Nevertheless, just as China turns out not to have an endless supply of manufacturing workers and India turns out not to have an endless supply of routine service workers, the world as a whole is not, in fact, a bottomless pit of potential low wage labor (indeed, rapidly growing China and India plus the rich countries contain most of the world's population). Plus as Chinese incomes grow, increasing numbers of people around the world will be able to make a living selling stuff to Chinese people.
Of course Yglesias' commenters knee-jerk reaction to this is "free trade bad". But, how can it be bad to raise the standard of living for millions of people while causing very little to no harm for very few? Free trade, contrary to popular belief, actually creates American jobs by, in this case, increasing the market for American goods. I wish more people understood this and became unapologetic defenders of free trade. From the NYT:
Persistent labor shortages at hundreds of Chinese factories have led experts to conclude that the economy is undergoing a profound change that will ripple through the global market for manufactured goods.
The shortage of workers is pushing up wages and swelling the ranks of the country's middle class, and it could make Chinese-made products less of a bargain worldwide. International manufacturers are already talking about moving factories to lower-cost countries like Vietnam.
...
A few years ago, "people would just show up at the door," said Liang Jian, the human resources manager at Well Brain. "Now we put up an ad looking for five people, and maybe one person shows up."
For all the complaints of factory owners, though, the situation has a silver lining for the members of the world's largest labor force. Economists say the shortages are spurring companies to improve labor conditions and to more aggressively recruit workers with incentives and benefits.
The changes also suggest that China may already be moving up the economic ladder, as workers see opportunities beyond simply being unskilled assemblers of the world's goods. Rising wages may also prompt Chinese consumers to start buying more products from other countries, helping to balance the nation's huge trade surpluses.
"The next great story in China is how they are going to move out of the lower-end stuff: the toys, textiles and sporting goods equipment," said Jonathan Anderson, an economist at UBS in Hong Kong. "They're going to do different things."
When sporadic labor shortages first appeared in late 2004, government leaders dismissed them as short-lived anomalies. But they now say the problem is likely to be a more persistent one. Experts say the shortages are arising primarily because China's economy is sizzling hot, tax cuts have helped keep people working on farms, and factories are continuing to expand even as the number of young Chinese starts to level off.
Prosperity is also moving inland, and workers who might earlier have migrated elsewhere are staying closer to home.
Keep in mind this was the free market at work, multinational companies are not exploiting workers, workers are selling their skills for an agreed upon wage. As scarcity of these workers increases, the wages go up. Also, as the workers are employed their skills increase also forcing their wages up. The free exchange of labor and capital works better than government regulation and aid ever will. When in doubt, trust capitalism!
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