We do care about good working conditions but it’s not part of the purchasing decision. What is part of our purchasing decision is price and it trumps ethical conditions.

According to a study by the University of Michigan in 2006, people are indifferent whether they buy socks that were made in good working conditions verses unknown working conditions as long as the prices are the same. But if the price of the socks that were made in the good working conditions is 5% higher then only 30% of people will buy those socks.

A study by Harvard, MIT, and the London School of Business in 2011 found that sales of Fair Trade coffee dropped 30% if the price increased by 9%. It also found that the sales for more expensive then average Fair Trade Coffee stayed the same when the price was increased by 8%.

So what do I think the issues are.

No clear definition of the working standards. The burden of defining the standards for organic food doesn’t fall on the consumer, it falls on USDA a trusted entity. We need the same thing for good working conditions.

No label. The organic label for food has made it easy for consumers to quickly distinguish between an organic grown food and a conventionally grown food.

No clear benifit for consumers. Consumers are willing to pay more for organic food so why not for good working conditions? I pay more for organic food because I believe it’s better quality and better for me. As a consumer I am unsure how good working conditions adds value to me.

I think the solution lies in the business model. Companies need to figure out how to add value both to its work and consumers. A good example of a cleaver business model is Everlane. Its mission is to be radically transparency in how its clothes are made and its costs. As a result it has good working conditions but equally important it delivers well-made clothes at a fair price to its consumers.

Let me know your thoughts?