A labor shortage in China’s factories may force many of the foreign companies with factories there to go elsewhere for their labor. The shortage is expected to cause a trade shift into lower-cost countries such as Vietnam, and, in the short run, cause prices of goods from China to increase. It has already caused factory wages to swell and conditions to improve in hopes of attracting more workers.

“It’s interesting that in a nation of 1.2 billion people, we’re talking about a labor shortage,” said Bob Williams, Professor of Economics. “It’s important to realize that it’s a relative situation.”

Part of the reason for this labor shortage is the one-child policy, instated in 1979, restricting each family to only one child. Though it is not rigidly followed, it has cut down on the next generation of the labor force.

Also, more young adults in China are beginning to go to college instead of joining the labor force. Enrollment in Chinese colleges jumped from 2 million in 1999 to 14 million in 2005.

“The Confucian culture emphasizes education,” said George Guo, Associate Professor of Political Science. “As better-educated people, they leave the poor areas to go to coastal cities, to face challenges.”

The biggest problem leading to this labor shortage is most likely the existence of hukous, residency permits in China that allow a person residency only in certain places. A person without a hukou in a certain area has restricted access to education and government services.

“It’s key to look at where the labor shortages are,” said Eric Mortensen, Assistant Professor of Religious Studies. “If it’s in certain cities, it’s because people can’t go to those cities.”

Hukous also restrict people to working in certain areas. Many cities in East China, where most factories are located, will not grant migrant workers from the West hukous because they have no place to house them. There are between 80 and 120 million migrant workers in China drifting from city to city, living off of part-time, low-paying jobs.

“I would think this labor shortage is limited enough where it can be solved by moving the labor into the West, and China will have to do that eventually,” Mortensen said. “That would serve to ameliorate the problem.”

Within the last 20 years, one-half of foreign investments have moved to China. China’s labor force trumps every other country’s by almost 300 million people, making up over 25 percent of the entire world’s labor force.

“It’s crazy to me because there is so much cheap labor, and there are still so many people who don’t have jobs, so it just speaks to how fast China’s economy is growing,” said sophomore Andrew Freedman, who spent the fall semester studying in China.

Despite the present setbacks, this labor shortage will serve to benefit China’s swelling economy in the end.

“Labor shortages are basically how our economy and other major economies have developed over the last few hundred years,” Williams said. “The main thing is that it will raise the standard of living for people on lower levels of the social ladder.”

For the common consumer, this labor shortage may mean a slight price increase on goods in the near future. This price increase should not be too drastic, however, and will eventually stabilize.

For some, this is a good opportunity to reevaluate how we act as a consumer.

“When we go to the store and pay very cheap prices, we have to think about what’s making that,” Williams said. “If our goal as consumers is to pay the lowest possible price, then we have to think of what’s causing that.