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Maybe cutting deep isn't the answer

Today’s productivity numbers are good news for companies and bad news for workers. Companies cut deeper this time than they did in past recessions, and deeper than their sales fell.  That means the remaining workers worked harder than before. And it also likely means companies feel comfortable operating without hiring for quite some time — that we’ll see the another “jobless recovery” for a couple years as we’ve seen in the last two recessions.  But an interesting Wall Street Journal story asked whether such productivity gains are sustainable. Are the gains caused by fearful workers working harder? Or by permanent changes and new technology? The fact that the rate fell from 6.3 percent in the fourth quarter to 3.6 percent in the first quarter (which is still pretty good) may provide a hint.

Another WSJ story looks at research that suggests that cutting the workforce deeply isn’t best in the long-run. It makes it harder to ramp back up when sales return.