Productivity of the United States labor force has decreased while hourly compensation has risen. The US Bureau of Labor Statistics released their productivity data for Q1 of 2023 with data showing that productivity in the US business sector is down 2.7% from the previous quarter and down 0.9% from a year ago. Hourly compensation is up 3.4% from last quarter and up 4.8% from a year ago.
The data reveals that workers are on the job for longer hours in the day. Hours worked have increased 3% from the previous quarter and increased 2.3% more from a year ago. To summarize, workers are less productive causing them to work longer but are also seeing their wages rise. What does this mean for workers and businesses?
In the volatile job market of 2023, workers need to continue to prove their value to their employers, as labor is becoming more expensive. As businesses look for more ways to lower costs, only top talent is going to survive – especially in struggling businesses.
According to Fortune, the cost of labor increases while productivity declines, layoffs are going to continue to be a more likely option for businesses as it is often easier and faster to execute compared to taking the time to fix the productivity issue – a problem for which there is no quick fix.
While workers can focus on providing more value to their employers, businesses must ta the time to analyze what is causing the decrease in productivity. One byproduct of the pandemic has been the increase in job-hopping from young generations, which leaves businesses at a disadvantage as training costs and time increase.
Interviewing, hiring, and training new employees takes time, and when that new employee only sticks around for a year, for example, the cycle begins again without meaningful progress made in that role. Employee continuity is key for productivity. So, businesses must adapt to train new employees more efficiently to get the most out of the job-hopping generations while also providing reasons to stay, preventing the job-hop in the first place.