Productivity Up — Workers, Wages and Regulations Down?

Last week, the Bureau of Labor Statistics (BLS) released another one of its informative but not exactly exciting reports. Despite quarter after quarter of very limited hiring and lots of firing, companies managed to increase productivity by 1.9 percent.

The terms are dry and the numbers preliminary, but they do tell us a lot more than Mike "The Situation" Sorrentino ever has in two seasons on some East Coast shore, and millions of people watched him each week.

To put it simply, productivity is a measure of just how many goods and services companies produced, divided by labor costs (hours for which employees and owners were paid). When productivity goes up, either output has risen or the cost of labor has gone down.

New technologies, ideas and products emerge every day that make increased efficiency possible. But that might not be what's happening here. The AP described what happened between July and September as "modest" productivity gains and an "improvement" over the 1.8 percent productivity dip earlier this year.

But that three percent jump represents the biggest increase in productivity in about a year. That's a feat accomplished with very little corporate hiring and plenty of firing.

It seems business really managed to do more with less. Could it be?

In 1938, the Fair Labor Standards Act banned child labor, established the minimum wage and what would become the 40-hour work week. Its ferocious Depression-era proponents — if you don't know the name Frances Perkins please read about her immediately — also hoped it would bring down the unemployment rate. The theory is that overtime costs can mount to a point that it is cheaper to simply hire more workers.

With national unemployment hovering dangerously close to 10 percent today, one has to wonder if that three percent productivity surge really happened within the bounds of federal wage laws.

Just a year ago, the U.S. General Accounting Office (pdf) described Labor Department efforts to enforce wage laws as so "inadequate" that workers, particularly low wage workers, are left "vulnerable to wage theft."

Wage theft is the term used to describe unpaid or unacknowledged overtime or unpaid regular wages. Wage theft is also used to describe the practice of having an employee work so many hours at a regular rate of pay that the employee is effectively paid less than the minimum wage. Demand an end to wage theft!

This year, the National Employment Law Project — an attorneys' group that typically represents worker interests — polled (pdf) workers in major cities such as New York, Los Angeles and Chicago. A full 26 percent said they were paid less than the minimum wage, and 75 percent were not paid overtime wages which they were due.

Early this year, the Labor Department did announce plans to ramp up fair wage enforcement. By the middle of this year, the agency had hired 250 new investigators and had plans to hire about 100 more. But the Department's Wage and Hour Division Administrator position — that's the chief of the division charged with investigating wage theft — has been vacant since President Obama took office.

So, are workers really more efficient or just more exploited?

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