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Home Publications Blogs Beat the Press Lessons on Economics for NYT: China's "Labor Shortage"

Lessons on Economics for NYT: China's "Labor Shortage"

Friday, 08 February 2013 05:38

An article on Hewlitt-Packard's decision to require suppliers in China to not use involuntary labor from students told readers:

"Enforcing workplace rules in China has always been difficult, as even Chinese laws on labor practices are flagrantly ignored by some manufacturers as they struggle to keep up with production demand amid labor shortages. The Chinese government announced last month that the nation’s labor force had begun to shrink slowly because of the increasingly rigorous one-child policy through the 1980s and 1990s."

In a market economy, firms that can't operate profitably paying the prevailing wage are supposed to go out of business. This is what happened to millions of small farms in the United States between 1860 and 1960. These farms could not afford to pay wages that were competitive with the wages that workers could get in manufacturing.

If the NYT were covering this process today presumably it would be complaining about the labor shortage resulting from the failure of people in the United States to have enough children. Of course to workers at the time this process implied an enormous improvement in living standards. The same will be the result of the news that the NYT seems to think is so dire, that China's labor force is now shrinking.

Comments (6)Add Comment
People Who Live In Glass Houses
written by Robert Salzberg, February 08, 2013 6:03
In the United States, our farms, meat processing plants, and landscape companies are filled with undocumented workers that violate our labor laws.

Women, people of color, and workers over 50 are routinely discriminated against across the U.S. in violation of our labor laws.

At least in China, they have universal health care, high speed rail and cheap DVDs...
America Does Have A Farmworker Problem Today Due to Low Wages
written by Robert Salzberg, February 08, 2013 6:27
A few miles down the road here in Manatee County, Florida, there are fields filled with tomatoes left to rot because the farm owners refused to pay a few pennies more per pound to have them picked.

Last year, many strawberry farms in Florida let their crops rot and collected the insurance rather than pay to have them picked and lose more money.

In Alabama, where they passed aggressive anti-immigrant legislation, farmers can't get their crops harvested.

written by Union Member, February 08, 2013 6:28
STUDENTS...INVOLUNTARYLABOR! SCHOOL ADMINISTRATORS RECEIVE BONUSES. This article, including the reporting itself, is seething inhumanity. Nixon help us! Nothing but FEAR and LOATHING for Kristof/Friedman.
written by skeptonomist, February 08, 2013 8:24
Although the NYT sometimes pays lip services to labor in its editorials, its news coverage is strongly biased towards the views of capital or employers, even outside the business pages. And other papers are worse. In the US, the economics profession is also slanted in this direction; even "liberal" economics pundits tend to frame international competition in terms of the best way to reduce labor costs.
chinese labor
written by Jennifer, February 08, 2013 8:29
It is kind of amazing that the NYT and others are expressing such concern about the decrease in the Chinese population. This is really a positive thing as this means employers in China should have to improve working conditions and/or raise wages to make factory work more attractive. And there has been evidence that the Chinese themselves are putting up with less and asking for more. China has been the driving force behind the decrease in wages and labor conditions across the world, I guess now that this is changing the neo-liberals are freaking out.
written by Brett, February 08, 2013 10:22
Where did you get the impression that the NYT was complaining about rising wages in China? They're just saying that it's a shift to see the big electronic companies start to push hard on their Chinese suppliers to follow decent labor rules. The power of publicity . . .

In any case, this will presumably give the Chinese something extra to do with all that capital that they're piling up in the state banking system. They can use it to pay for the robots they'll need as the labor force continues to shrink.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.