BusinessWeek reports that the Labor Department data shows worker productivity slowed in the 4th quarter of 2005 for the firs time since 2001.
The efficiency of American workers rose in 2005 at the slowest pace since the recession year of 2001 while a key gauge of wage pressures rose at the fastest pace in five years, the government reported Thursday.
The Labor Department said productivity rose by 2.7 percent last year while labor costs rose by 2.4 percent, the biggest jump since a 4.2 percent increase in 2000. For just the final three months of the year, productivity actually fell by 0.6 percent, the first decline since early 2001, and labor costs rose by 2.4 percent.
The combination of slowing productivity -- the amount of output per hour of work -- and rising labor costs was certain to attract attention at the Federal Reserve, which is worried that rising wage demands could trigger inflation problems down the road.
Most consumers have already seen inflationary prices in food, gas and energy costs that is putting additional pressure on the economy.
