WhyEconomistsAreWrongAbout

SweatshopsandtheAntisweatshopMovement
JohnMiller
Someeconomistsarguethatlowwagelaboremployedbymultinationalcompaniesin
developingnationsisusuallybeneficial.Wagesaretypicallyhigherthanwhatisavailablein
domesticwork.Butthereisanotherview.Thiseconomisttakesonsomeofourboardmembers
inapiecethatarguesthatsweatshopsshouldnotbeeasilytoleratedindevelopingnations.

HESTUDENTLEDANTISWEATSHOPMOVEMENTthattookholdonmany
collegecampusesduringthelate1990sshouldhavepleasedeconomists.Studyingthe
workingconditionsfacedbyfactoryworkersacrosstheglobeofferedpowerfullessons
abouttheworkingsoftheworldeconomy,thedimensionsofworldpoverty,andmoststudents'
privilegedpositioninthateconomy.
Ontopofthat,thesestudentswerededicatednotjusttoexplainingsweatshopconditions,but
alsotochangingthem.Theywanteddesperatelytodosomethingtoputastoptothe
brutalizationandassaultsonhumandignitysufferedbythewomenandmenwhomadetheir
jeans,tshirts,orsneakers.1Onmanycampuses,studentactivismsucceededinpressuring
collegeadministratorsbydemandingthatclothingbearingtheircollegelogonotbemadeunder
sweatshopconditions,and,atbest,thatitbemadebyworkersearningalivingwage
(FeatherstoneandUnitedStudentsAgainstSweatshops2002).
Butmostmainstreameconomistswerenotatallpleased.No,theydidnotdisputethesetales
fromthefactoryfloor,manyofwhichhadbeenconfirmedinthebusinesspress(Robertsand
Bernstein2000)andbyinternationalagencies(ILO2000).Rather,mainstreameconomists
rushedtodefendthepositiveroleoflowwagefactoryjobs,theverykindweusuallycall
sweatshops,ineconomicdevelopmentandinalleviatingpoverty.
JOHNMILLERisWilliamsProfessorofEconomicsatWheatonCollege.Theauthorwould
liketothankSusanPorterBenson,JamesDevine,PeterEvans,MalcolmFairbrother,Tami
Friedman,BarryHerman,LouisKampf,ArthurMacEwan,RobertPollin,andChrisTillyfor
theirhelpfulcommentsonthemanuscript.ThecommentsofJamesHeintz,whodiscussedan
earlierversionofthearticleatthemeetingoftheAlliedSocialScienceAssociation(January3,
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

2002),wereespeciallyvaluableinrefiningtheargumentspresentedbelow.Theauthoraloneis
responsibleforanyshortcomingsthatremaininwhatfollows.
Whatismore,theseeconomistsweregenerallydismissiveofthestudentledantisweatshop
movement.Insummer2000,theAcademicConsortiumonInternationalTrade(ACIT),agroup
ofadvocatesofglobalizationandfreetrademadeupmostlyofeconomists,tookitupon
themselvestowritedirectlytothepresidentsofuniversitiesandcolleges(see
wwwspp.umich.edu/rsie/acit/).TheACITletterwarnedpresidentsthatantisweatshop
protestersoncollegecampusewereoftenillinformedandthatadoptingcodesofconduct
requiringmultinationalcorporationstopayhigherwagesrecommendedbytheprotestersmay
costworkersinpoorcountriestheirjobs.
Theresponseofmainstreameconomiststotheantisweatshopmovementwashardlysurprising.
Economistshaveapenchantforplayingthecontrarian,and,forthemostpart,theyoppose
interventionsintomarketoutcomes,eveninterventionsintothelabormarketsofthedeveloping
world.
Nomatterhowpredictable,theirresponsewasprofoundlydisappointing.Althoughitcontains
elementsoftruth,whateconomistshavetosayaboutsweatshopsmissesthemark.Thatwasmy
conclusionafterspendingsummerandfallof2000readingmuchofwhateconomistsand
economicjournalistshadwrittenaboutsweatshopsasIpreparedtoteachmyundergraduate
seminar,"SweatshopsandtheGlobalEconomy."2First,thepropositionsthatmainstream
economistsrelyontodefendsweatshopsaremisleading,rootedinanexchangeperspectivethat
obscuressweatshopoppression.Sweatshopoppressionisnotdefinedbylabormarket
exchangesbutbythecharacteristicsofajob.Second,policypositionsbasedonthese
propositionsareequallyflawed.Economists'claimthatmarketledeconomicdevelopment,
independentoflaborandsocialmovementsandgovernmentregulation,willputanendto
sweatshopconditionsdistortsthehistoricalrecord.Finally,theirassertionthatdemandsfor
betterworkingconditionsintheworldexportfactorieswillharmthirdworldworkersand
frustratepovertyalleviationisalsosuspect.
Withthatsaid,thechallengeissuedbymainstreameconomiststotheantisweatshopmovement
remainsaformidableone.Whateconomistshavetosayaboutthesweatshopshasconsiderable
powerinthewayofpersuasionandinfluence,theprotestationsofBhagwatiandtheACIT
notwithstanding.Oftenitistheirwritingsthatarebeingdistilledinwhatjournalists,
governmentofficials,andthegeneralpublichavetosayaboutsweatshops.
Supportersoftheantisweatshopmovement,andinstructorsofsweatshopseminars,needtobe
abletoanswereachcountoftheeconomists'indictmentsoftheirmovementwithargumentsthat
areequallypersuasive.

