U.S. Productivity Rose in the First Quarter
- May 07, 2008
Washington, D.C.–Productivity–the amount of output per hour of work–grew at an annual rate of 2.2 percent in the first quarter, the Labor Department said Wednesday.Labor cost pressures declined slightly–an indication that inflation could be easing, according to the New York Times. In the last three months of 2007, labor costs increased by 2.8 percent; in the first quarter of 2008, labor costs grew at an annual rate of 2.2 percent.Rising wages and benefits can help workers; they can also increase inflation as businesses are forced to increase their product costs to fund the higher payroll costs. But if productivity increases, businesses are able to pay higher wages from the higher output profits.As productivity rose, the number of hours worked fell at an annual rate of 1.8 percent due to layoffs. Payroll reductions were the result of the national economic slowdown caused by the severe housing decline and credit crunch.