US Productivity on the up.
Job creation has been a major concern for the United States economy as it tries to avoid a double-dip recession. US President Barack Obama recently promised to implement new tax incentives for companies that create jobs within the domestic economy – rewarding those that bring jobs into the US and eliminating tax breaks for companies that move jobs overseas. Although the unemployment rate in the US fell to 8.5% in December 2011, the lowest since February 2009, it is the impressive productivity figures which have gone largely unnoticed.
What are the reasons for this:
1. In 2012, with the weak economic conditions workers are concerned about job security so therefore tend to work longer hours and become more innovative in performing their job. This may involve them taking on more responsibility by doing other tasks.
2. When the recession bites, firms really have to think hard at how they can still maintain a revenue stream at the same time as seeing off the competition. This is where they become more innovative and risk further capital investment in order to remain solvent.
3. Panicked by the 2008 financial crisis and deepening recession, U.S. employers cut jobs pitilessly. They slashed an average of 780,000 jobs a month in the January-March quarter of 2009.
“My sense is there was much more weeding out of the weakest workers — the ones they didn’t want,” Kenneth Rogoff – Harvard University
The above is a brief extract from an article published in this month’s econoMAX – click below to subscribe to econoMAX the online magazine of Tutor2u. Each month there are 8 articles of around 600 words on current economic issues.