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In U.S., a Cheaper Labor Pool

Wall Street Journal (01/06/12) Hagerty, James R.; Linebaugh, Kate

U.S. manufacturing has become more competitive globally thanks to minimal wage growth and the ability of manufacturers to use more-flexible work practices and increased automation to make the same amount of goods with far fewer people.

U.S. manufacturing labor costs per unit of output in 2010 were 13% below the level of a decade earlier as workers became more productive, according to the U.S. Bureau of Labor Statistics. The U.S. outperformed Germany, where unit labor costs increased 2.3%; Canada, where they rose 18%; and South Korea, up 15%.

“Manufacturing in the U.S. is more and more attractive,” said Daniel Meckstroth, chief economist for the research group Manufacturers Alliance for Productivity and Innovation. Meckstroth expects the U.S. to remain mainly a services economy but thinks manufacturing is likely to stop shrinking.