Workforce Productivity Stagnant as Labor Costs Rise

November 2, 2006 ( - US workforce productivity did not budge in the last quarter, but labor costs continued to climb by 3.8%, the Labor Department announced Thursday.

Even though the rise in costs fell below the yearly rate for wages and other labor costs, static productivity means that employers are not getting from workers what they put in, Bloomberg reported. R ising wages and benefits for workers at a time when productivity is slowing could lead to inflation if companies decide to raise prices as a result, the news report said.

According to the Labor Department, the flat productivity rate in the third quarter was the poorest showing since the final three months of 2005. In fact, in the past four quarters, productivity has only risen 1.3% – the weakest showing since 1997.

The 3.8% rise in labor costs represents a slowing of costs, slumping from a 9% first quarter gain and a 5.4% second quarter gain – increases that pushed costs up by 5.3% for the year.

The Labor Department also announced that the number of jobless claims was the highest since early July, with the number of employees filing benefits claims up 18,000 from last week – a much higher number than the 2,000 experts expected.