When starting out researching sweatshops I thought of them the same way as probably most people do, the greedy corporations exploiting labor need to be stopped and the sweatshops need to be shut down. As I later learned, this is possibly the worst approach to think of sweatshops as.
More and more people are hearing about the horrors of sweatshops. What exactly is the problem behind sweatshops and how has anti-sweatshop activists misguided direction for change? Sweatshops in general are not the problem, they are a result of a greater issue which calls for action very different than most anti-sweatshop activists. Watch below for a brief introduction
There are many misconceptions about what a sweatshop is. When someone hears the word “sweatshop,” most think of it in a negative connotation, but the advocacy against sweatshops are often very misguided. So what exactly is a sweatshop? The word sweatshop has a loose definition but in general it refers to a workplace (usually a factory) where workers are paid low wages, and work long hours under poor conditions (Pugatch). Other characteristics may include coercion (forced labor), but since these are not necessary characteristics, this is not what will be discussed and is in no way defended. Sweatshops should not be confused with coercive labor even though the mix of coerced labor and sweatshops can exist. The fact is most sweatshops are not involved in forced labor, rather laborers choose to work at these workplaces.
Sweatshops are nothing new and have been around ever since the Industrial Revolution. Most countries that go through economic and technological development at one point have sweatshops. It’s simply a part of a period of development which usually lasts from twenty-five to a hundred fifty years (Powell “Defense”). It’s a time for growth. The U.S. and Great Britain are both well known for the use of sweatshops during their time of development. With growing productivity and value, eventually these countries gained higher standards of living to the point of becoming leading countries in terms of standard of living. While these countries took time to develop, other impressive examples include Hong Kong, Singapore, and Taiwan. These countries went from pre-industrial to first world within a generation (Powell). Sweatshops naturally disappear as economic development continues, unless otherwise stifled by laws which reduce economic liberty and increase workplace costs. This is due to many factors, one of which is competition of the free market in the area of wages and working conditions. Since sweatshops allow for cheap labor and ultimately cheap production cost, the demand from these factories are extremely high. When there is high demand for products from a specific country, this allows for somewhat quick growth for the sweatshops and the economy. When this happens, producers will often increase wages because it causes a higher demand to work at these specific workplaces. When this occurs, other sweatshops must compete to keep their workers from leaving and so they may also end up increasing wages. This concept also applies for working conditions. Companies that have “appalling work environments don’t stand a chance competing for workers in a free market” (Spath). No sane worker would choose to work at a factory with terrible working conditions as opposed to a different factory with better conditions. In the end, wages, working conditions, and ultimately the standard of living are increased due to the surplus of income.
Sweatshops are something that should be expected in developing nations. Most all of these developing countries already have a bad economic status, therefore limiting resources and the ability for clean working conditions and high wages. This is where one may begin to grasp the idea that sweatshops are not directly the problem. They are the result of a larger economic problem. In most cases sweatshops actually provide higher wages than other jobs in the location. A study conducted by the director of the Free Market Institute at Texas Tech University and professor of economics, Benjamin Powell, proves this to be true. The study looked at forty-three different sweatshops accused of exploitation from eleven different countries, and found that “sweatshop workers typically earn much more than the average” in those countries (Powell). Considering the economy in these areas, these sweatshops are paying workers the best they can. Materials engineer and supply chain professional, Paul Templin, agrees. He even goes as far as to say “factory work is usually good work, often with benefits and salaries higher than those in the surrounding area” (Templin). While the work can be difficult, offer low pay, and have bad conditions, in the end the work is something necessary for workers to make money to live. It may not be something to thrive off of, but undoubtedly it is better than other alternatives. Most of the developing countries that use sweatshops, the percent of people who earn less that two U.S. dollars a day is very high. In most examples the sweatshops provide a higher income than the average (Powell). While these are extremely low wages (especially for U.S. standards) and does not allow for even a moderate standard of living, it is still a better opportunity than the surrounding jobs. People who work at sweatshops have no other better alternative and most do not have the skills to climb the economic ladder quickly enough. Sweatshops are beneficial in the sense that they “provided a means for many of the country’s least-skilled people to earn livings” (Spath). Low-skilled workers have little in terms of options and a sweatshop is one of the best options considering other alternatives. In addition, sweatshops provide a way for the poor to to make the little money that can be made. This could ultimately prevent starving that could have occurred if these sweatshops have not been around.
