Sweatshops: The Bad, The Better, The Best
When the Rana Plaza building collapsed in Bangladesh on 24 April 2013, 1,132 people died and over 2,500 more were injured. It was a devastating loss for many and a reminder of the current conditions workers face in sweatshops. Hundreds of these incidents, some worse than these, have happened because of the failure of companies to meet local and international standards. These increasingly unsafe work environments have caused a high incidence of work-related accidents, deaths, and even diseases, which some would describe as “Mass industrial homicide” (Bliss, 2019). Sweatshops and their horrible work conditions remain prevalent all over the world, even in the United States. You might not know it, but many of your products probably come from these places.
Sweatshops: What are they now? What is wrong with them? What can they be?
Occurrences like the Rana Plaza building collapse have plagued sweatshops. But what exactly are they? Jean-François Rouge (2016) would define them as “work environments that violate law and where workers are subject to:
1- Extreme exploitation including the absence of living wage or long hours work;
2- Poor working conditions such as health and safety hazard;
3- Arbitrary discipline, such as verbal or physical abuse;
4- and/or Fear and intimidation when they speak out, organize, or attempt to form unions.”
Another definition is that sweatshops are factories in violation of two or more labor violations (“Are There Sweatshops in the United States? | The Dunken Law Firm”, 2020). We can simply look at a sweatshop as a workplace with poor working conditions, unfair wages, and unreasonable hours.
Sweatshops are most often found in the fast fashion industry (garments and shoes) and extend to electronics, cocoa, and other products. In almost every country, there are sweatshops (even in the U.S.). In fact, sweatshops are so prevalent worldwide that in 2019, it was found that they rake in almost $USD 1-trillion with tens of millions of people working in those conditions (McKay, 2019). Still, it is most prevalent and often most dangerous in developing countries with laxer monitoring and implementation of labor laws.
Sweatshops remain a reminder of the gross abuses against worker and human rights that exist in the status quo. It is a microcosm of the world wherein the rich continue to get richer off the poor’s backs, while the poor continue to get poorer. These practices, which have prioritized profit over the hands, lives, and families of workers, have been an assault on human dignity. And many brilliant minds have recognized this glaring problem and have tried to illustrate ways to change the system.
In a study conducted by Pollin, Burns, and Heintz (2001), it was found that increasing the salary of sweatshop workers can come through increasing retail prices. By increasing consumer costs by 1.8%, we will already be able to double sweatshop wages. With consumers being found to be willing to pay for a 15% premium for products that did not come from sweatshops, this study has significant potential in changing the system.
Especially in today’s political climate, where there is an increasing demand for humane business practices, more potential solutions are popping up. In another study conducted by Arnold and Hartman (2006), they were able to verify that U.S. consumers are willing to accept higher prices to ensure ethical production processes. Even from a business perspective, it might be even more profitable to have higher labor standards. It was found that from 1997–2001, companies that practiced a set code of ethics to create a sustainable business model outperformed companies that did not. These companies created significantly increased economic added and market added value.
However, most of these researches do not call for abolishing these sweatshop industries, but rather the betterment of their culture and practices.
Sweatshops: Why do they exist? What are they good for?
Even with all the workplace hazards and injuries caused, sweatshops continue to thrive, especially in developing countries. That begs the question: Why do sweatshops continue to exist?
Nobel Prize-winning economist Sir Arthur Lewis explains the necessity for sweatshops in his theory known as the “Lewis Model” or “Dual Sector Model”. This theory explains the growth process in emerging markets such as developing countries. Specifically, he mentions that there are two economies within these nations: the traditional sector and the modern sector. In the traditional sector, economies revolve around rural agriculture, while in the modern sector, economies revolve around urban manufacturing. The traditional sector faces problems of low productivity and a surplus of workers. In contrast, the modern sector capitalizes on the surplus of workers by offering better compensation which incentivizes low-skill workers in rural places to move into cities. So, sweatshop industries can create higher levels of productivity through technology and produce better welfare.
Many countries have displayed this phenomenon. For example, in China, the extreme poverty rate went from 84% to 12% in less than 30 years through industrialization. Even in Bangladesh, where the Rana Plaza tragedy occurred, they have a high GDP growth rate and have increased their GDP per capita from $510 in 2000 to $972 in 2015 (Canepa, 2016).
