It probably fell at a 1.2 percent rate in the just-ended second quarter, according to the G.D.P. tracker of the Federal Reserve Bank of Atlanta.

More people producing less is not a good look, no matter how you squint. Labor productivity — that’s output per hour of work — shrank at an annual rate of 7.3 percent in the first quarter in the nonfarm business sector. Given what we know about jobs and output, productivity probably shrank again, though less, in the second quarter.

It’s clear now, that most of the increase in jobs was from a change in the mix of workers. Huge layoffs in leisure, hospitality, and other low-wage sectors early in the pandemic skewed the labor force toward workers who earn higher wages and tend to have higher labor productivity (at least as conventionally measured).

So, why does the LLM business owner care?

The temporary skew in the average skill level of jobs accounted for 71 percent of labor productivity growth in the second quarter of 2020. Now all these so-called lower-skilled employees are back but being retrained in higher-paying jobs due to this shift. Thus, a shortfall in trained, skilled employees in the manufacturing industry.

Strong demand for workers has forced owners to bring less productive workers that in normal circumstances would not be active or employed, thus productivity suffers. Meanwhile, employment won’t remain strong for long if employers sense that the strength of demand for their goods or services doesn’t justify all the hiring they’ve been doing. Some of the hiring reflected in the strong June jobs numbers is the result of decisions made months earlier when economic prospects were brighter.

Winning companies will respond to the slump by investing more in automation, while ambitious workers will switch to employers “who can afford to pay more but who will also require them to be more productive”.

Adding insult to injury, we are seeing strong evidence of “national firms” rolling up LLM companies for their employees, as well as aggressively seeking out skilled labor to these larger rollups with higher pay, and better benefits (with the expectation of generating higher productivity through economies of scale). This trend creates additional pressure for the Lower Middle Market owner to compete for good help.

When the output is weak while input is strong, it means businesses’ costs are rising and profits are getting squeezed, which tends to lead to layoffs. Profits have been lately providing a cushion. But productivity is on track for one of its worst 12-month performances in records going back to 1947. Look out below.