“Made in the USA is great but it’s just too expensive”. Standing alone, this statement is probably true. Most goods that are manufactured in the US are more expensive than the incredibly low-cost products we import from international markets at a staggering pace. This isn’t due to US inefficiency but because we are competing against a stacked deck. The US conveniently outsources the environmental, regulatory and labor issues that we don’t want to see in our backyard to international manufacturers – thus making those goods comparatively cheaper.
Before we rush to judge American-made goods as being overly expensive, let’s take a quick look at three differences that drive this disparity.
Labor Equity: When we create jobs in the US we want them to be “good jobs” with things like safe working conditions, fair wages, paid time off, and access to health insurance and retirement plans – all very reasonable things. However, these come at a cost and are not the norm in most countries that we import goods from. Workforces in manufacturing hubs such as Southeast Asia have high rates of forced labor, slave labor, absurdly low wages and inhumane working conditions. For example, in 2022 after facing scrutiny for labor practices, Malaysia increased the monthly minimum wage 1500 Ringgit. That equates to a whopping $325 USD per month.
Regulatory Requirements: As a country, we also want to make sure things are done the right way. And the “right way” is typically the “safe way”. This means investments in safety systems such as fire suppression, ample emergency exits, proper lighting and clearance – all things that support safe and proper working conditions but also come at a significant cost. Many countries that have taken on manufacturing of commodity goods simply look past these investments because the reward does not justify the expense.
Environmental Protections: Both customers and environmental agencies are pressuring US manufacturers to operate by higher standards and minimize their impact on the surrounding environment. This pressure and higher standard is warranted – but achieving compliance typically requires additional investment. However, this same standard is not necessarily applied or adopted by manufacturers in distant corners of the world. The ability to avail themselves of complying with environmental standards typically results in yet another cost reduction, which can be passed on to international buyers.
It’s pretty clear. Pursuing “Made in USA” requires compliance with the standards and practices that we have set in the US, which often makes goods more expensive. However, these standards also make for fairer labor standards, safer workplaces, better quality goods, and more environmental protections. Well worth the investment.