Companies may be hiring more workers, but they are producing less goods and services, leading to higher unit-labor costs and stagnant wages.

U.S. productivity fell at a 3% annual rate in the fourth quarter of 2015, the biggest drop since the first quarter of 2014, the Labor Department said Thursday. Productivity rose by a downwardly revised 2.1% rate in the third quarter, and grew just 0.6% for all of 2015, the smallest increase since 2013.

Economists polled by Reuters had forecast productivity falling at only a 1.8% rate last quarter after expanding at a previously reported 2.2% pace in the third quarter.

More workers were hired and many put in more hours, but overall they produced less, the Labor Department said. Economic growth slowed to a 0.7% rate in the final three months of 2015, while nonfarm payrolls rose by an average 284,000 jobs per month.

“Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity,” CNBC wrote. “While weak productivity has boosted employment growth as companies hire more workers to increase output, economists say it has contributed to stagnant wages and lowered the economy’s speed limit.”

The number of hours worked rose at a 3.3% rate in the fourth quarter, while unit-labor costs rose at a 4.5% pace, the fastest rate in a year. Compensation per hour increased at a 1.3% rate in the fourth quarter, and rose 3% for all of 2015, the largest increase since 2007.

MarketWatch summed up Thursday’s figures with the headline, “Here’s why your paycheck isn’t going up much.”

“Rising productivity is the key to a better standard of living,” MarketWatch wrote. “Companies earn more profits and can pay employees higher wages when productivity is strong. But there’s less money to go around for workers and shareholders when productivity is low.”

Regions’ chief economist Richard Moody told MarketWatch that the “rate of productivity growth sets the economy’s speed limit. At present, that speed limit is distressingly low — around 1.3%.”

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