Great insight on cheap labor, Andrew. I'm wondering what the next country is, out there, that has a large pool of female laborers that will work for free.

Because as I've read here before, it's a "race to the bottom".

I think a lot of the rest of Asia outside China is already played out... Indonesia, Malaysia, India, and Thailand all have higher labor costs than China at this point I think. Vietnam may still be lower at this point but you would just be moving a couple million workers over from the textile sector to electronics assembly.

Maybe there's a chance some of this work could be done in the Middle East or Africa some day. Certainly not today with the religious/political situation there currently, but possibly 20 years down the line, if things settle down and everyone turns back from the road to Armageddon.

It sure would be interesting for me to build a computer with an Iranian-made motherboard some day... after all if I showed all my Chinese-made components today to a Rip Van Winkle who just woke up from the 1970s they'd be similarly shocked.

-Adam

This is a good article. I would add that, when reading these things, one needs to be on the look-out for actual values. There was an article (NYT?) a few weeks ago on this labor shortage. The factory owner who was complaining was finding it hard to get labor at $160/month. Assuming a 60-hour week, that's less than $1/hr. Even throwing in the cost of a bunk in a 'hot bed' dormitory and three (cheap) meals/day, that's got to be no more than $1.50-$2.00/hr. Assuming a 72-hour week (6 12-hour days), and it's probably back to $1/hr including room and board.

This all implies not so much that we have a 'labor shortage, as that we've found the current 'floor' labor rate for unskilled labor in the global economy, and it's $1-$1.50/hr.

Which means that, in the US, minimum wage is not competitive for any importable labor function (imported manufactured goods counting as being partially imported labor).

Thanks for this interesting article. Having followed China labor condition, via this website http://www.chinalaborwatch.org/ and contacts in China, I agree with Andrew that this "shortage" at the lowest wage level is actually a good thing for the young workers from the countryside. However, as pointed out by a previous post, the "chase to bottom" will hardly end in China. My hope is that wherever the first links of the global supply chain relocate to, the worldwide communication facility and the increasingly aware and empathetic consumers will help to improve the quality of worker's life there.

These labor shortages are so far mostly confined to the coastal regions, and even there, mostly to the hottest cities. I also tend to believe these "shortages" are hitting mostly the lowest paying factories because none of our American or European clients have ever even mentioned it. For them, the toughest thing is finding good managerial talent.

www.chinalawblog.com