(Powell "Sweatshops and Third World Living Standards")
One may ask why these factories couldn’t just increase wages. This cannot done for a few reasons. The first is that if sweatshops increase wages, they will either need to let go of workers or increase product price unless enough value has been increased. If workers are not let go, the product price must increase. With an increased product price, companies would simply move on to a different producer because of such a large price gap created. The sweatshop would now be unsustainable considering the atmosphere of other producers in the area. Companies would simply not choose to use that producer in the area because all other producers create products cheaper. In extreme cases this could lead to the whole shutdown of the producer if policies don’t change. On the other hand if workers are let go, productivity decreases and the output may not be sufficient or sustainable. The reality is that producers don’t have much of a choice than to operate as-is with cheap labor.
Wages and working conditions are usually directly linked, but even with the terrible working conditions that the workers endure, it often provides better conditions than surrounding opportunities. Most people in these countries consider sweatshops to be a higher standard in terms of class than the other available option such as intense agricultural work (Powell). When people advocate for better working conditions, the link between wages and working conditions are often forgotten. Better working conditions mean advancing infrastructure and often expanding a facility for more space. These upgrades often would cost more than the available capital at the time. As a result, “employers will meet health and safety mandates by either laying off workers or by improving health and safety while lowering wages against workers' wishes” (Powell). Whatever the upgrades may be, it will affect policy, whether it be increased product cost, lower wages, or letting go of workers. Now it is plausible for this not to be the case if that factory has enough capital to improve, but once again this is something that should come naturally. An abrupt push to improve working conditions and wages would result in instability of the company which could result in letting go of workers or other negative effects.
Some advocacy groups against sweatshops in the name of helping workers promote the idea of abruptly boycotting companies that use sweatshops. This was a big push with Apple and Nike when reports were showing the appalling condition with the work behind them. To some this may seem like a valid approach but when dug just under the surface, it becomes apparent that it is not a good solution. The fact is, boycotting companies that use sweatshops actually turn out to be much worse for the workers than continuing to support them. Boycotting in this manner almost guarantees that workers will lose jobs either from the factory shutting down or from worker layoffs. These people appreciate the work they have even though it is tough, the conditions are bad, and the low wages. Paul Templin brought up the fact that her grandmother had to work at a sweatshop to support her family when “times were tough”, and that she was “glad to get the work” (Templin). Once again in most cases these sweatshop jobs are the best they can get. The reality is that boycotting a company because they use sweatshop work is the worst “solution” plausable for the workers. Workers will lose jobs and be left with worse alternatives. Another proposal by those advocating against sweatshops is buying only products with ethical branding labels. While this may sound like a good idea at first, it really is just another form of boycotting. Ethical branding may indicate that the company used labor that has a living wage and good conditions, but what is ignored are the workers in areas that desperately need work. It would actually be more “ethical” if the companies just used sweatshop labor to help out developing economies. Only buying from companies that have some sort of ethical branding is just ignoring the workers who need to make money in poor economies. boycotting is not the solution.
Anti-sweatshop activists often propose a minimum wage or living wage as a solution. It seems that any time the minimum wage is brought up, it turns into a left versus right issue, but that is not what this is about. It may be plausible for minimum wage laws to benefit already developed countries such as the US, but it would have a devastating effect on an extremely weak economy such where most sweatshops are located. One effect that is not thought of very often is stifling of new businesses and in effect stagnating the economy. Businesses starting up in an area with a bad economy have no room to start out with a mandated wage. Only wealthy people (compared to others in the area) would be able to start a business. When businesses don’t have to worry about regulations such as minimum wages, that is when they will thrive, and with more companies, it means more jobs. Another negative effect that minimum wage may have in developing countries is unemployment. When a minimum wage is enforced, it “will create unemployment if the producer cannot adjust other margins” (Lemieux). Companies that don’t have enough money to raise wages will be suffocated. This has been shown in Cambodia between 1995 to 1999 and Paraguay between 1993 to about 2001, when there was a raise in minimum wage. During this period, it is true that workers benefited by increased wages but only at the “cost of others being pushed to unemployment or to informality” (Angel-Urdinola). This is an example of two developing countries who were harmed by minimum wage. To promote economic growth in poor economic areas, minimum wage laws should be avoided. More jobs will be created, companies will be more stable, and less workers will be laid off. As discussed earlier, Wages and working conditions naturally improve.
When discussing sweatshops, child labor is often brought up as an opposing force. Child labor is something most agree is a terrible thing, but sometimes it is the only way for a family to survive. A call to end child labor could end up harming these children. For example, in 1993, a proposal to ban trade between countries that engage in child labor, created a scare at a Bangladesh factory. The factory laid off children and instead of going to school, many of them ended up in jobs with worse working conditions and even prostitution (Bellamy). This helps demonstrate the problem with child labor laws in developing countries. Parents have their children help to provide for the family because they are desperately poor and have no other means for survival besides worse alternatives. While some think that child labor ended in the United States because of child labor laws, the fact is, when a national ban on child labor was enacted in 1938, child labor was no longer necessary (Powell “Case”). The economy was already developed enough where there was no need for child labor. At the time income was up to $10,000 per person in today’s standard, and when looking at other countries, we see that the ones with income over $10,000 per person don’t have child labor anyway (Powell). Child labor laws can only benefit in moderately good economies but not in developing countries. Just like wages and working conditions improve naturally, child labor also naturally disappears in a free market. There have been some reports of abusive practices with children in sweatshops and this is something that should not be tolerated. For the well-being of workers, the government should enforce laws to prevent any sort of abuse as this is one of the rolls of government.
