The Brown Bookstore’s recent cancellation of its merchandising contract with Nike has returned to prominence the debate over low-wage labor in developing countries. The cancellation stemmed from alleged illegal labor practices on the part of two Nike subcontractors based in Honduras.
While severing business relationships with companies clearly engaged in activities illegal in the countries in which they occur is legitimate, this incident should not become the basis for a wider backlash against the purchase of manufactured goods from developing countries. The fact of the matter is that though sweatshops are frequently criticized, they provide the best chance for short-run alleviation of poverty and long-run economic development in their host countries.
The arguments against the consumption of goods made through sweatshop labor are replete with false dichotomies. A centerpiece of this opposition is the argument that sweatshops are abhorrent because they employ child labor. While a factory in the developed world with such practices would be quickly and rightly condemned, this contention does not hold with overseas sweatshops because it relies on the assumption that children not working in sweatshops would not be working at all — an assumption that is demonstrably false.
Far from improving the plight of children previously employed in sweatshops, forced layoffs frequently relegate them to far worse circumstances. In tracking the overall welfare of thousands of children fired in Bangladesh in 1993 as a consequence of political pressure, UNICEF found that many of these children, being too impoverished not to work, had gone into prostitution and petty theft. While rescuing child laborers from dangerous conditions is a noble goal, attempts to remove sweatshops are often tragically counterproductive in this effort.
Anti-sweatshop activists also point out that the wages of garment workers in sweatshops are paltry compared with those of their counterparts in the developed world. While this is true, it is irrelevant, since sweatshop workers do not possess the option to work in a developed country. The only comparison of wages that is relevant in this case is that of sweatshop workers with the average wage of home country workers. According to a 2004 study, the wages paid in sweatshops exceeded the average national income in nine out of the eleven countries examined, including four countries — Honduras among them — with sweatshop wages doubling the national average.
In light of this, the common criticism that sweatshop workers possess little job security becomes better understood. Laborers in sweatshops are frequently fired over minor infractions for the same reason that higher worker turnover rates prevail in periods of high unemployment anywhere. When the demand for a low-skill job is high, the incentives not to fire and replace a worker are minimal.
Aside from the factual inconsistencies in the rationale of opposition to sweatshop-made goods, there is also an element to the rhetoric that treats sweatshop workers as if they do not possess free will or the ability to leave the sweatshop. Many anti-sweatshop arguments gloss over the point that the worker, in choosing to work in a sweatshop, sees it as preferable to the alternative, which often involves subsistence agriculture or other dangerous manual labor. While working in a sweatshop strikes anyone in a developed economy as terrible, it is for many in the developing world a step up from the conditions in which they previously lived.
Furthermore, one must remember that the United States and the United Kingdom also went through a phase of low-wage industrialization in their own economic histories, as did virtually all advanced economies that did not develop by way of oil wealth.
In the late 20th century, the world saw the stratospheric rise of Japan, South Korea, Singapore and Hong Kong through the exact same process. To prevent other countries from developing along the same trajectory that wealthy nations have already taken by refusing to purchase their goods is, in effect, to punish them unfairly for coming into the game too late.
While anti-sweatshop activists mean well in their efforts to raise the quality of life in poorer countries, the policies that they espouse as means to this end would have disastrous effects on the economies of the developing world if applied on a large scale. The arguments against sweatshops are based largely on appeals to emotion, with context and consequences often falling by the wayside. Until a viable alternative method of development can be offered, campaigns against sweatshops will continue to backfire, harming the very people they intend to help.
Hunter Fast ’12 is an economics concentrator who strongly supports free immigration, but that’s a topic for another column.