Saturday, July 31, 2010
Unemployed? Get used to it. Part 2
Bob Herbert reports on a study of recession data that indicates that unlike previous economic downturns, corporations cut far more employees than the circumstances would require.
The recession officially started in December 2007. From the fourth quarter of 2007 to the fourth quarter of 2009, real aggregate output in the U.S., as measured by the gross domestic product, fell by about 2.5 percent. But employers cut their payrolls by 6 percent.According to the good professor, increased worker productivity is the cause, with the value of that increase siphoned from the workers to the management. If you call productivity increased workloads requiring longer hours without extra pay that might be true.
In many cases, bosses told panicked workers who were still on the job that they had to take pay cuts or cuts in hours, or both. And raises were out of the question. The staggering job losses and stagnant wages are central reasons why any real recovery has been so difficult.
“They threw out far more workers and hours than they lost output,” said Professor Sum. “Here’s what happened: At the end of the fourth quarter in 2008, you see corporate profits begin to really take off, and they grow by the time you get to the first quarter of 2010 by $572 billion. And over that same time period, wage and salary payments go down by $122 billion.”
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