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Higher Productivity Means More Jobs Ahead

The Workforce is Working Harder With Fewer Workers

SUSIE GHARIB: As the White House tries to kick-start hiring, companies across the economy are getting by with fewer workers. But those employees are working harder. The nation's productivity or output per hour of work is at its highest level in six years. So, will companies continue to ask employees to do more or will firms soon increase hiring? Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Seven million people in the U.S. have lost their jobs since the recession began. Those fortunate to remain employed have lately been working much harder. That's because, even as the economy picks up, companies are still reluctant to hire new workers. The result is significant gains in the nation's productivity this year. In the first quarter, it rose less than 2 percent, while in the most recent quarter measured, it surged about 8 percent. Business cycle expert Lakshman Achuthan says the spike in productivity suggests companies will start adding new workers sooner than we think.

LAKSHMAN ACHUTHAN, BUSINESS CYCLE EXPERT, ECRI: If the economy continues to grow -- and there's every indication that it's going to continue to grow for at least a few quarters more, there's no double dip in front of us -- employers need to hire more people in order to keep up with the demand.

PRATT: Increased productivity has been a factor at Community Options, a non- profit that provides employment services for people with disabilities. Executive director Brooke Reynolds says managers have been working longer hours to get the job done.

BROOKE REYNOLDS, EXECUTIVE DIR., COMMUNITY OPTIONS: I think some of the supervisors and executives have kind of had to cover the workload. But in the end, we're in the human service field; we're helping people. So, I think that part of it doesn't really affect you as much.

PRATT: Experts say once productivity is maxed out, companies often lengthen the work week and hire temporary workers. There's evidence both are already happening. And there's another factor about our nation's increased output that you should know.

ACHUTHAN: With productivity gains also, it means that companies are more profitable. Companies now have cash so that they can hire people.

PRATT: Businesses might be tempted to ask current employees to keep up the hard work indefinitely. Beyond the obvious human toll, experts predict firms that do that will eventually lose market share to competitors, those that have taken the plunge and hired new workers. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.