Between 2000 and 2011, the U.S. manufacturing sector’s unit labor costs declined by an average annual rate of 1.6 percent.  Based on data for major manufacturing countries (excluding China), just four—Taiwan, Japan, the Czech Republic, and Singapore—experienced larger declines.  Three additional countries recorded a decline in their unit labor costs while the remainder saw increases.

The decline in unit labor costs in the United States has occurred even though hourly labor compensation (adjusted for inflation) increased by an average annual rate of 0.9 percent over the decade, largely as a result of productivity growth.  That is, productivity growth has exceeded wage gains, thereby contributing to the competitiveness of U.S. manufacturers.

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