How cheap is Chinese labor? U.S. Department of Labor has the answer for the first time

Contracted by the U.S. Department of Labor, Judith Banister, famous for her estimation of Chinese death number (30 million) in Great Leap Forward, has put out a number on average wage of Chinese manufacturing workers.

According to the report, in 2002, Chinese manufacturing employees are paid on average 57 cents/hour, and those in cities are paid twice that amount. In comparison, U.S. manufacturing workers are paid   $21.11/hour, and Mexican workers are paid $2.48/hour.

57 cents/hour however is not a bad deal for many Chinese workers. Because China’s living costs are low, it is equivalent to nearly $3 dollar/hour adjusted for purchasing power.

The numbers are based on 2002 though. In the past four year, particular after 2004, wage level hikes in Chinese manufacturing factories, so the latest number should be much higher than that.  According to London-based EIU (Economist Intelligence Unit), labor costs last year has reached $1.36/hour, 72% higher than in 2001, and in 2010 they will be double again.

"It is not just wage that is going up; companies are having to buy air conditioners for employee dorms, provide better food and make the enviroment better for workers"  according to Michael Kleist, author of Global Sources' China Supplier Survey.

Banister also points out that, Western companies shouldn’t expect to pay only 57 cents per hour (not even in 2002), because foreign-owned factories are usually located in cities, and hire skilled workers who earn more. 

Evidence seems to point to the direction that cheap labor is not the only reason why Chinese excel in manufacturing. Wage level in India is much lower.

The longer reports:
manufacturing employment and compensation in China (pdf file)
Two shorter reports:
Manufacturing employment in China  (pdf file)
Manufacturing earnings and compensation in China  (pdf file)

You may also want to read a previous post on this Bulletin,  on Chinese minimum wage