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Home Publications Blogs Beat the Press Rising Prices for Apparel: Good News for Workers?

Rising Prices for Apparel: Good News for Workers?

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Saturday, 18 January 2014 09:14

Floyd Norris has an interesting piece showing that apparel prices are now rising more rapidly than other prices, after almost three decades in which they sharply trailed other prices. This is potentially very good news for most of the country's workers.

The forces at play here are the fall in the value of the dollar and the rise in wages in developing countries, most importantly China. While the availability of low-paid manufacturing workers in the developing world has placed severe downward pressure on wages over the last three decades, as these wages rise this pressure may be alleviated in the years ahead. There is a still a large gap in wages, but the recent relative rise in apparel prices indicates that this gap is narrowing. This will make U.S. workers better positioned to share in the gains of economic growth going forward.

Comments (8)Add Comment
Dean, you sound just like the neo-liberals over in Europe
written by Auburn Parks, January 18, 2014 9:43
"If only American wages would go down in relative terms then we could be more competitive and export more."
Lets all cheer for reduced wages here at some all so we can produce real goods and services for some other country to enjoy, Yeah!
How is this a progressive POV?
Getting higher wages seems progressive to me
written by Dean, January 18, 2014 9:55
Auburn Parks,

not sure what you're talking about. I just wrote a post suggesting that workers in the U.S. would get higher wages. Were you responding to something else?
Dean, you are overlooking the foundation of trade relations.
written by Auburn Parks, January 18, 2014 10:15
If American wages decline relative to the rest of the world, then yes we would export more and there would be more domestic jobs and higher wages domestically ceterus parbius. But this would only be true until American wages grew again, relative to the rest of the world, to the point that American workers would no longer be as competitive shifting production back to the lower cost countries. Right back where we are now. Your POV directly contradicts itself.

More "competitiveness" = lower relative wages.
There is no way around it, if you want the USA to be a net exporter, then either
A) US wages must remain below a threshold level relative to other competing nations or.
B) Have restrictive trade policies that keep production at home but increase prices of goods domestically.

Americans obviously don't prefer more expensive American made goods over cheaper foreign made goods.
More "competitiveness" != lower relative wages
written by Bill H, January 18, 2014 10:24
It also can result from higher productivity, or from a lower relative value for the currency, a point which Dean made in his original post.

Another issue adding to rising wages in US is rising costs for overseas shipment as oil remains high and cost of operation of ships rises.
Oil prices are not high
written by Auburn Parks, January 18, 2014 10:36
Oil prices are below what they were in 2006 in real terms,and for that matter lower than they were in 1980.

http://zfacts.com/zfacts.com/p/35.html

I am all for productivity gains as they increase standards of living, however they never outweigh the wage cost comparison. American workers are vastly more "productive" then Chinese workers yet its no match for the wage disparity, as evidenced by the trade balance.

America's biggest export is the US dollar. Why do we care if Cambodia wants to exchange their labor for our fiat currency anyway? Its not like we can ever run out of our national currency.
huh?
written by Squeezed Turnip, January 18, 2014 11:09
f Cambodia wants to exchange their labor for our fiat currency anyway? Its not like we can ever run out of our national currency.


You do know the difference in population sizes between the two countries and what that implies for labor, right? Arithmetic, Auburn. It's useful.
Squeezed Turnip
written by Auburn Parks, January 18, 2014 11:21
That response is a complete non-sequitur.
I say the sky is blue and you say the world is round, they have nothing to do with each other
how long is "Years Ahead"
written by John Parks, January 18, 2014 11:38
Yes, as wages in manufacturing jobs in China increase 10-20% per year, other work forces will be accessed until they too can no longer be of use.
There is a long list of populations yet to be properly exploited before US workers will be considered again.

I just received a shipment of promotional apparel from a US company that does logo embroidery etc and out of curiosity I looked at the origins of the various pieces. Until the standard of living level increases in countries like Madagascar, Mexico, Dominican Republic, China, Honduras, Guatemala, and Vietnam (in addition to Bangladesh which the author mentions) the US worker will not compete in the apparel jobs market for many years.
Showing a graph of China's 20% share means next to nothing without showing the graphs of many other nations, including the US. I think the US workers are standing w-a-y back at the end of the line before they have the opportunity (?) to take those jobs again.

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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.

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