Thursday, March 31, 2011

The Mean Index – Profit Over Jobs In U.S. – Opposite In Europe & Japan

 Empty - Ghosts of the Middle Class

There was a time when recessions caused employers in the United States to figure out ways to keep employees busy in order to keep from losing them. Now laying off workers seems to be the first, not last option for U.S. companies compared to the rest of the world.

In the past when economic downturns would hit, U.S. companies would do everything it could to keep from losing employees. Employees would be assigned cleanup tasks, filing and straightening up the storeroom. It seems that something has dramatically changed in the United States. An article titled “Unlike competition, U.S. values profits over jobs” by Paul Wiseman March 31, 2011 and published on the MSNBC website shows the difference in how some foreign country based companies treat employees in a recession versus United States based firms.

In the United States worker productivity is up as fewer employees are producing more output after companies shed workers during the recession. According to the article that is not the case in Japan and Europe. Productivity actually went down during the height of the recession during 2009 by 3.7 percent in Japan and 2.2 percent in Europe while U.S. productivity growth doubled from 2008 to 2009 and again in 2010. Now that U.S. corporate profits are at record levels, U.S. firms are hiring a pace far lower than businesses in other recovering nations.

It seems that companies in other developed nations kept more of their employees during the downturn, even at the cost of profits and productivity. Something has changed in the United States as employees are not seen as being as valuable as they once were. Downsizing and trimming the workforce seems to be the first strategy to deal with a downturn as opposed to keeping more employees and sacrificing some level of profitability. Earnings per share and bottom line profits have won out over retaining skilled employees throughout a downturn. Pumping every ounce of output from the remaining workers is seen as a better strategy than hiring new employees as profits bounce back, employee morale and well being take a back seat.

I guess the United States is firmly entrenched in the “employee as a unit of labor input” formula as opposed to an individual with respect, responsibility and loyalty if treated well. This should be no surprise when the action that are taking place in some states towards professionals such as teachers and firefighters as they are hammered down into the roles of “just shut up and work.”

1 comment:

  1. Thanks so much for such a detailed analysis. I hope it gets a lot of attention, especially after all the media hype over this.

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