he anti-sweatshop
he anti-sweatshop movement consists of unions, student groups, politicians, celebrities, and religious groups. Each group has its own favored “cures” for sweatshop conditions. These groups claim that their proposals would help third world workers. Some of these proposals would prohibit people in the United States from importing any goods made in sweatshops. What determines whether the good is made in a sweatshop is whether it is made in any way that violates labor standards. Such standards typically include minimum ages for employment, minimum wages, standards of occupational safety and health, and hours of work.
Such standards do nothing to make workers more productive. The upper bound of their compensation is unchanged. Such mandates risk raising compensation above laborers’ productivity and throwing them into worse alternatives by eliminating or reducing the
U.S. demand for their products. Employers will meet health and safety mandates by either laying off workers or by improving health and safety while lowering wages against workers’ wishes. In either case, the standards would make workers worse off. The aforementioned Charles Kernaghan testified before Congress on one of these pieces of legislation, claiming:
Once passed, this legislation will reward decent U.S. companies which are striving to adhere to the law. Worker rights standards in China, Bangladesh and other countries across the world will be raised, improving conditions for tens of millions of working people. Your legislation will for the first time also create a level playing field for American workers to compete fairly in the global economy.
Contrary to his assertion, anti-sweatshop laws would make third world workers worse off by lowering the demand for their labor. As his testimony alludes to though, such laws would make some American workers better off because they would no longer have to compete with third world labor: U.S. consumers would be, to some extent, a captive market. Although Kernaghan and some other opponents of sweatshops claim that they are attempting to help third world workers, their true motives are revealed by the language of one of these pieces of legislation: “Businesses have a right to be free from competition with companies that use sweatshop labor.” A more-honest statement would be, “U.S. workers have a right not to face competition from poor third world workers and by outlawing competition from the third world we can enhance union wages at the expense of poorer people who work in sweatshops.”
Kernaghan and other first world union members pretend to take up the cause of poor workers but the policies they advocate would actually make those very workers worse off. As economist David Henderson said, “someone who intentionally gets you fired is not your friend.” Charles Kernaghan is no friend to third world workers.
Conclusion
Not only are sweatshops better than current worker alternatives, but they are also part of the process of development that ultimately raises living standards. That process took about 150 years in Britain and the United States but closer to 30 years in the Japan, South Korea, Hong Kong, and Taiwan.
When companies open sweatshops they bring technology and physical capital with them. Better technology and more capital raise worker productivity. Over time this raises their wages. As more sweatshops open, more alternatives are available to workers raising the amount a firm must bid to hire them.
The good news for sweatshop workers today is that the world has better technology and more capital than ever before. Development in these countries can happen even faster than it did in the East Asian tigers. If activists in the United States do not undermine the process of development by eliminating these countries’ ability to attract sweatshops, then third world countries that adopt market friendly institutions will grow rapidly and sweatshop pay and working conditions will improve even faster than they did in the United States or East Asia. Meanwhile, what the third world so badly needs is more “sweatshop jobs,” not fewer.
Benjamin Powell is Assistant Professor of Economics at Suffolk University and Senior Economist with the Beacon Hill Institute. He is editor of Making Poor Nations Rich: Entrepreneurship and the Process of Development.
