Market Commentary

Productivity

Every quarter we get a report from the government about productivity of the American work force. Accompanying that report, to determine productivity, is quarterly unit labor costs and other associated numbers. For the fourth quarter of 2018 the report has been delayed because of the recent government partial shutdown.

Every worker should be concerned with this number. It is obvious as to why companies like to see productivity go up but what about the average worker? Our standard of living increases along with productivity. As we make goods or provide services at a more efficient rate the cost generally goes down thus our salaries can buy more goods and services with the same amount of dollars. Of course, your employer should pay you more for your increase of productivity, and generally they just do not as much as they should.

Not being productive or not being efficient reduces standards of living. For examples you might want to look at Venezuela in recent years, or North Korea over the last 50 years. Both societies are extremely poor in efficiency and productivity and their citizen’s suffer for it.

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