THE AVERAGE American manufacturing worker's hourly pay was lower, in 1980, than his counterparts' in four European countries. The four high-wage countries were, in descending order, Belgium, Sweden, the Netherlands and German. The United Sates now stands a little above the average among the 10 rich countries, ranked by average compensation -- with Great Britain and Japan at the bottom.
A high wage rate does not necessarily mean an unusually strong economy, any more than a low wage rate -- for example, Japan's -- means a weak or instable one. But these changes in the standings in recent years reflect long, powerful trends in the international economy that deserve attention. American pay scales were at the top of the list through the early 1970s, but in 1975 three of the European countries went higher, and the gaps have widened since then. It reflects, among other things, higher productivity growth abroad.
The table comes from the U.S. Bureau of Labor Statistics, which cautions that the figures are not, and cannot be, precise. They represent total hourly compensation -- cash pay plus fringes -- for production workers in manufacturing, and the measurement of the fringes in a prolific source of statistical uncertainty. How do you compare the United States, where fringes commonly include health insurance, with Britain and Canada, where the taxpayer provides it? The foreign wages are converted here to dollars at market exchange rates, another source of distrotion.Conventional exchange rates are not alwlays reliable guides to people's purchasing power at home. The Japanese worker lives at a higher standard than this table might suggest, while the German, despite his high wage, still does not live quite as well as the American. But, as a general guide, the figures outline an interesting pattern.
During the inflatioary 1970s, wages rose faster in most other countries than they did in the United States. Translated into in American dollars, they rose particularly rapidly in Europe -- and that's one key reason for the increasing strength of protectionism there. The Europeans now regard Americans, with their lower labor costs, to be dangerously competitive -- and, from their perspective, they are quite right. The lamentation in this country over the alleged loss of the American ability to compete is being grossly overdone, with much of the worst exaggeration coming, incidentally, from industries that want tax breaks from Congress.
Higher wages abroad are no threat to American prospertiy. If anything, they give this country an advantage. American prosperity is manufactured here, and depends on the rate at which American productivity rises. Unfortunately, that rate has been roughly zero for the past three years. Hourly Compensation Production Workers in Manufacturing [TABLE OMITTED]