The relative cost of labor and capital is a defining property of any place.
That ratio basically determines the economy productivity.
I'm saying "the fact that Ecuadorian labour earns less than US labour doesn't matter to an Ecuadorian furniture shop owner because everything costs less in Ecuador, including furniture".
You're saying "labour costs are less in Ecuador relative to capital costs, so it's more affordable for business owners to hire more people instead of buy more trucks"
is that right?
Getting on a tangent, the market for capital goods is much more globalized than for labor, so capital prices vary less from one place to the other. As a consequence, when everything is cheaper on some place, it usually means that labor is cheaper relatively to capital too.
It makes everything bigger. Instead of a couple guys with a pick up truck making one delivery at a time it's a couple guys with a big box truck making multiple deliveries. Instead of one shop keep with their tiny shop you have one big shop. That scale allows efficiencies which drives down the labor per unit.
The big box store has (let's say) 20 deliveries a day to make, because it's serving a larger proportion of the market. So it becomes worth buying a big box truck and hiring a couple of guys to make all those deliveries.
The small retail store has (presumably) fewer deliveries to make, so they don't do delivery themselves. So the delivery is done on a case-by-case basis by the couple of guys in a pickup truck.
If the small store has more sales and more deliveries, it will eventually become worth them hiring a truck and drivers, and offering delivery to their customers. Again, not limited by labour costs, but by scale and vertical integration.
You're assuming without evidence the key supporting point of your argument? Why not assume something different and end up with the opposite conclusion?
So yes, you're right, I have assumed this. And if you disagree with this assumption then you're going to disagree with my argument. However, the article provides some good evidence that this assumption is true. I would be interested to hear any evidence that it's not...?
Within a single market, they're not so relevant. In this case, everything is cheaper. The furniture is cheaper, so there's less money to pay people with. So the proportion of costs for labour is about the same. Assume 10% of the cost of the furniture goes to paying people - in the USA that's a larger number than in Ecuador, but still 10%. It doesn't really affect the model.
I think the real difference is the consolidation of the supply chain in the US (and other developed economies). In the US, the first "big box" stores were able to squeeze savings from the supply chain and offer lower prices. Customers liked that, bought more, and soon every furniture store had to either go very up-market or adopt the same strategy. A few decades and a lot of acquisitions later, and the entire new furniture market consists of half a dozen completely vertically integrated superstore chains, plus a few up-market retailers.
The second-hand market is not so consolidated. The article doesn't say whether they were buying new or second hand furniture. It'd be interesting to find out why the second-hand market isn't subject to the same market forces. How come there isn't a few large second-hand furniture stores?