U.S. Manufacturing Labor Is Cheaper Than Many Realize

Firms that make products can help ease unemployment

The argument usually made in support of the flight of manufacturing capacity out of the U.S. is that labor in this country has become far too expensive to make goods efficiently. Hence the trend of outsourcing product-making to countries such as China, which has experienced a sustained economic boom because of it. The latest and greatest consumer products are much more often than not assembled abroad these days. Look where your iPhone is made, for example.

But American manufacturing labor is surprisingly less expensive than many are aware. According to an exhaustive report put out by the Bureau of Labor Statistics, the U.S. is significantly cheaper than many first- (and even, occasionally, second-) world rivals when it comes to worker compensation. The typical American blue collar laborer was paid $34.74 in 2010. Compare that to Australia, which clocked in at $40.60, Germany ($43.76) and Sweden ($43.81). Germany in particular continues to be a strong manufacturing nation. America was even in the ballpark with Japan (which pays its workers an average of $31.99), a longtime and still-strong manufacturer. This despite the gains made in nearly every important foreign currency against the U.S. dollar, which was weak in 2010.

Further, that hourly wage hasn't grown much of late. The American figure increased less over the course of one year than that of low-cost Mexico and Philippines, or busy Japan, South Korea and Canada. So perhaps it's not surprising that - again, contrary to public perception - American manufacturing activity is creeping upwards again - in late 2011 shipments grew nearly 12% year on year across all categories surveyed by the U.S. Census Bureau. In certain job markets in the U.S., improvements in the employment rate are boosted in no small part by this trend, as companies hire more hands-on labor to match the rise in their manufacturing.

There's a flip side to the good wage numbers, though. Although relatively low-cost compared to our first world counterparts, we're still pricey when matched against ambitious smaller nations. For example Taiwan, which pre-dates China's accession to the world's factory and still ships its products throughout the world, had an hourly manufacturing wage average of only $8.36, while Mexico stood at a mere $6.23. Even when shipping costs are added to those salary figures, it's often far cheaper to make a product there than to do so domestically.

Regardless, these statistics provide hope that one corner of our economy can help continue to drive down the national unemployment rate. Hiring workers to make things in America isn't as much of a money-bleeder as many assume, so companies shouldn't be shy in adding to their employment rolls once they need a product made. This country could use those jobs.