US productivity leaps 6.5%, according to data released yesterday. This resembles the jump in productivity experienced by firms at the end of the recession of 2001. We have been waiting for this kind of news for three quarters!
Some outcomes will be higher stock prices, improved earnings, and other gems for the top of the economic food chain: institutional investors, pension funds, wealthy individuals and generally anyone owning stock. This creates an environment where psychology views a turnaround, and makes businesspeople more willing to take risks.
Job creation may result from a better risk-taking environment. But corporate earnings per hour has reached the point where either the consumer is buying more, and recovering the psychological shocks of the initial economic meltdown, or simply, firms are employing better people, who get more value out of the work, per hour.
Both scenarios are likely, too. Another scenario is that companies will begin to reacquire cash from more profitable operations, resulting in better pay for high performers (banks come to mind) as well as increased investable cash.
Barring any more econo-speak, the news may result in better hiring prospects for the smart, young and agile (our demographic). We hope to see an uptick in college recruiting going into fall 2009, as big accounting, banking, legal and technology firms return to campus. Recoveries in the banking sector are particularly encouraging for business students and the MBA group, who have had to weather the storm of recent quarters. Business students comprise the single largest group of college majors, ahead of education.
However, college graduates must evince their preparation and their readiness to participate in this productivity boom. Firms will always be willing to gamble on college hires, and see them as integral facets of the labor ecosystem, but students must assume that they must prove their mettle, pre-hire. Firms will need to capture value instantly upon onboarding a young graduate, if managers wish to maintain a positive growth trend.
The question we have asked in our research is how can students demonstrate their readiness? Must they stage a major march on Washington, a la 80 Million Strong movement?