Current and Future Challenges for U.S. Manufacturing

48. Among 9 Largest Trading Partners, Only France Has Higher Structural Costs Than the U.S.

The excess structural cost burden facing the U.S. manufacturing sector more than offsets the competitive advantage it holds with regard to labor and capital costs. This “raw cost index” was just under $30 per hour in the United States, $3 less than the trade-weighted average of our nine largest trading partners. When the effects of higher structural costs are factored in, however, this cost advantage turns into a burden of $3 per hour. The excess corporate tax burden alone erases the U.S. manufacturing advantage, and the effects of employee benefits, torts, and regulatory compliance simply add insult to injury.
China, Mexico, and Taiwan enjoy significantly lower raw production costs, although they have risen rapidly since the initial study in 2003. In China and Mexico, these costs more than doubled, and in Taiwan rose by almost 50 percent, compared with a 23 percent increase in the United States.

To Competitiveness


According to the UN, U.S. Manufacturing Slipped to #2


According to the World Bank, U.S and Chinese Manufacturing Are Comparable


Manufacturing's Share Within Countries Declines


Manufacturing Exports Alone Are Not Enough to Sustain U.S. Economic Growth


The U.S. Is the #1 Destination for Foreign Direct Investment


The U.S. Ranks High But Is Not the Easiest Country To Do Business In


Inflation-Adjusted Manufacturing Has Kept Up With the Overall Economy


Measuring the Quantity of Manufacturing GDP Is Distorted by High-Tech


Traditional Manufacturing Has Not Kept Up With Overall Economic Growth


The U.S. Has a Structural Cost Disadvantage


Among 9 Largest Trading Partners, Only France Has Higher Structural Costs Than the U.S


The U.S. Does Not Keep Pace With Falling Corporate Tax Rates


U.S. Healthcare Costs Are Skyrocketing


Commercial Tort Costs Climb Again


Despite Rhetoric, Regulations Are as Burdensome as Ever