Excess burden of "overhead costs" on U.S. manufacturers

Excess burden of "overhead costs" on U.S. manufacturers

According to the Manufacturers Alliance/MAPI, external overhead costs add at least 22% to the unit labor costs of U.S. manufacturers (nearly $5.00/hr worked) relative to their major foreign competitors.

According to the Manufacturers Alliance/MAPI, external overhead costs add at least 22% to the unit labor costs of U.S. manufacturers (nearly $5.00/hr worked) relative to their major foreign competitors. In this chart, these costs are almost as large as total manufacturing costs in China.

Since making its initial report in 2003, the group has found that these overhead costs have become even more burdensome to U.S. manufacturers. "Benefits costs in the U.S. continue to escalate at an alarming rate," says Dr. Thomas Duesterberg, president and CEO of MAPI. "Between 2000 and 2004, total benefits costs as a share of total compensation grew from 31.6% to 35.1%. Healthcare costs remain the primary driver of this escalation, rising from 7.2% in 2000 to 8.4% of total compensation costs in 2004."

Source: "How Structural Costs Imposed on U.S. Manufacturers Harm Workers and Threaten Competitiveness," by Jeremy A. Leonard, Manufacturers Alliance/MAPI


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