U.S. Manufacturing Is Important to the Global Economy

Manufacturing’s Falling Unit Labor Costs Increase Global Competitiveness

Between 2007 and 2012, the unit labor cost in the U.S. manufacturing sector declined by an average annual rate of 0.3%. Among the 19 major manufacturing economies (excluding China), just five—Taiwan, Singapore, the Czech Republic, Spain, and Japan—achieved larger declines; the remainder saw increases. The fall in unit labor costs in U.S. manufacturing occurred alongside an increase in inflation-adjusted hourly labor compensation (including benefits), which rose by an average annual rate of 0.3%. Productivity growth exceeded wage gains and therefore contributed to the cost competitiveness of U.S. manufacturers.