More productivity from fewer workers

U.S. worker productivity increased in the first quarter of 2008 at an annual rate of better than 2% -- which is pretty good. But the underlying reason is that job cuts required the remaining employees to do more work. Dan Grech reports.

KAI RYSSDAL: Worker productivity's one of those rare economic statistics that isn't so hard to wrap your brain around. Widgets produced, per hour worked is the formula. Sounds pretty straight forward. On the face of it, today's report that productivity in the first quarter rose at an annual rate of better than 2 percent was pretty good. A, it was higher than most economists expected, and B, we also learned wages and benefits were essentially flat when compared with inflation, but one of the first things you learn with rosy economic statistics is that sometimes there's less to them than meets the eye.

Dan Grech has more.

DAN GRECH: Since 2000, workers have increased their productivity by nearly 20 percent, but during that same period, average hourly wages increased by only 3 percent.

JARED BERNSTEIN: The American work force is working harder, smarter and longer. Essentially they're baking a bigger pie, but they're taking home smaller slices.

That's Jared Bernstein with the Economic Policy Institute. He says the gap between productivity growth and wages is at a historic high. The reason, more money is ending up in the pockets of the wealthy.

BERNSTEIN: Inequality is a wedge that has gotten between the productivity growth that the typical worker contributes to the economy, and their take-home pay.

But some economists say the problem is not with income inequality. It's with the government's numbers. The Heritage Foundation's James Sherk says when you factor in non-cash compensation, like health care benefits and time off, and adjust differently for inflation, compensation isn't that out-of-sync with productivity.

JAMES SHERK: So there's a small difference, but not nearly this yawning chasm that so many people talk about.

One thing that's not in dispute, many Americans feel they're working harder just to tread water.