Moreover, in a study conducted by the National Bureau of Economic Research, the effects of Ethiopian formal industrial labor or sweatshop work were investigated. The study found that workers in the industrial sector (factory work) had increased income levels than workers in the informal sector. This trend has been seen in many other countries, with some results even being more promising. According to Powell & Zwolinski (2011), in countries such as Cambodia, Haiti, Nicaragua, and Honduras, workers were paid more than double the average income in that country given a 70-hour workweek.
Even more importantly, it was found that pay in the informal sector is extremely unstable and volatile while factory jobs had stability. So, despite the danger that sweatshop conditions pose, sweatshops were found to be beneficial in providing short-term solutions to workers who have been laid off or are finding new jobs. This was found to equate to 77% of Ethiopian workers quitting their factory jobs within a year (Canepa, 2016). For developing countries, this can be incredibly impactful as, without social safety nets such as unemployment insurance, workers are often reliant on their daily wages for sustenance.
Sweatshops: What do workers personally feel about this issue?
In a study conducted by Skarbek, Skarbek, Skarbek, and Skarbek (2012), the opinions, perceptions, and narratives of sweatshop workers in El Salvador were surveyed.
The majority of the respondents noted that they viewed their alternatives, specifically agricultural work and street vending, as less desirable than sweatshop labor. They stated that this is primarily due to the non-monetary benefits of sweatshop labor, such as medical insurance, medicine, and even school assistance packages for their children. This is in addition to the improved compensation and, in some cases, better working conditions relative to other alternatives. All of these allow for intergenerational mobility, educational attainment, and improved future economic opportunities for both themselves and their families. Many workers noted that due to benefits received from sweatshops, they could put their children through education, allowing them to go one more rung up the socioeconomic ladder (Skarbek, Skarbek, Skarbek & Skarbek, 2012).
To end, here is a quote from a worker that was interviewed:
“My parents always say, you should be more than I am so you won’t have to work so hard. I will provide you with an education so that — not that you will make very much, but that at least you won’t have to work so hard, so you won’t have to work in the rain or under the sun.”
Sweatshops: What should change?
Economist Jeffrey Sachs, one of the pioneers in advancing the United Nation’s Millennium Development Goals and an advisor to many developing countries, stated, “My concern is not that there are too many sweatshops but that there are too few.” He says this because of the ability of sweatshops to boost economies. But that begs a few questions: Are there too few sweatshops? If there are too few, isn’t it a good thing to lessen places where worker rights are abused?
Even though we must all recognize the problems that sweatshops bring, we cannot ignore the benefits sweatshops bring. In fact, all members involved in the debate around sweatshops recognize that sweatshop labor often represents the best option available for impoverished workers in developing countries to provide for themselves and their families.
But that doesn’t mean that we shouldn’t try to change the system. Even if current iterations of sweatshops are the best alternatives these workers have, it doesn’t mean that it should stay that way. The system still has many problems. But change has to come the right way. It can’t simply be off of one research study on an industry or firm. Powell and Zwolinski (2011) have already responded to this idea, saying that just because it is sometimes possible for single firms to raise wages without causing unemployment, doesn’t mean it can happen universally. As Powell said, “Any law that raises the relative price of third-world labor will unemploy at least some marginal workers and close some marginal firms. How big the effect is depends entirely on how far the law pushes wages and health and safety conditions beyond what the market would have produced on its own.” Any policy aimed at reforming the culture and practices within sweatshops must be thoroughly researched and implemented cautiously to ensure that workers are not in jeopardy of losing jobs.
At the end of the day, even though research might point to sweatshops offering the best alternative to impoverished workers in developing countries, that might not always be the case. We should hope that new findings can prove otherwise and that there is an even better alternative. But until research can definitively prove a better economic mechanism to regulate sweatshops, we should tread with caution.
Sweatshops: What can we do?
So, what can we do on our end as consumers?
In a study conducted by Ferguson and Ostmann (2018), they examined the morality of consumer choices regarding sweatshops. They consider three possible options: instinctive, dismissive, and compensatory.
To demonstrate, say there is a woman named Alice who went to a shop to buy clothes. However, she later finds out that the clothes in that shop were made in a sweatshop.
If Alice took the instinctive option, she would go to another store to purchase clothes not made in a sweatshop. She does this on the premise that workers who made the clothes that she bought we compensated fairly.
