In business cycles, productivity slowdowns can be a difficult time for workers because employers typically respond by letting employees go. New labor statistics released yesterday showed that productivity is indeed slowing faster than first thought, raising the question of whether layoffs are soon to follow. A report yesterday by the Labor Department said productivity in the final three months of 2006 was about half the rate first reported. And for the year, it grew at the slowest pace since 1997. The government also said that companies compensated employees at a much higher rate than first calculated, which could add to pressure on businesses.
See "Revised Figures Show Sharper Slowdown in Productivity in the Fourth Quarter of 2006", Jeremy W. Peters, The New York Times, March 6, 2007