Sunday, September 26, 2010

Labor Productivity and Engagement

Economist seem to be mute on the issue of employee engagement-- are any of you our there and willing to comment on the recent WSJ article on labor productivity and unemployment?  The premise of the article is that companies cannot grow more though productivity gains-- to grow they will have to hire more: "many companies are reaching the limit of how much they can get their workers to do."  An interesting thought; I know I am a dilettante in economics, but I have my doubts.

As I have blogged about before there are limits to how much employees can increase effort-- but those limits seem pretty elastic.  Labor productivity is the value of output per hour of work-- the higher the value the more productive the US workforce is.  Lots of things add to productivity, including new IT systems, capital investments and of course the the workforce disposition(skill and wills).  If you can believe the premise, the employees' will is running out!

I am sure it is true that labor productivity is down.  But I worry that corporations will not have the foresight to start hiring.  It has been an "employers" market for so long it will be hard to get people to believe there is a still war for talent.

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