December 15, 2009    Volume 16, No. 20

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China Adds Almost As Many Manufacturing Jobs As Exist In The United States


By Richard McCormack
richard@manufacturingnews.com

While the United States was losing millions of manufacturing jobs over the past decade, China was gaining many millions more. China's manufacturing employment increased by 10 percent in four years, from 100.9 million workers in 2002 to 112 million in 2006, according to the U.S. Bureau of Labor Statistics (BLS). The increase was almost equal to the total number of Americans working in the U.S. manufacturing sector (14 million at the end of 2006, declining to 11.6 million in November, 2009). China has 100 million more people working in its manufacturing sector than does the United States.

The massive growth in manufacturing employment in China counters a myth propagated in America's economic circles that China's manufacturing employment is declining, just as it is in America.

Yet the number of manufacturing workers in China is equal to 33 percent of the U.S. population. By comparison, the 11.7 million U.S. manufacturing workers at the end of November represented an order of magnitude less -- 3.8 percent of the U.S. population.

China's manufacturing employment peaked in 1996 at 126 million and started declining as China privatized its state-owned manufacturing enterprises. Manufacturing employment bottomed out in 2002 and then started growing robustly due to "foreign demand for Chinese-manufactured goods growing by 25 percent per year," says the BLS.

The cost of manufacturing labor in China is also increasing. In 2006, the average annual compensation cost for a manufacturing employee in China stood at $1,939 (13,785 yuan), equal to $162 per month or $0.81 per hour. Chinese manufacturing workers whose jobs are located outside the major cities earn far less than the average. Their annual compensation was $1,282, or $107 per month ($0.53 per hour). Manufacturing workers in the cities make almost two times that amount: $2,336 per year, or $195 per month ($1.47 per hour).

Total compensation includes pay for time worked, pay for vacations and holidays, bonuses, in-kind payments, employer payments for social benefits such as workers' compensation, unemployment insurance, medical services and insurance, medicine expenses, transportation and housing funds, pension funds and taxes on payroll.

"Although hourly compensation costs in China's manufacturing sector increased relatively rapidly compared with those of other economies between 2002 and 2006, average hourly compensation in China continues to be a small fraction of that found in the United States and other developed Western economies," says the study. "Average hourly compensation costs for China's manufacturing sector in 2006 [$0.81], were 2.7 percent of the average hourly compensation costs of manufacturing employees in the United States for the same year."

In 2002, total Chinese manufacturing worker compensation costs ($0.57 per hour) were 2.1 percent of U.S. compensation costs.

To view the report "China's Manufacturing Employment and Compensation Costs: 2002 to 2006," go to http://www.bls.gov/opub/mlr/2009/04/art3full.pdf.


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