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US May Rival China in Job Competitiveness Soon: Analysts

Slowing wage growth in the United States, coupled with rising wages in China and other emerging markets, could soon make the U.S. more competitive.

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While wage levels in China are still far below the average wage in the U.S,, better technology, transportation and services in the U.S. could help make the difference for companies, according to Bart van Ark, Chief Economist at The Conference Board.

"There are other factors at play here, from access to services, high technology and innovation, to transportation," he told CNBC Friday.

As wages increase in the major cities in China, companies are having to move lower-paid jobs further inside the country, where infrastructure has not yet caught up, to get the same benefits.

The weaker U.S. dollar has also helped the U.S. regain competitiveness and increased "on-shoring", Virginie Maisonneuve, Head of Global and International Equities, Schroders, told CNBC Friday.

"During the crisis period, the US has regained tremendous competitiveness, mostly in terms of currency but also in terms of adjustment on wages," she said.

"It has been a painful process for the US."

She pointed to the example of General Motors letting go workers who cost around $70 an hour, when wages were added to benefits such as health insurance and pensions, at the start of the crisis. Recently, Volkswagen opened a plant in Tennessee which costs them about $27 an hour in wages and benefits.

This came after basic starting wages for union members in the auto sector were lowered to around $15 per hour as part of the 2007 National Agreement.

In the second quarter, US unit labor costs grew by 2.2 percent, slower than the 4.8 percent recorded in January-March.

The unemployment rate in the US is gradually falling, and was narrowly lower at 9.0 percent in October - although economists believe that it will stay around this level for months to come.

"We have seen some major adjustments in wages," Van Ark told CNBC.

"We see evidence that companies are pulling back business into the U.S. The question is, how will this affect growth?"

He pointed out that the export sector in the U.S. is much smaller than in Europe.

"Clearly China is still very competitive, but if you look at other costs, as wages lower in the U.S. they're nearly on a par," Maisonneuve said.

She warned that there was a danger of "social fragmentation" in the US as unemployment is disproportionately affecting young, uneducated workers.

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