Chinese factory workers figuring out that they can ask for more money…and they just might get it.
SHANGHAI (AP) — Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world’s factory floor.
Nice little bit of unfounded editorializing, there. We don’t know that they’re “hastening” anything, or that an “eventual end” is at hand. Even using the word “eventual” implies that this reporter can see the future. Which she can’t.
Still.
A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China’s low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.
Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.
Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and a few are even resuming production in the West.
Yay! Now watch America’s labor unions demand even higher wages and benefits, because, y’know, they’re going to be so much busier soon.
A few caveats:
- This isn’t going to happen tomorrow;
- even at higher wages, coastal China still has a competitive advantage over the West;
- even if the comparative advantage shrinks, there are plenty of other places besides China that can provide uber-cheap labor.
On a selfish note: if China’s wages rise, that means overall prices in the U.S. will also rise. People here spend a lot of time bitching about Wal-Mart, but Wal-Mart makes us all wealthier. I can buy a roll of duct tape and a candy bar at Wal-Mart for the same price as a roll of duct tape at the neighborhood hardware store. That’s a good thing.
When a product’s price goes down, that makes consumers of that product comparatively wealthier. The opposite is also true.
And yet, I take this as good news. Formerly impoverished people were willing to take a job. Any job. At any pay. Moving that tiny distance up the economic scale gave them the opportunity to become slightly more knowledgeable about their own economic situation, and now they’re realizing that their labor might be worth more.
Hey, I could be wrong. And this could backfire on them, if only by bringing work back to the U.S. that would otherwise have gone to them. But still. We want better-educated people who are better able to make their own economic choices. That’s a good thing, too.
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