Wages Rising in China

You might want to take a look at this article from the New York Times on the price of labor in China:

Chinese wages are on the rise. No reliable figures for average wages exist; the government’s economic data are notably unreliable. But factory owners and experts who monitor the nation’s labor market say that businesses are having a hard time finding able-bodied workers and are having to pay the workers they can find more money.

And higher wages in China are likely to lead to higher prices in the United States — at the mall, at the grocery, even at the gas pump.

Chinese companies are already passing along some of their higher costs to overseas customers. Prices for goods from China, after years of gradual decline, have risen 1.2 percent since February, according to the Labor Department. July’s increase was the biggest yet: 0.4 percent compared with June. Chinese companies and contractors are also passing on the cost of the rising value of their currency, the yuan, up 8.8 percent against the dollar in the last two years.

For decades, many labor economists said that China’s vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this reasoning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities.

Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say.

This is a better than average article and China-bashing is thankfully kept to a minimum. The article points out several noteworthy things:

  1. Wages are rising in China.
  2. So are the prices of Chinese goods.
  3. So is productivity.

There are a couple of things the article doesn’t point directly but some of the items it points to should make us want to consider. First, we simply have no way of knowing how much of China’s growth is due to removing relatively unproductive labor resources from agriculture to manufacturing. That’s what the Soviets did, too, and they were the wonders of global development for quite a while as a result.

Second, there’s one group of Chinese workers that’s particularly in demand and particularly hard to come by: young women. They’re in short supply as a direct consequence of the One Child Policy and particularly in demand because they’re so well-suited to the light manufacturing that’s spurred a lot of China’s growth. However, young women are valuable as today’s mothers, too. It’s a trade-off.

Watch the demographics.

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