WICHITA — Wonder why people at work (and out of work) are so miserable? Check out this fact, courtesy of economist David Rosenberg:The bottom line is that over 100% of the growth in nonfarm business output in the past three quarters has come from productivity — and that is the critical ingredient for the positive underpinning in the profit picture.He sees it as good news, companies keep all of the increased production as profit. That’s true and it is good news. But it also means that 90 percent of the workforce is working significantly harder for the same pay and 10 percent can’t get hired.
Longer-term, Rosenberg notes, the cost of labor as a percent of the cost of production has basically been falling since the early 90s, with a large spike in the late 90s and a smaller one in 2007/2008 when labor markets got tight and salaries rose. Labor costs have now reached an all-time low of around 58 percent of the output cost, down from a more typical 63-67 percent in the 1950s to 1980s. I’m guessing this is impact of computerization and outsourcing. Bodes well for American business in the long run. It also means a very slow recovery in terms of employment.