Monday, February 10, 2014

Productivity Increases: Proof That ObamaCare Is Behind Weak Job's Reports?

Each quarter, the United States Bureau of Labor Statistics (BLS) measures worker efficiency in a report titled: "Productivity and Costs".  Normally, increases in productivity are a good thing because it shows that the workforce is producing more goods on a lower per-person basis, thus reducing the costs of items being produced and making those items more competitive; especially against low-cost world markets.

But, when productivity increases at a faster rate than the reduction of labor costs, it might be a sign that the labor force is losing ground in terms of jobs and/or job turnovers or in lowered salaries.  In fact, in 2013, in every quarter -- except for the second quarter -- labor costs fell to the extent that they are now contracting (below 0% growth).  This, then, has resulted in, what I think, is a very disturbing chart:

Of particular note is the yellow line.  This plot of "Unit Labor Costs" clearly shows that they have fallen to levels that haven't been seen since 2001 and 2008; when, in both those previous years, we were in the midst of a recession.  However, unlike those two years, we are hardly in a recession with economic growth in the last two quarters at 4.1% and 3.2%, respectively.
I think the drop in labor costs are proof that ObamaCare may be impacting the workforce in a substantial way by converting high-paying, full-time jobs to part time; thus lowering unit costs.  That's why the Huffington Post reported that 75% of jobs created this year were part time. It certainly is no coincidence that the drop unit costs occurred in the same year that ObamaCare was being implemented. At the same time, it may be the very reason as to why only 75,000 jobs were created in December and 113,000 in January.  In any event, we are now seeing recession-like unit labor costs and the reason isn't characteristically a recession.


BLS, February 6 report, 4th Quarter Productivity and Costs: Statistical Summary of the 4th Quarter Productivity Report:

GDP: Economic Growth:

75% Of Jobs Created This Year Were Part-Time:

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