Labor Costs Rise Far Faster for Competitors Than U.S.

U.S. labor costs rose more slowly last year than in all but one of the 11 countries that are major competitors of the United States, the Labor Department said Wednesday.

The rise in U.S. labor costs--0.3% from 1987 to 1988--was dwarfed by increases such as 17% in Taiwan and 11.2% in South Korea.

Of 11 countries for which the Bureau of Labor Statistics gave figures, only France recorded a decline, at 0.8%.

While U.S. workers were still earning more than employees in most of the other countries, the fall in the value of the dollar meant that a Japanese worker was catching up fast to his U.S. counterparts.

The average Japanese worker earned $13.14 an hour in 1988, a 10.5% increase over 1987. The average in the United States was $13.90.

In eight Western European countries, the costs were already higher than in the United States: $19.43 in Norway and $18.07 in West Germany, for example.

In South Korea, however, the cost of an average hour’s labor was just $2.45; in Taiwan, it was $2.71 an hour.

That is, an employer could hire more than five Taiwanese or South Korean workers for the cost of hiring one American. This helps explain why owners have moved production lines out of the United States.

Not all labor costs go to workers as wages. The Labor Department figures include employer contributions to private plans and payroll taxes for social services, such as pensions and health care, from which workers benefit.

These expenses are generally higher in Western Europe than in the United States, and higher in the United States than in the countries on the Pacific Rim.