Monday, June 8, 2009

China's Manufacturing Jobs Surged As American Jobs Disappeared

While the United States was losing 1.4 million manufacturing jobs from 2002 to 2006, China was substantially increasing the number of workers in its manufacturing sector, according to a new report on Chinese manufacturing employment and compensation costs from the Bureau of Labor Statistics. Manufacturing employment in China during those five years increased by 10 percent to 112 million, about 100 million more than the number of manufacturing workers in the United States.

Manufacturing employment in China bottomed out in 2002 at 100.7 million, down from a high of 126 million in 1996. "In the late 1990s, privatization of China's manufacturing establishments and intense global competition brought increases in labor productivity accompanied by a drop in manufacturing employment," says the new BLS study. But things started to turn around in 2002, with foreign demand for Chinese-manufactured goods growing by 25 percent per year. "By the end of 2006, China's manufacturing employment had increased once again to 112.63 million, nearly eight times the level of manufacturing employment in the United States (14.16 million)."

Average compensation for Chinese manufacturing workers increased by more than 40 percent from 2002 to 2006 to $0.81 per hour, or $162 per month (and $1,939 per year). Total compensation cost for a manufacturing worker in China is only 2.7 percent of the average hourly compensation cost of a manufacturing employee in the United States. "Because hourly compensation costs in China have grown at an annual rate three times that of the United States during the five years covered in this series (9 percent and 3 percent, respectively), this percentage has edged higher, starting from 2.1 percent of U.S. compensation costs in 2002 and increasing slightly each year," notes the study.

But Chinese manufacturing employees located in rural areas make far less than the average. Total compensation for a rural manufacturing employee is only 53 cents per hour. In urban areas, the average is $1.47 per hour. Total compensation costs include wages, employer payments for social benefits such as workers' compensation, unemployment insurance, health insurance and pension funds. It includes sick leave, income guarantee insurance, life and accident insurance, illness compensation and family allowances.

Not only are there a lot more manufacturing employees in China, but the amount of hours they are working also increased substantially during the 2002 to 2006 period. "The published data on weekly hours worked in urban China showed a sharp increase from the 2003 to 2004 period to the 2005 to 2006 period, not only in manufacturing, which exhibited a sudden 9 percent increase but in most other economic sectors as well," says the study. This big increase in hours worked "is unusual from an international perspective," says the BLS report. The report, "China's Manufacturing Employment and Compensations Costs: 2002 - 2006," is located at


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