There has been a growing push to buy things made in America. Every time I buy something built and crafted here, I feel good about the jobs it has created, how supporting locals is good for our economy, and it certainly fuels a sense of pride that 'MADE IN THE USA' is alive and well and thriving.
There is a downside too and we may be feeling that right now: The price. Here are some thoughts on how this is impacting us now:
- Labor costs here are higher than in most parts of the world. However, many luxury products made in Italy, Germany and the UK have even higher labor costs.
- Immigrants often take on the lower-paying construction jobs: 13.7% of US citizens are foreign-born. 25% are from Mexico, while under 19% are from India, China, The Philippines and El Savador, over 55% are from other parts. COVID cut back the influx of lower-paid immigrant labor.
- We have a skills shortage. Many manufacturing jobs require very specific skills. These skills are best carried forward by apprenticeship-style learning. We have lost many skilled workers to retirement and many have not been replaced.
- In 2018 new US tariffs were imposed on imported commodities and products raising the cost of all materials used in construction: steel (25%), Aluminum (10%, but 50% on scrap!), lumber (9%, now down from 20%), copper (25%), a 20% tariff on the first 1.2 million washing machines imported into the U.S. each year and a 50% tariff on all subsequent units. During the COVID-19 recession, these trade restrictions didn't matter too much because the economy and U.S. homebuyer demand was sagging. Now as demand is unleashed, they bite.
- Capacity. Most manufacturers have to strike a balance of maximizing production profitably while not over-investing in infrastructure should a recession strike. Like OPEC or the diamond industry, cutting production and limiting supply keeps prices high. Our capacity to manufacture locally is insufficient, including our ability to construct enough homes.
- We live in a highly regulated society. This has many benefits to maintain safety and keep our neighborhoods healthy, but governments are notoriously slow and inefficient. Time costs money. The slowness of regulation adds to the cost of everything, especially when demand is soaring and the systems to regulate don't have the capacity to keep up.
- Certain things made in the USA are subsidized by the government with your tax dollars. That is a hidden cost we often don't realize.
Made in the USA is wonderful, but it mostly costs more. Houses are made in the USA. They will cost more and continue to cost more unless we address some of the above issues proactively in a measured, sensible and practical manner. We want to protect the environment, and grow jobs and incomes. We also want things to be affordable. Can we have it both ways?