Worker productivity drops in the second quarter

Employees’ productivity increased significantly throughout the recession, as firms fired workers to cut costs. 

Overall in 2009, productivity was up 3.5 percent, as companies were able to produce more goods with fewer employees. 

Labor costs increased slightly in the second quarter — up 0.2 percent, less than estimated and the first increase since the second quarter of 2009. 

The 0.2 percent rise in unit labor costs followed a 3.7 percent decrease during the first quarter. It was the first increase since a 0.6 percent rise in the second quarter of last year.

Increased output allows companies to pay workers more because of the increased production without increasing the cost of their products, leading to inflation. 

The Federal Reserve is meeting Tuesday to discuss the nation’s slowing economic recovery.