US manufacturing has been decimated by low cost labor in many countries, notably China, right?

That certainly seems to be the case - but is there another explanation?

Writing recently in IndustryWeek's web site, Roy Meidinger, author of "The Truth about the Healthcare Industry," and an AT&T retiree, says rising US healthcare costs are the primary cause of US manufacturing decline.

"The US is the only industrial country where the employer directly pays a substantial share of employees' health care benefits," Meidinger writes. "In other nations, for the most part, citizens themselves and businesses foot the bill, through income taxes."

He presents the following chart, showing the rise in US healthcare costs and the parallel deline in manufacturing as a percent of GDP.

Source: Roy Meidinger

Meidinger adds that "A simple comparison of the percentage change in GDP of the healthcare industry versus the manufacturing industry shows a direct correlation between the growth of one and the shrinkage of the other, percentage point for a percentage point."

He also notes the cumulative costs of healthare across the supply chain. For example, a materials suppliers' healthcare costs are passed on to a component supplier, which has its own healthcare costs that are passed on to the final product maker.

Could it be that simple - even if the solution is not?

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