This piece is a near-complete load of twaddle.
Want to know why manufacturing employment has been going down?
It isn’t because wages are too high in the US.
It is because the US has been exporting manufacturing to China. And why do they keep going to China?
No. It has to do with currency pegs and absurdly low wages for the Chinese labor force.
How low?
$0.95/hour for urban manufacturing workers, $0.41/hour for rural manufacturing workers, as of 2002.
The BLS estimates Chinese labor costs are 3% of what US manufacturing labor costs are.
OK, so you say that US workers are overpaid. That’s nice. Now, how do you think Mexican workers, or Brazilian workers are paid? Too much?
Well, the total labor costs for Mexico or Brazil are about four times what they are in China. Are manufacturing employees in Mexico making out like bandits?
Didn’t think so.
The free trade advocates who think that the US can compete with China based on nothing but cutting regulations, unions and comp packages are simply full of crap. None of that will address the effective subsidy that China gives their manufacturing sector with a currency peg, and there is no way that manufacturing wages in the US will ever come close to those in the PRC.
http://www.bls.gov/fls/chinareport.pdf
Low wages in China are not low when output per dollar of input is considered. Productiveness of those low wage workers would be less than that of American high paid workers if the tax and regulation burden were equal. Remove all the excess regulatory and tax costs and American workers are more productive- produce more gain for their employers- in the US than in China or anywhere else. Tax and regulatory costs are not amenable to employers’ attempts to reduce costs per unit of output. Employee costs are. In order to remain competitive when tax costs are high and rising and unavoidable and regulatory costs are high and rising and unavoidable, then labor costs must be reduced. Automation is one response and offshoring is another. Our tax and regulation regime is what makes offshore labor relatively more productive than domestic. The prospect of the tremendous new costs that are coming-some already arrived- is a huge new incentive to send manufacturing offshore.
Offshoring does not occur because offshore labor cost is less per hour than American labor cost or because it is less per unit of product(it is not). It is because labor cost PLUS regulatory and tax costs is higher per unit of output in the US than it is offshore.
Can you post that nifty chart of what the U.S. manufactures? Please be sure to include food & beverages.
Those who insult have already lost the argument.