Job development and job recovery could get a shot within the arm from a drop in worker productivity. Companies have enjoyed fat balance sheets by getting more from less after slashing payrolls during the recession. But the work force may be reaching its limit depending on the latest Labor Department report. If that proves to be true, companies may have to start creating jobs to drive the economic recovery they need to keep growing.

A new meaning for falling worker productivity

Worker productivity posted large gains throughout 2009, but the Labor Department said Tuesday it declined at an annual rate of .9 percent within the April-to-June quarter. Worker productiveness is a primary factor in improving the standard of living, as outlined by the Associated Press. Increasing productiveness leads to higher wages and increased production without raising prices . Declining productiveness would be a negative for the United States of America economy in normal times. But in this economy, some analysts say that companies profiting from job cuts will eventually be hurt by the high unemployment rate. Because consumer spending accounts for 70 percent of the economy, hiring will create the jobs families need to go buying. Those corporations benefit from more demand for their products.

Companies push workers to the limit

For businesses banking that output would continue to climb without hiring new workers, CNN reports that the new Labor Department report is a wake-up call. During the worst of the recession, and businesses learned how to get more with less. But in the latest Labor Department report, the amount of hours worked rose at a faster pace than actual economic output. Companies probably "overdid it" with layoffs during the recession, said Nariman Behravesh of IHS Global Insight in Lexington, Mass. Within the CNN article. He said that if for no other reason than keeping employee morale up, businesses may have to hire more to avoid worker burnout.

Job creation a must to prevent deflation

For the next few months, Behravesh said, job creation will probably remain low. However, he's optimistic that more than 100,000 jobs a month could start materializing within the private sector by the end of the year and possibly 150,000 jobs monthly mid-2011. At the opposite end of the spectrum is a report from ABC News, which said that dropping productiveness is just one more sign the economic recovery is in danger of heading south. The overall economy grew at only a 2.4 percent annual rate in the second quarter, down from a 3.7 percent rate within the first quarter. with the unemployment rate mired at 9.5 percent, officials at the Federal Reserve are concerned that companies will see the high unemployment rate as an opportunity to push wages down for those who still have jobs, which could start a debilitating cycle of deflation.

Further reading

Google

google.com/hostednews/ap/article/ALeqM5gNiyJ905Ho0Ur96V2TQhsBX19lGwD9HGMHAO0

CNN

money.cnn.com/2010/08/10/markets/thebuzz/

ABC News

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