NPR: China's Labor Advances May Affect U.S. Prices

[Omaha Steve]

http://www.npr.org/templates/story/story.php?storyId=89321888

NPR audio story is at link.

Morning Edition, April 3, 2008 · As Chinese workers gain more power and employment choices, the country's economy has had to adjust. And these changes may soon impact prices on goods in America. Host Steve Inskeep talks with NPR's Frank Langfitt and Alexandra Harney, author of The China Price, about what the future may hold for the world economy.

In recent years Chinese workers gained leverage due to an unanticipated labor shortage, Langfitt says.

"This gave more workers a lot more power vis-a-vis management," he says, adding that while people were desperate to have jobs in the '90s, today they may walk out of a factory if they don't like their job or the working conditions.

This shift in power has led to increased costs for Chinese manufacturers.

"China used to be so cheap they were unbeatable," Harney says. "The China price was the cheapest price you could get for anything around the world, but now that China is becoming more expensive, thousands of factories are starting to close down in Southern China."

As a result, Harney says, American companies will start paying more for goods they buy from China.

"I think that we are going to start seeing more and more of this show up on American price tags this year and next year," she says. "Some retailers and importers are telling me that they are already starting to have to raise the prices in the U.S."