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8 Ways Your Productivity Affects the Unemployment Rate


When it comes to productivity, few of us consider the big picture. Being more productive at work means much more than just being able to finish more work in a day or getting your boss to notice your work ethic; it can also have a marked effect on the economy as a whole, especially when considered in relation to unemployment levels. These two markers of economic success (or distress as the case may be) are intertwined in a number of complex ways and the relationship between the two isn’t always as clear cut as we might think. Here, we explore some of the ways that worker productivity — yes, even your own — can and has affected unemployment (and vice versa), both in our own country and in others around the world.

  1. The more you can do, the fewer people who are needed to complete a job.

    Getting more done in less time is great, right? If you’re an employer, definitely, but things aren’t so clear cut for employees. In recent years, many businesses have made major cutbacks in the amount of employees they have working for them, forcing those left behind to take on more work, often for no pay increase. It’s impressive that some workers can do the job of three employees, but this kind of forced productivity means that there are fewer jobs out there and more people looking for work, pushing up levels of unemployment.

  2. High unemployment may make you more competitive in the workplace.

    If your employer was making major layoffs, how would you act around the office? If you’re like most people, you’d step up your game, working hard, staying late, and becoming as productive as possible so as to appear more indispensable to the company. In some cases, increased productivity may be the direct result of the threat of unemployment, much as unemployment may be the result of increased productivity. It can be a vicious cycle, but as we’ll discuss later on, it doesn’t always have to be.

  3. The technology that lets you be more productive has a complicated relationship with unemployment levels.

    On the one hand, new technology has made it a whole lot easier for people to get more done with a lot less effort, which may have contributed to eliminating some jobs or reducing the number of workers needed. On the other, it’s important to note that technology is also driving a whole new sector of jobs, many of which didn’t even exist a decade ago. Yet technology, and the productivity it enables, may be pushing unemployment up in some ways despite spawning new jobs, as those put out of work by new technologies often don’t have the skills necessary to fill positions created by new technologies.

    This has been a major point of discussion in American politics as of late, as colleges struggle to put out enough qualified grads to fill available positions.

  4. Your productivity is what allows companies to remain globally competitive.

    To remain competitive in a global marketplace, most companies have had to find ways to increase their productivity, especially here in the U.S. where employees enjoy higher wages and more benefits than other parts of the world. By and large, companies have been pretty successful at getting more out of less. Despite having an ever shrinking manufacturing core here at home (it makes up less than 10% of the economy), the U.S. is the second-largest manufacturer in the world. The U.S. is also the world’s third-largest agricultural producer, even though just under 2% of Americans farm. The U.S. stays competitive precisely because it can do so much with so little.

  5. Yet domestic workers are only part of what allows companies to be more productive.

    While the drive to be more productive can have some benefits for employees in the U.S., more often than not it also has a major downside. American workers are expensive, as are fines for violating environmental and worker regulations. The solution for many businesses is to take their jobs abroad or to invest in automated systems that eliminate a large number of positions for actual humans. This has been especially true in the manufacturing and customer support sectors, but few fields have remained unscathed and middle-class jobs have been dwindling for decades. Factors like new technologies and shipping jobs overseas do up productivity, but they also can have a negative impact on unemployment over the long haul.

  6. Greater productivity doesn’t always negatively impact employment.

    While it might seem like spikes in productivity and unemployment go hand in hand, the opposite is very often true. During the 1990s productivity experienced a boom, driven by new developments in the technology sector, growing at almost twice the pace of previous years. Yet despite a huge growth in productivity, unemployment levels actually bottomed out, reaching unusually low levels. A similar pattern happened during the 1970s, not just in the U.S. but also in Europe. The reality? Increased productivity has a pretty complicated relationship with unemployment. Depending on circumstances it can either help produce new jobs or eliminate a large swath of existing jobs. These changes often occur in cycles that occur time and time again as markets adjust and readjust to the realities of the modern world.

  7. Unemployment affects your productivity, too.

    Just as productivity levels affect unemployment, unemployment can also have a marked effect on productivity, something we touched upon briefly earlier. Research has shown that unemployment can impact productivity growth, but the scope of the impact depends heavily on how much human capital means to a given business, which in today’s technology-driven marketplace may be at lower levels than in years past. Data from 13 OECD countries collected between 1960 and 1990 found that an increase in unemployment reduces the long-term level of productivity in a given nation. Higher unemployment rates, and the social and economic problems that come with them, can eventually take a toll on productivity, showing that these two economic factors impact each other regardless of which is rising or falling in a given year.

  8. You’re getting more done than ever, but you’re not getting paid for it.

    Employees these days may be getting a lot more done, but they’re not being compensated for it. How does this affect unemployment? If individuals can’t make ends meet with one job, they’re more likely to take on another, or to have their spouse work as well. That means fewer jobs to go around, and sometimes, higher unemployment. Consider these recent stats: America is producing more goods now than it did before the economic slump began in 2007, even with 6 million fewer workers. Yet the share in the profits from these gains in productivity is smaller than ever for workers with real wages dropping 28% since 1969, its lowest point since the government began keeping track in 1947. This is perhaps more troubling than the unemployment increased productivity can cause, as even those who find paying work may not be getting paid enough for doing that work.

July 17th, 2012 written by Site Administrator

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