“There is evidence here of reshoring because of transportation costs and lead times,” Mr Bergmann said. “The global supply chain allows you to chase lower cost of labour, but the total costs are reflected in the decision on where you produce for a given geography.”The decline of the American middle class has finally reached the point that American workers can compete against Chinese peasants. Victory is in sight!
How much have things changed since the start of this Depression? A lot.
Whereas the gap in labor costs between the two countries was about $17 per hour in 2006, that could shrink to as little as $7 per hour by 2015,With any luck our corporate masters will soon be installing suicide nets outside their American factories too.
A decade ago, a factory worker in China made 58 cents an hour. Today, wages are more than $ 3.00 and there are predictions of $6.00 an hour by the year 2015.$3 an hour?!? Who do they think they are? Rockefeller? No wonder manufacturers are moving back here.
Time for some simple math: $17 - $7 = $10.
The Chinese peasants are making roughly $5 an hour more, thus we're getting $5 an hour poorer.
Oh, sorry. I mean $5 an hour "more competitive".
Of course its important to analyze all the reasons for this sudden surge of love for the American worker.
Boston Consulting Group, which advises companies on their supply chains, recently made an extended case that the United States is like the China of wealthy countries (awesome analogy!) because of how cheap it is to make stuff there.
What it shows is that labor and energy costs are a lot lower in the US than in Europe and Japan, and are no higher, combined, than in China. Overall, in 2015, manufacturing in the US will cost only about 5% more than in China.
5% isn't much, and considering the way that median wages are dropping here in The States, we should reach Chinese peasant wages in no time at all.
Already 40% of workers earn less than the 1968 minimum wage after adjusting or inflation.
Of course its important to look at the key reasons why the American worker is getting so darn cheap.
The report notes that a significant reason for lower US labor costs is that it’s easier to fire people and shut down factories:Doesn't reading that leave you with a warm, fuzzy feeling all over? The American worker is getting cheaper because the American worker is the most disposable of any developed nation.
All that love for the American worker shows up in all sorts of ways, such as vacation days.
Or should I say, lack of.
Some of the more alarmists may compare the current condition of workers to medieval peasants, but that wouldn't be accurate.
Plowing and harvesting were backbreaking toil, but the peasant enjoyed anywhere from eight weeks to half the year off... In fact, economist Juliet Shor found that during periods of particularly high wages, such as 14th-century England, peasants might put in no more than 150 days a year.And lets not forget that 38% of workers get no sick leave.
As for the modern American worker? After a year on the job, she gets an average of eight vacation days annually.
Another number you need to remember is 91%.
Just in time for the Labor Day "holiday," a new survey reveals that nearly all employed Americans—91 percent—do work-related tasks during their personal time.Businesses don't have to pay for vacation time or sick time, and get a whole bunch of unpaid hours of work above and beyond the normal 40+ hours.
A total of 37 percent of employed Americans work 10 or more hours per week during their supposed personal time, compared with 27 percent of Australians and 18 percent of British workers, according to the survey of 2,034 workers.
All that translates into higher corporate profits that comes directly from paying less compensation (at least to non-CEOs).
Before everyone gets excited about those sweatshop jobs being reshored, let's keep it in perspective.
So far, the effect on jobs has been modest. Since January 2010, the United States has added 520,000 manufacturing jobs — and of those, just 50,000 have come from overseas firms moving here, according to the Reshoring Initiative. (That includes 115 in the new Lenovo plant.) That’s a decent number, but it pales beside the 6 million factory jobs that the Bureau of Labor Statistics says vanished between 2000 and 2009.I wonder if a time will come when our leaders will decide not to compete with the wages of workers in other 3rd world countries.
People who are interested in an alternative to the current economic policy should go to the last link of my diary.
"Should job exports continue apace, the U.S. will be a Third World country in 20 years."
- Paul Craig Roberts, in the late 90's
"[They say] if you had not had the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or dear depends upon what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man."
- President William McKinley