The oft-underrated Harold Meyerson points out that “China’s bad economic news is not necessarily good for the U.S.“:
… With labor costs soaring in China and the yuan slowly rising, while in the United States productivity soars and the dollar slowly declines, the economic advantages that American companies reap by offshoring production begin to dwindle. A Boston Consulting Group study released this month on the return of U.S. manufacturing concludes that “re-investment in the U.S. will accelerate” as a result of these trends.
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Great news, no? Well, hold the applause for now.
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The study looks at the change in U.S. and Chinese labor costs and productivity levels over the past decade, and then projects them for 2015. China’s labor costs were 34 percent of U.S. labor expenses in 2005, the study notes, in the two regions the group chose to measure. By 2015, the study reports, the gap between American and Chinese labor costs adjusted for productivity differentials will have so narrowed that China’s labor costs will come to fully 69 percent of U.S. labor costs.
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So what’s the catch? Just this: The two regions that the group compared are the Yangtze River Delta (which includes Shanghai) and Mississippi.
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Mississippi? The state that ranks 49th or 50th in virtually every measure of U.S. living standards? Is Mississippi the new normal for an America that’s competitive in the global marketplace?
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“We made a mistake by picking Mississippi,” conceded Harold Sirkin, a senior partner and managing director at the Boston Consulting Group who authored the study. But the America that the group was measuring, he told me last week, was one defined by Southern labor standards: “fewer work rules, less unionization and lower costs” than other advanced economies. Our economy, he said, is more flexible than, say, the northern Europeans’. “With unemployment at 9 percent, the economy can flex in ways that people wouldn’t have believed. Michigan’s population is declining, while the South is growing.”
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Mississippi, here we come…