Finally, what are the real problems with sweatshops and what can be done about them? As stated earlier, sweatshops in general are not the problem, but instead they are part of a larger economic problem. While much of the economic issues are hard to pin down, there are some things that can be done to promote growth in these countries. Much of what can be done must happen on the side of the third world countries. For example, government in these countries should provide ways for companies to thrive. This includes limiting legislation that affects companies. For example, low tax rates, little intervention, and promotion of free market principles. These conditions from government help an economy develop and eventually allow for the economy to improve and stabilize so that sweatshops and everything that comes along with it will no longer be needed. There is very little that can be done about sweatshops from already developed nations but what little can be done is still beneficial. The first thing is not to discriminate against a company just because they use sweatshops. These companies are indirectly doing workers in dire need a favor. In fact, in most cases “multinational firms pay more than domestic firms in Third World countries” (Powell and Skarbek). A large enough group of people avoiding these companies could result in a negative effect on workers in various ways as discussed earlier with ethical branding. Something else that could help is donating to charities that help families in these developing countries. Much of the reason parents choose to have their children work in sweatshops is to pay for the kid’s education. Donating to specific charities can help fund the kid’s education and could eliminate them from working in sweatshops. Finally, we should not try to prevent the formation of sweatshops because ultimately the more free the market, the quicker the economic development.
There are many misconceptions regarding sweatshops and the root issues are ignored. Sweatshops provide workers with opportunities better than others in the area, yet people are so quick to try and shut them down. What needs to be understood is that sweatshops are an important part of economic development. While not everything about sweatshops can be defended, they have an important role. It’s true we should stand behind the treatment of workers, and do everything we can to ensure what is best for workers, but much of what is best for workers is allowing a free market to operate. Most all of the anti-sweatshop solutions end up putting workers in worse conditions. We should make sure that anything we do in the name of helping workers, actually ends up being for their benefit. The free market should be promoted and laws limiting the economy should not be allowed.
Editors Commentary
I know this subject is a very complex one and I am not asking everyone to agree with every point I stated. In fact I expect that many people will disagree. My only intention is that you consider the possibility and really think about it. I hope this article led you to thinking differently about the subject of sweatshops in some way.
Works Cited
- Angel-Urdinola, Diego. “Can a Minimum Wage Increase Have an Adverse Impact on
Inequality? .” Journal of Economic Inequality, vol. 6, no. 1, Apr. 2008, pp. 57–71. Business Source Complete, http://library.collin.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&an=29983812&site=bsi-live&scope=site - Bellamy, Carol. “The State of the World’s Children .” UNICEF, 1997,
http://www.unicef.org/sowc97/download/sow1of2.pdf - Lemieux, Pierre. “Defending Sweatshops.” Regulation, vol. 38, no. 2, 2015, pp. 66–68. Business
Source Complete, http://library.collin.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&an=108590893&site=bsi-live&scope=site - Powell, Benjamin. “A Case against Child Labor Prohibitions.” CATO Institute, 29 July 2014,
http://www.cato.org/publications/economic-development-bulletin/case-against-child-labor-prohibitions - Powell, Benjamin. “In Defense of ‘Sweatshops.’” Library of Economics and Liberty, 2 June
2008, http://econlib.org/library/columns/y2008/powellsweatshops.html - Powell, Benjamin, and David B Skarbek. “Sweatshops and Third World Living Standards: Are
the Jobs Worth the Sweat?” Independent Institute, 27 Sep. 2004, http://www.independent.org/publications/working_papers/article.asp?id=1369 - Pugatch, Todd. “Historical Development of the Sweatshop.” The University of North Carolina,
30 Apr. 1998, http://www.unc.edu/~andrewsr/ints092/sweat.html - Spath, Stefan. “The Virtues of Sweatshops.” Foundation For Economic Education, 1 Mar.
2002, http://fee.org/articles/the-virtues-of-sweatshops/ - Templin, Paul. “The Much-Dreaded Sweatshop Really Isn't.” Industrial Engineer: IE, vol. 48, no.
8, Aug. 2016, pp. 22–22. Academic Search Complete, http://library.collin.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&an=116850038&site=ehost-live