Patrick Schwerdtfeger is a motivational speaker who can speak about productivity and how it affects unemployment at your next business event. Contact us to check availability. The full transcript of the above video is included below.
 

 

Full Video Transcript:

 
Hi, and welcome to another edition of Strategic Business Insights. Today we’re going to talk about productivity and how it relates to unemployment. People don’t put these two things together but they are directly related.

When you turn on the evening news and they say that productivity is up, do you know what that means? That means that it took fewer people to produce the same amount of goods and services. That’s what it means. We were more productive.

When we’re more productive, it means it takes fewer people to produce the same amount of goods and services, which means that higher productivity leads directly to higher unemployment, if you will. In other words, it takes fewer people to produce the same goods and services. So until we start producing more goods and services, we’re not going to get back to the same amount of employment per productivity that we had before, because productivity went up.

This is an ongoing trend. Productivity continues to go higher and higher and higher because people are introducing technologies like robotics and automation, outsourcing. All these different things are increasing productivity.

Overall, this is a good thing. Human beings are becoming more productive. But we also have to acknowledge that when productivity goes up, unemployment goes up as well, or it stays high, which is the case right now. We have persistently high unemployment. It’s because we’re extraordinarily productive and the demand isn’t there, the economy isn’t growing the way it was, and so you have a high unemployment.

Unfortunately, this is not going to get better. It’s going to be more and more this way as time goes on. Like right now, 2013, people constantly say the economy is struggling, the economy is weak. The reality is the economy is actually doing fairly well. Corporate profits are at all-time highs. Companies are making a ton of money. Balance sheets are strong. And if you listen to the earnings calls in the stock market, it’s the revenue projections that are flat. In other words, we are not selling more. The economy is not really growing or it’s growing by a very small amount. So the revenue is stable but the profits are increasing below that revenue because we’re being increasingly productive along the way. So companies are making a ton of money, which is why the stock market is rising.

People say it’s a sugar high from quantitative easing and that it’s all just complete stimulus and nothing else. It’s not true. P/E ratios, which is price-to-earnings ratios, and it compares the price of the stock to the earnings of the company, P/E ratios have not changed. They have not changed. This is earnings driven. Companies are making a ton of money. So balance sheets are strong, a lot of cash on balance sheets, they’re making a ton of money.

The problem is they’re not hiring anybody. So that affects the average person. When there’s unemployment, it affects the average person. Maybe you’re employed, maybe you’re not. If you’re employed, that’s fantastic. But you probably know people who are not or just lost their jobs or are looking for other jobs. That’s the problem.

So there’s this perception that the economy’s not doing well. If the economy is just business and profits, it’s actually doing very well. What’s doing bad is the unemployment market, and it’s going to take a long time for that to wind down. It’s starting to come down slowly but that’s just one type of unemployment. If you actually include all the people who are underemployed or have jobs below what they would like to have, the unemployment rate is still like 14, 15%, which is very, very high. At one point, it was up at 16, 17% of underemployed. It’s what they call, what is it, U6? They have names for them. I don’t know the names, so I could be wrong, but if you include all the different categories, it’s very high.

And the same thing is true in Europe, by the way. Europe’s in even worse shape because the economy isn’t growing at all. I mean, their economy, right now it’s in recession, but it’s basically just … And so their companies even there are making some money, so there are some profits being made, but the unemployment is way higher than it is here because at least here in the US the economy is growing a little bit. So we do get some top-line revenue growth. It’s not much, but it is some. In Europe there is none, and in Japan there’s none. I mean, now that they’re manipulating things their export market is taking off, but their domestic market, their domestic economy is … and shrinking and has been for years already.

So anyway, I hope this gives you some insight as far as what higher productivity on the evening news, that it sounds all good, but the reality is it does have a bad effect or a difficult effect on the employment markets, and I hope this video helps you see that connection a little bit better. Thanks for watching the video. I appreciate it. My name is Patrick, reminding you to think bigger about your business, think bigger about your life.
 


 
Patrick Schwerdtfeger is a keynote speaker who has spoken at business conferences in North America, South America, Europe, Africa, the Middle East and Asia.