Labor productivity grew by another 6.9%, while labor costs fell by 5.9% in the fourth quarter, according to the Bureau of Labor Statistics. With output increasing but unemployment still high, this news shouldn't be shocking. But it does provide some indication that employers may be at a breaking point in terms of how much effort they can squeeze out of workers. What does today's data mean for employment?
BLS measures labor productivity simply as output divided by hours worked. Historically, productivity has increased more often than not. So the fact that it's increasing is usually generally seen as a good sign: more productive workers are good for an economy. But in a recession, it increases further for another reason -- employers are demanding nearly the same amount of output from fewer workers. Here's a chart showing labor productivity since 1947, as far as BLS's data goes back:
I created this graph by doing a ratio of BLS's indices of labor output and hours worked. As you can see, it's a relatively steady upward trend. But since the start of 2009, the slope of the curve has become quite steep. In fact, the rise in productivity in 2009 was the largest for a year since 1965.