That Apple, and other companies, are deciding to move manufacturing back to the United States is evidence of the diminishing importance of labor costs in decision-making. This implies several things.

Labor is around 4–5% of the retail cost for a computer, according to the article, and will continue to fall as automation increases. Labor costs are a bottom-line decision: a way to extract profit from a sale that has already happened.

As labor costs become less important, companies will instead look for gains on the top-line: competitive advantage that results in the sale being made in the first place. Shipping more quickly, customizing for local markets, and “Made in [your country here]” branding are aided by manufacturing locally.

Another way to think of it is a move up Maslow’s hierarchy. The basic need of manufacturing is satisfied at a low cost, such that it is no longer a focus of companies. Looking up the hierarchy, firms appeal to their customers’ more refined concerns.

Further, one hopes this change will obviate complaints that China and low-wage countries are “stealing jobs”. On the one hand, it neutralizes nativist, uneconomic arguments — a good thing. On the other, low-wage manufacturing is a large part of Chinese citizens’ enormous move up from poverty in recent decades — if “low-wage” is no longer a competitive advantage, the bottom might drop out.

Our assumptions about “cheap” Chinese manufacturing and its role in the world economy are likely to change more quickly than we realize.