The Bureau of Labor Statistics announced drops in labor costs Wednesday, showing that U.S. workers and businesses were not as productive in the first quarter as originally thought.
Newly revised figures of the January through March period show that although productivity measures rose by 0.5 percent overall, they did not rise at the 0.7 percent rate originally estimated.
Hourly worker compensation plunged 3.8 percent in the first quarter instead of rising 1.2 percent as originally estimated, marking compensation's steepest decline since the Labor Department began keeping track of the statistic in 1947. The manufacturing sector saw the largest drop in compensation and when adjusted for inflation, hourly wages fell even more dramatically at 5.2 percent.
The 3.8 percent decrease in hourly compensation plus the 0.5 percent increase in productivity combined to make labor costs in nonfarm businesses fall 4.3 percent. Labor costs reflect how much it costs a business to produce one unit of output.
Despite the quarter-over-quarter declines, compensation has risen 2.0 percent in the year-over-year measure while unit labor costs have gone up 1.1 percent annually.
Other adjustments include output, which was revised down from 2.5 percent to 2.1 percent as well as growth in hours worked, which dropped from 1.8 percent to 1.6 percent.
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