U.S. Productivity Gain Brings Greater Job Security for Workers

(MoneyWatch)  Fearing you may lose your job can really kick your work effort into higher gear -- especially when your struggling employer is putting pressure on to squeeze more productivity out of a shrinking workforce.

That's just what happened in the third quarter when U.S. worker productivity posted its biggest gain in six years. The Labor Department reported today that productivity in July through September leaped at a 9.5% annual rate, far exceeding economists' estimates. The increased output helped drive labor costs down 5.2% -- the biggest drop since such recordkeeping began in 1948.

Those related developments are good news for U.S. companies since the combined productivity gains and labor-cost reductions mean improved profits or at least smaller losses. The benefit for workers both employed and unemployed is that it reduces the likelihood of further layoffs and increases the prospects for future hiring.

The productivity gain also benefits consumers since rising efficiency eases pressure on producers to raise prices, thereby reducing the risk of inflation. That, in turn, keeps interest rates on all types of corporate and consumer loans in check, which the Federal Reserve acknowledged yesterday in pledging to keep its benchmark rate "exceptionally low" for the near future.

U.S. workers also got good news today in another labor department report; first-time jobless claims fell by 20,000 last week to a seasonally adjusted 512,000, the lowest level since January. All eyes now will be on tomorrow's jobless-rate report for October and whether it breaches the psychologically significant 10% mark, vs. the 9.8% level in September.

If you are now employed, you may feel drained and stressed due to productivity pushes, which may continue if employers keep squeezing harder rather than hiring anew. But if the recovery continues apace in 2010, you may be rewarded with an appreciable raise next year, vs. a furlough or pink slip, courtesy of the greater effort you put in to help your employer through the tempest.