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Top 3 Ways Sweatshops Help The Poor Escape Poverty

Should sweatshops around the world be shut down? What might we say if we looked at sweatshops from the perspective of the world’s poor? While it may be true that sweatshops treat workers unfairly, Professor Matt Zwolinski says there are three points to be made in defense of sweatshops.

  • The exchange between the worker and the employer is mutually beneficial. Sweatshop jobs often pay three to seven times more than wages paid elsewhere in an economy. Workers in the developing world tend to view sweatshop labor as a very attractive option.
  • Even if sweatshop labor is unfair, it’s a bad idea to prohibit it. Taking away sweatshops just takes away an option for the poorest workers of the world. While countries can make it illegal for sweatshops to pay low wages, they cannot prevent sweatshops from shutting down and paying no wages. And when that happens, the workers all lose their jobs.
  • It is better to do something to end the problem of global poverty than it is to do nothing. Sweatshops are doing something to help. They are providing jobs that pay better than other alternatives, and they are contributing to a process of economic development that has the potential to offer dramatic living increases.

If we look at sweatshops from the perspective of the world’s poor, which looks better: the American company that outsources to a sweatshop and provides jobs in developing countries, or the American company that, because of its high-minded moral principles, hires only U.S. workers?

The New York Times recently reported on the case of Nokuthula Masango, an employee at a clothing factory in New Castle, South Africa. Masango works long hours in tough conditions all for only $36 per week. If that sounds low, it is, even by South African standards where the legal minimum wage is $57 per week. Many people would describe Masango’s factory as a sweatshop, and many would say that the owners of the sweatshop are treating Masango and their other employees unfairly. Now in this video I don’t want to try to fully settle the question of whether sweatshops treat their workers unfairly or not. Let’s grant for the sake of argument that they do. The point I want to make here is that even if sweatshop workers are treated unfairly, there are three points to be made in defense of sweatshops.

 

First, it’s important to remember that the exchange between the worker and her employer is mutually beneficial, even when it’s unfair. Sweatshops make their employees better off even if they don’t make them as much better off as critics think they should. Consider sweatshop wages. As you might recall, Masango earned $36 a week at her sweatshop job. Compare this with her friend, who lost her job at a sweatshop after it was closed for violating minimum-wage laws and had to find work as a nanny. That friend wound up earning just $14 a month, less than 12 percent of what Masango earned. And this wage gap is typical of sweatshop jobs relative to other jobs in the domestic economy. Studies have shown sweatshop jobs often pay three to seven times the wages paid elsewhere in the economy.

 

So even if we think the conditions of sweatshop labor are unfair, relative to their other alternatives, sweatshop labor is a very attractive option for workers in the developing world. And this is why those workers are often so eager to accept so-called sweatshop jobs. Now no one on either side of the debate defends forced labor, but so long as sweatshop labor is voluntary, even in a weak sense of being free from physical coercion, workers would only take a job in a sweatshop when that job is better for them than any of their other alternatives. This is true even if we grant that sweatshop workers’ freedom is often limited in a variety of unjust ways by their government or by the so-called coercion of poverty.

 

Coercion constrains options, but as long as workers are free to choose from within their constrained set of options, we can expect them to select those jobs that offer the best prospects of success. And when given the choice between working in a sweatshop or working on a farm or working elsewhere in the urban economy, workers consistently choose the sweatshop job.

 

The second point to be made in defense of sweatshops is this: Even if you think sweatshop labor is unfair, it is a bad idea to prohibit it. Think of it this way: People only take sweatshop jobs because they’re desperately poor and low on options. But, taking away sweatshops does nothing to eliminate that poverty or to enhance their options. In fact, it only reduces them further, taking away what workers themselves regard as the best option they have.

 

Now, of course, most anti-sweatshop activists aren’t trying to shut down factories, but sometimes well-intentioned actions have unintended consequences. The layoffs faced by Masango’s friend are a stark demonstration of this. That friend was fired because the owners of her factory decided it would be better to stop doing business altogether than to pay the legal minimum wage. And while you can make it illegal for factories to pay low wages, you cannot make it illegal for them to pay no wages by shutting down altogether.

 

The third and final point is this. It’s better to do something to help the problem of global poverty than it is to do nothing. And sweatshops are doing something to help. They’re giving people jobs that pay better than their other alternatives, and they’re contributing to a process of economic development that has the potential to affect dramatic increases in living standards. Most of us, on the other hand, do nothing to improve the lives of these workers, and that includes American companies that don’t outsource their production at all but instead give their jobs to U.S. workers, who by global standards are already some of the world’s wealthiest people.

 

So take the perspective of one of the world’s poor for a moment and ask yourself which looks better to you: The American company that outsources to a sweatshop or the American company that, because of its high-minded moral principles, doesn’t? Maybe the sweatshop is run by people who are greedy and shallow in their motivations and maybe the other company is run by people with the purest of intentions. But good intentions don’t get you a job and they don’t feed your family. So which looks better now?

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8 Comments

  1. Matt Wavle

    When people’s actions bring about harmful results, in direct conflict with their stated goals, why then do they ignore the results and justify their actions based solely on their worthy intentions?  Is their pride really more important than their stated goals?

  2. Adam Billman

    I suppose the first question is how do you determine the “needs” of the workers? Assuming we took your position and stated the companies should do what is right, we still need to know what right is and who gets to decide it. Certainly the company would want it to be low and the worker would want it to be high so we really cannot use either judgment. 

    We could try to peg it to prices of necessary goods. The meaning of necessary however is amazingly hard to pin down in a third-world country. In the states, we might require a car, air-conditioning, electricity, cell phone, and a wide variety of food and other goods. Someone in the third world however is used to much less than that. Cars are frequently outside all but the richest hands. Consequentially, people choose to live close to work. So even if we in the states decided that they should be able to afford a car and the money for maintenance of it, the third-world employee does not need the car. Likewise, cell phones are rare as well, and so the infrastructure to use them is sparse. This being the case, those are also useless. Frankly, we have no business trying to judge any wage earned in any third-world country because we are so far removed from the third-world, that we simply cannot make educated judgments regarding it.
    A better option is to let the free-market do what it does best. Let people choose where they want to work. No one will ever work somewhere if working there will literally not cover expenses so no one will starve who is employed. As for comparative advantage, no employee will work in a sweat shop that could earn anywhere else a better income from a different job. Assuming there is no government interference, there is no better system then the free market for determining the best value for their pay. As more people get more jobs at more firms and the labor market shrinks, the established businesses will have to pay more or else risk losing the more productive employees. Hence, while currently they live in poor slums, they will not always. Eventually the infrastructure will adjust, more people will become better educated, and that country will improve.
    As one final note, consider the USA in the early days of the 20th century. The average income would have been around a $0.40 a day for a low income job. This would have bought 1lb of bacon (hence the phrase “bringing home the bacon”). In less than 100 years, due to technological advance and infrastructure improvements, the average minimum wage recipient can now earn close to 2lbs of bacon per hour. Go to a grocery store and divide everything you see by $8.50. That will give you the number of hours of work it would take to earn that item. You will be amazed at how cheap everything is here.
  3. taschrant

    I understand when people bash sweatshops, but I think the most important point to be made when debating sweatshops is just what this guy said: What are the alternatives?

  4. supersonicsixteen

    You have to let people choose how to fill their own needs the best.  I for instance think I have the best idea of how to eat.  That being said, it would be wrong for me to make you eat a certain way. Does that make sense?

  5. supersonicsixteen

    Pride is very important to those that hold it.  It’s hard to understand for people like you and me who would rather deal with results.

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