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Cheap Labor? Rising Wages and the End of Manufacturing in China

Made in China. Or maybe not.  Once a place where companies went to find cheap labor, China is becoming less desirable for companies looking to manufacture very inexpensively.  Wages are on the rise.  Time.com covers the rapid increase in labor costs for manufacturers in China, detailing one CEO whose manufacturing costs have risen by 50 …

Made in China. Or maybe not.  Once a place where companies went to find cheap labor, China is becoming less desirable for companies looking to manufacture very inexpensively.  Wages are on the rise.  Time.com covers the rapid increase in labor costs for manufacturers in China, detailing one CEO whose manufacturing costs have risen by 50 percent over two years (the article notes that real wages for manufacturing workers have grown 12% per year over the last decade). The average manufacturing wage of $3.10 per hour is still drastically under the US’s average of $22.30.

These wage increases have implications across the globe, and not just for business owners. The living conditions for Chinese workers are improving and they are increasingly able to find jobs that pay well enough to work near their home. As business owners are taking their business elsewhere, many other countries are seeing an influx of jobs.

And these manufacturing jobs may not just move to poorer countries like Laos, Cambodia, and Vietnam, but may also come back to the United States.  As the unemployment rate reached 9.2% in June, an increase in manufacturing jobs would be an extremely positive development for the US.

 

Read: The End of Cheap Labor in China

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