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The Pay Model - 3

The document presents data on hourly compensation costs for manufacturing workers in various countries from a 2006 Bureau of Labor Statistics report. The key details are: - China had the lowest hourly wage at $0.57, followed by Mexico at $2.50 and Brazil at $3.03. The U.S. wage was $23.17. - Some argue that differences in wages lead to job losses in countries like the U.S. to lower-wage nations. However, productivity also needs consideration - Chinese productivity is about 10% of the U.S. while Mexico is 25%. - In addition to wages, factors like quality of data and completeness of comparisons between nations are important to consider in international labor

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84 views1 page

The Pay Model - 3

The document presents data on hourly compensation costs for manufacturing workers in various countries from a 2006 Bureau of Labor Statistics report. The key details are: - China had the lowest hourly wage at $0.57, followed by Mexico at $2.50 and Brazil at $3.03. The U.S. wage was $23.17. - Some argue that differences in wages lead to job losses in countries like the U.S. to lower-wage nations. However, productivity also needs consideration - Chinese productivity is about 10% of the U.S. while Mexico is 25%. - In addition to wages, factors like quality of data and completeness of comparisons between nations are important to consider in international labor

Uploaded by

AnneXu
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The Pay Model • 3

China* 1 $0.57
Mexico im $2.50
Brazil FI~1 $3.03
Czech Republic -••^.:. -,;;J$5.43
Taiwan 1 1 $5.97

Singapore .••.., - 1 $7.45


Korea ; L,,,^ :, ,, :„-,,] $11.32
Spain , . •„ 1 $17.10
Italy „ : • .. :. • • • - ••- i$20.48
Canada •••• ' - - ' •• - • ' 1 $21.42
Japan " .... - .,... - ....($21.90
Ireland : , , . 1 $21.94
Australia „ . • -- . -. '•• ' '"-'• • .. 1 $23.09
U.S. 1S23.17
France . . "' ... 1 $23.89
U.K. . . :. • -: 1 $24.71
Sweden • • , " • 1 $28.42
Netherlands . ' - • 1 $3U.7b
Germany - "• - - "" • ' I $32.33
Norway . -, • .. . _ J $34.64
'Data on China's labor cost is an estimate from 2002 information, released by the China Labour Agency.
Hourly Compensation Costs for Manufacturing Workers (in U.S. Dollars)
Source: Bureau of Labor Statistics, April 2006.

Some in a society attribute job losses (or gains) to differences in compensation. People in the United States
complain about losing manufacturing jobs to Mexico, China, and other nations. Exhibit 1.1 reveals that the
hourly wages for Mexican manufacturing work are about 11 percent ($2.50/hour) of those paid in the United
States ($23.17). China's estimated 57 cents/hour is about 2.5 percent of the U.S. rate and 23 percent of Mexico's.
However, the value of what is produced also needs to be considered. Manufacturing productivity in China is
about 10 percent of that of U.S. workers, while Mexican worker productivity is 25 percent of U.S. workers.7

7 U.S. Department of Labor, Bureau of Labor Statistics, "International Comparisons of Hourly Compensation Costs for Production
Workers in Manufacturing, 2005"; Marie-Claire Guillard, "A Visual Essay: International Labor Market Comparisons," Monthly Labor
Review, April 2006, pp. 33-40; www.bls.gov/fls/flsichcc.pdf; For a thorough discussion of quality and incompleteness of data, see
Judith Banister, "Manufacturing Employment and Compensation in China," Monthly Labor Review, July 2005, www.bls.gov/opub/
mlr/2005/07/art2full.pdf, and J. Banister, "Manufacturing Earnings and Compensation in China," Monthly Labor Review, August 2005,
www.bls.gov/opub/mlr/2005/08/art3full.pdf. For Mexican manufacturing labor costs, see Hourly Compensation Costs for Production
Workers in Manufacturing Industries: Mexico 1975-2004, U.S. Department of Labor, Bureau of Labor Statistics, Office of Productivity
and Technology, May 19,2006. Also see Thomas Friedman, The World Is Flat (New York: Farrar, Straus & Giroux), 2006.

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