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Will world run out of cheap labor?

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webmaster | 05/06/13

Looking through my closet (an activity that always results in vows to “clean this thing up”), I noticed recently that fewer labels on clothing items bear the label “Made in China” than used to be the case.

That’s because the Chinese are moving up in the world, The Wall Street Journal reports, and are increasingly disinterested in working in garment factories.

The labels I see on my clothes are more likely to say they were made in Thailand, India, Bangladesh or Honduras these days than in China.

Manufacturing, being what it is, always makes its way to the lowest-cost labor. Depending on your point of view, it is capitalism at work, wage slavery or a little of both, leading to a situation that would seem intolerable to even the minimum-wage American worker.

For example, the workers in the clothing factory building that collapsed in Bangladesh last week were earning about 21 cents an hour. Add to that the fact the workers don’t get any benefits, don’t get overtime premiums and don’t have any employment rights.

Even workers in India, a former low-cost labor pool, make more than that.

Many of us recall when Japan was the low-cost leader in the labor market. Today, Japanese workers enjoy wages that in many cases are higher than those in the United States.

The Journal reports that China’s manufacturers are having a tough time finding and holding employees because Chinese workers want to be employed in offices, where they can use and learn information skills that will give them a chance at higher pay in the future. Also, manufacturing work is hard on the body, while office work is easier in that respect.

Is the world running out of lower-cost labor? The Chinese are beginning to develop factories in Africa and other Asian countries to tap low-cost labor in those countries, but that may be the end of it.

What is likely to happen down the line is that the low-cost labor that has made inexpensive products available to consumers in wealthier nations may run out. The rest of us will have to make our own stuff, or buy it at increasingly higher costs.


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