A Simple Graph Showing the American Manufacturing Worker Is Suddenly an Incredible BargainQuicklink submitted By Amanda Lang Permalink
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|This month's Atlantic magazine predicts that we are on the verge of a U.S.-based manufacturing renaissance, as companies see the advantages to making more goods at home, such as more control over the final product, lower energy costs from moving goods across an ocean, and a falling "wage gap."
Simply put, U.S. factory workers are a much better deal than they were just ten years ago.
Here is a T. Rowe Price graph of unit labor costs -- basically, that's a measure of how productive our manufacturing workers are -- which shows that U.S. has spent the last ten years gaining on some of our key trading partners. (When these lines are going down, that means U.S. factory workers are getting cheaper relative to the competition...) ... so that's exactly what's happened. Chinese workers used to be a huge discount for American companies. But they've lost half of that productivity discount...