Businesses responded to the recession by “making do with less” by getting more effort from fewer workers, a new study released Monday by the National Bureau of Economic Research finds.
Productivity — the amount of output generated in a given time — increased during the recession. The study tries to explain this phenomenon by examining workers at a large services firm that closely monitors individual employees’ work on a daily basis (the study does not name the firm for confidentiality reasons). The authors conclude that “each worker produced more output than would have been the case during normal times: output-per-worker rose during the recession by 5.4 percent.”
In other words, employers tried to get more out of existing employees harder during the recession and employees responded by working harder. The authors suggest that employees worked harder than they had in the past because the bad job market made them unwilling to quit their jobs or risk getting fired.
The study was written by Edward Lazear, a former top economic adviser to President George W. Bush, and his Stanford business school colleague Kathryn Shaw, with Christopher Stanton of the University of Utah.
The three economists note that workers’ efforts and productivity increased the most in areas with higher unemployment, raising the possibility that the fear of job loss motivated employees to work harder throughout the recession. That boost in productivity was especially strong for less productive workers, who likely realized that they were most at risk for layoffs.