The Ironic Value of Labour

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***Featured on Writer Beat***

With technology rapidly advancing and more and more people losing their jobs to machines, the value of labour in the tech-heavy 21st century is truly ironic.

With Trump imposing high tariffs on Chinese imports, China has threatened to stop exporting altogether. An article I read online, inadvertently suggested that this will lead to production taking place in the US itself, and the cost of (if we are to take Apple as an example) the iPhone to increase drastically. But the question here is why?

Just how cheap could labour be in China that it overpowers even transportation costs?

In a world soon to be entirely dominated by machines and robots working on A.I, I was surprised to know that labour cost accounts for up to 25% of the entire cost of the product. And so I calculated the approximate cost of labour per piece in China, and in the US. I won’t delve into the math, but I’ll give you the basic values:

Minimum wage in the US: ~ $10 = the average day’s wage in China

Time taken to produce one piece = 2 days

After running some calculations, I found out that the average cost per piece (using the above-mentioned values), comes out to be ~$50 in China (but it can be up to $20 less). The average cost in the US is around $100. This lets the company save up to $70 per piece. Factor in a number of pieces manufacturers actually produces, and you’ve already saved $350,000 on a small-sized shipment!
Image Source

Furthermore, the labour there tends to be a lot more productive than the typical American labour (no racism, discrimination, labelling, segregation, common assumption or any other offence intended). This boosts per-worker output, thereby giving the company even more profit for the same amount of labour. To further decrease the cost, land in countries like China and India is a LOT cheaper than the US.

Now, I hear you arguing – but transportation costs are huge…that should make a difference. Well, yes and no. Yes, transportation costs are sizeable, but no it doesn’t really make much of a difference. Allow me to explain.

Transportation is done in bulk and is carried out for different firms, all together. As the per-piece cost is already slashed a considerable amount, and the total transportation cost is relatively low, this doesn’t really affect the firms much.

Another significant example is Australia. All the refineries there have been shut down and moved to other locations such as Myanmar and Indonesia, for the same reasons as discussed above. The only difference being the transportation cost is now further reduced as the two locations are much closer to each other when compared to USA and China.

Image source

For those of you who don’t know, that’s a Garuda – Indonesia’s national emblem.


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20 thoughts on “The Ironic Value of Labour

    mandomradness said:
    March 5, 2017 at 5:18 pm

    Interesting stuff

    Liked by 1 person

      Ajinkya Goyal responded:
      March 5, 2017 at 5:25 pm

      Glad you liked it 😁

      Like

    Shavet said:
    March 5, 2017 at 8:10 pm

    That’s a great trail of thought. A little improvising and can be brought down to why a country is profoundly dominant of the other or why one drives the world’s economy. Looking forward to more reads. Good luck

    Liked by 1 person

      Ajinkya Goyal responded:
      March 5, 2017 at 8:14 pm

      Glad you liked it 😃
      Thanks for the suggestion. Will definitely incorporate it in a future article.

      Like

    imfunz said:
    March 6, 2017 at 2:34 am

    Spot on Article..

    Liked by 1 person

      Ajinkya Goyal responded:
      March 6, 2017 at 7:38 am

      Thanks! Glad you liked it 😊

      Like

    Kristen Walker said:
    March 6, 2017 at 11:07 pm

    Great article!

    Liked by 1 person

    sonomacountyvaping said:
    March 7, 2017 at 5:34 am

    Interesting and scary thought about how the world will be dominated by machine operators. Which could in turn take over many jobs that people do right now. I am a college student and studying graphic design and my hopes are that a machine will not be able to take over my creative field of work, but you never know. I would greatly appreciate it if you would follow my new blog and check me out if you have time. Either way thank you for your inspirational writing. -bel

    Liked by 1 person

      Ajinkya Goyal responded:
      March 7, 2017 at 7:38 am

      Thanks for the comment, Bel. And don’t worry, I personally don’t see robots being able to take over a graphics design job.
      I’ll definitely check out your blog too!

      Liked by 1 person

    KuminKueche said:
    March 8, 2017 at 1:48 am

    Great post, well done!!

    Liked by 1 person

      Ajinkya Goyal responded:
      March 8, 2017 at 7:11 am

      Thanks a lot! Glad you liked it 😁

      Like

        KuminKueche said:
        March 9, 2017 at 1:23 pm

        I would appreciate it a lot if you check out my blog and give me feedback! Thanks in advance and see you there!

        Like

        Ajinkya Goyal responded:
        March 9, 2017 at 1:49 pm

        I sure will!

        Like

    boompawolf said:
    March 11, 2017 at 6:00 pm

    One of the first political articles I’ve seen without any bashing. Well written.

    Like

    http://adriaticsearch.com/author/wallacemedl/ said:
    April 6, 2017 at 4:12 am

    Zufaellig bin ich auf eurem Portal gelandet und muss feststellen, dass mir
    diese vom Design und den Informationen richtig gut gefaellt. http://adriaticsearch.com/author/wallacemedl/

    Like

    writerbeat said:
    April 12, 2017 at 9:26 am

    Would it be OK if I cross-posted this article to WriterBeat.com? I’ll be sure to give you complete credit as the author. There is no fee, I’m simply trying to add more content diversity for our community and I liked what you wrote. If “OK” please let me know via email.

    Autumn
    AutumnCote@WriterBeat.com

    Liked by 1 person

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