If Alice took the dismissive option, she would simply buy those clothes. This is because she recognizes that although sweatshop workers are subject to those conditions and may not be paid fairly, this is still their best option. Furthermore, the significant amount of welfare gotten from these jobs also creates a ripple effect with developing economies boosted by sweatshop production.
If Alice took the compensatory option, she would buy those clothes, but through a different channel, provide sweatshop workers with the difference between their actual wage and fair wages. Through this, Alice can compensate sweatshop workers more fairly while not hurting the economy and lowering the country’s welfare.
The study concludes that in most cases, it is morally better for Alice to take the compensatory option as it compensates workers fairly and recognizes the welfare benefits created by sweatshop economies.
In the end, only a few people can make a ground-breaking economic paper that dictates what is best to do in the face of sweatshops. But that does not mean we cannot do our part. As a developed country, the United States has also benefitted from sweatshops. We consumers enjoy the benefit of lower prices and the costs of living because of sweatshop workers. Be it the clothes we’re wearing, phone we’re using, or even chocolates we’re eating, sweatshop labor is everywhere. And as mentioned in Fergurson and Ostmann’s study, we can do something about it. Those with some excess can help by donating or partnering with third-party organizations such as non-profits or local government units. This can help ensure that workers are compensated more fairly and have the chance to better their living conditions.
But even then, not everyone has the option to shell out money. But that doesn’t mean that not doing so should not mean we’re complicit in the injustices.
So, what should everyone do? Or better yet, what can everyone do?
When the time comes that research has definitively proven something, we should all be ready with what we can contribute. Until that time, I think the best thing to do is to be informed and make an informed decision based on your principles. We can all rally for change, even if it is just to shed light on the issue or build traction for more research. Our small individual actions can help prevent massive catastrophes like the Rana Plaza building collapse.
References:
Are There Sweatshops in the United States? | The Dunken Law Firm. (2020). Retrieved 6 March 2021, from https://www.thedunkenlawfirm.com/sweatshops-in-the-united-states/
Arnold, D., & Hartman, L. (2006). Worker Rights and Low Wage Industrialization: How to Avoid Sweatshops. Human Rights Quarterly, 28(3), 676–700. Retrieved 6 March 2021, from http://www.jstor.org/stable/20072757
Bliss, D. (2019). The huge toll of ‘fast fashion’ on the planet — and why the answer could be circular. Retrieved 5 March 2021, from https://www.nationalgeographic.co.uk/environment/2019/06/the-huge-toll-fast-fashion-the-planet-and-why-the-answer-could-be-circular?fbclid=IwAR0AniqW_7Co4lI4i1irnmHczxYgc4Vv3AfD5aTD5mPgM7JaLOOZb71Y3tI
Canepa, G. (2016). Why the World Needs Sweatshops — NUES. Retrieved 6 March 2021, from https://web.northeastern.edu/econsociety/why-the-world-needs-sweatshops/?fbclid=IwAR3L5uUyNbGGM6E89G6_yCONwVlyA1JV-NloEgpC1kL7IYA9lt3axn4Z9qQ
Ferguson, B., & Ostmann, F. (2018). SWEATSHOPS AND CONSUMER CHOICES. Economics And Philosophy, 34(3), 295–315. doi: 10.1017/s026626711800010x
McKay, R. (2019). Sweatshop: What Are Sweatshop Conditions Like?. Retrieved 5 March 2021, from https://www.newidea.com.au/sweatshop-what-are-sweatshop-conditions-like
Pollin, R., Burns, J., & Heintz, J. (2001). Global Apparel Production and Sweatshop Labor: Can Raising Retail Prices Finance Living Wages? [PDF]. POLITICAL ECONOMY RESEARCH INSTITUTE.
Powell, B., & Zwolinski, M. (2011). The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment. Journal Of Business Ethics, 107(4), 449–472. doi: 10.1007/s10551–011–1058–8
Rouge, J. (2016). Sweet Sweatshops — A Reflexion about the Impact of Sweatshops on Countries’ Competitiveness. ECONOMICS, 4(1), 7–36. doi: 10.1515/eoik-2015–0023
Skarbek, D., Skarbek, E., Skarbek, B., & Skarbek, E. (2012). Sweatshops, Opportunity Costs, and Non-Monetary Compensation: Evidence from El Salvador. American Journal of Economics and Sociology, 71(3), 539–561. Retrieved 6 March 2021, from http://www.jstor.org/stable/23245189
