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Productivity Rises...But So Does Unemployment

In an ideal world, increases in productivity (or, the measure of employee output per hour) will lead to higher corporate profits. Some of that extra money can then be used to hire more workers. When more people are employed, there are more people that can spend money. And everyone lives happily ever after.

But these days, productivity has surged, jumping up at a 9.5 percent annual rate in the third quarter, according to Labor Department statistics released yesterday. That's the best clip in six years. However, that positive data has been immediately followed by bad news from the Department. Today, it was announced that October's unemployment rate rose to 10.2 percent, the highest rate in 26 years.

BusinessWeek's Peter Coy suggests recent productivity gains could be somewhat artificial since lay-off survivors have had to work harder than ever. In other words, productivity has risen because unemployment has also gone up and there are fewer employees left to handle all the work.

From your own experience working through this recession, do you agree with Coy's assessment? And do you think your company's productivity gains could be undermined by employee burnout? Please share your thoughts below.

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