Productivity

Differences Between Countries

With our higher wage rates and a myriad of health, safety and environmental laws to contend with and comply with, one would think American business would be at a great disadvantage to other countries around the world.

But the ace in the hole for U.S. manufacturers is productivity, according to a study from the Federal Reserve Bank of San Francisco. The study compared wage rates and productivity in the United States with those in five developing countries - Korea, Malaysia, Mexico, the Philippines and Thailand.

  • Korean workers make about 30% of the average U.S. wage.

  • Mexican workers, about 25%.

  • Malaysian, Philippine and Thai workers, less than 20%.

Using 1990 data, the study found that these workers are not nearly as productive as American workers.

  • Korean workers are about 45% as productive as Americans.

  • Mexican workers, a little more than 30%.

  • And the rest, around 20% as productive or less.

Developing countries tend to be net exporters of simple labor-intensive goods and net importers of more sophisticated products.

Another study, done some years ago, found that high tariffs can save jobs, but at a cost many times greater than the wages the workers earn. For example:

  • The cost to save one dairy industry job was $220,000 per year.

  • Non-rubber footwear jobs cost $55,000 each to save.

Instead of imposing further costs on American consumers through tariffs, the regulatory mandates that provide few benefits at high costs should be junked.

Source: Perspective, "America's Productivity Secret," Investor's Business Daily, November 1, 1995.

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