Gregory Burkart, Managing Director and Global Leader of Duff & Phelps’ Site Selection and Incentives Advisory practice, and Kurt Steltenpohl, Managing Director in Duff & Phelps’ Transaction Advisory Services practice and leader of Operations Consulting for the firm’s Corporate Finance practice, recently published an article in IndustryWeek titled, “Rethinking the Supply Chain During COVID-19.”
For decades, labor cost differences have been a primary influence in the continuous shift of manufacturing production from the U.S. to China. In 1980, the cost of labor in the U.S. was more than 30 times of that in China. As China became less agrarian and more of its population migrated to large cities to work in new factories, wages rose dramatically. By 2018, the U.S.-China wage gap had closed to only four times, rising approximately 200% in the U.S. but over 2,000% in China over nearly 40 years. Yet, despite the sharp rise in Chinese manufacturing wages over the last 20 years, offshoring continued. The U.S. manufacturing industry suffered, including millions of lost jobs, stagnant inflation-adjusted wages and a decline of the middle class.1
The authors wish to thank Duff & Phelps’ Danielle Dipietra, Meegan Spicer, Anthony Schum and Wesley Michael for their contributions to this article.
Read the full IndustryWeek article here.
Sources
1.Rakesh Kochhar, “The American middle class is stable in size, but losing ground financially to upper-income families”, Pew Research Center, September 6, 2018, https://www.pewresearch.org/fact-tank/2018/09/06/the-american-middle-class-is-stable-in-size-but-losing-ground-financially-to-upper-income-families/