Todayagroupofeconomistsisdedicatedtodoingjustthat.Inthefallof2001,Scholars
AgainstSweatshopLabor(SASL)issuedaresponsetotheACITindictmentofthe
antisweatshopmovement(SASL2001).Itsleadauthor,economistRobertPollin,madethecase
that"theantisweatshopmovementistakingconstructivestepstowardimprovinglivingand
workingconditionsformillionsofpoorpeoplethroughouttheworld."
Teachingaboutsweatshopsalsoconvincedmethatsupportersoftheantisweatshopmovement
needtorespondtothecriticismsofmainstreameconomistswithactionsaswellaswords.
Weneedtolinkantisweatshopcampaignsforthebettermentofthewomenandmenwhotoilin
theworldexportfactorieswitheffortstoimprovethelotoftheirbrothersandsisters,whooften
workunderevenmoreoppressiveconditionsintheinformalandagriculturalsectorsofthe
developingworld.

JustEnforcetheLaw
Whattodoaboutsweatshops?Thatisnotadifficultquestionformostmainstreameconomists
toanswer.Justenforcethelaw,theysay(Weidenbaum1999,2628).Andavoidother
"institutionalinterventions"thatmightimpairamarketleddevelopmentthatwillenhance
productivityandtherebyraisewagesandimproveworkingconditions(Irwin2002,214;
Sengenberger1994,10).Bylaw,theymeanlocallaborlaw,notsomelaborstandardthatill
informedprotesters(oreventheInternationalLaborOrganization,forthatmatter)would
imposeonmultinationalcorporationsandtheirsubcontractorsindevelopingeconomies.
Nooneintheantisweatshopmovementwouldquarrelwiththeinsistencethatthelawbe
obeyed.Infact,severalU.S.antisweatshopgroupsdefineasweatshopinlegalterms.According
toFeministsAgainstSweatshops(2002),forinstance,sweatshopoperatorsareemployerswho
violatetwoormorelaborlaws,fromtheprohibitionofchildlabor,tohealth,safety,fire,and
buildingcodes,toforcedovertimeandtheminimumwage.3
Effectiveenforcementoflocallaborlawinthedevelopingworld,wherelaborlegislationin
manycountriesonpaper,.atleastisquiteextensive,wouldsurelyhelptocombatsweatshop
abuseaswell(Portes1994,163).Forinstance,MadeinChina,areportoftheNationalLabor
Committee,theleadingU.S.basedantisweatshopgroup,foundthatsubcontractorsproducing
goodsforU.S.corporations,includingWalMartandNike,"routinelyviolate"Chineselabor
law.Insomeofthesefactories,youngwomenworkaslongasseventyhoursaweekandare
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

paidjustpenniesanhourafterpaydeductionsforboardandroom,clearviolationsofChina's
laborlaw(Kernaghan2000).AthreemonthBusinessWeekinvestigationoftheChunSi
EnterpriseHandbagFactoryinsouthernChina,whichmakesKathieLeeGiffordhandbagssold
byWalMartstores,confirmedthatworkersthereconfrontedlaborpracticesthatincluded
illegallycollectedfines,confiscatedidentitypapers,andbeatings(RobertsandBernstein2000).
Butthelimitationsofthislegalprescriptionforcuringsweatshopabusebecomeobviouswhen
wegotoapplyittocountrieswherelocallaborlaw,evenonpaper,doesnotmeasureuptothe
mostminimal,internationallyagreeduponlaborstandards.Takethecaseofthehigh
performanceeconomiesofSoutheastAsia,Indonesia,Malaysia,andThailand.Inthose
countries,severalcorelaborconventionsoftheInternationalLaborOrganization(ILO)have
goneunratifiedincludingtherighttoorganize.Minimumwagesarewellbelowthelevel
necessarytoliftafamilyofthreeabovethepovertyline,theusualdefinitionofalivingwage.
Andinthosecountries(aswellasChina),independenttradeunionactivityissystematicallyand
sometimesbrutallysuppressed.4
Whenlaborlawprotectionsarelimitedandinternationallaborconventionsareneitherratified
norrespected,theninsisting"thelawshouldbefullyobeyed"willdolittletopreventsweatshop
abuse.Inthosecases,enforcingthelawwouldseemtobeashakyfoundationonwhichtobuild
astrategyofalleviatingsweatshoplaborthroughimprovedmarketoutcomes.5
Ifyouarenotconvincedoftheinadequacyofusinglocalorexistinglaborlawtodetect
sweatshopabuse,thentrythisexerciseinvolvingafamousU.S.workplacefromthepast.In
February2001,RoseFreedman,thelastsurvivorofthe1911TriangleShirtwaistfire,diedat
theageof107(Martin2001).Thathorrificblazekilled146ofher500coworkersatthe
TriangleShirtwaistCompanyinlowerManhattan.6Mostofthevictimswereyoungwomen,
someasyoungasthirteenyearsold(KheelCenter1998,narrative3).Manyjumpedtotheir
deathfromtheninthstorywindowsoftheTrianglefactory.Afireescapethatledtonowhere
andlockeddoorsblockedtheirexit(KheelCenter1998,narrative3).Neitherfirefighters'
Iladdersnorthewaterfromtheirhosesreachedthefactoryontheupperfloorsofthemodern
Aschbuilding,andtheirnetsbuckledundertheweightoffallingbodies(McClymer1998,
13338).
Theseimagesshockedthenation.TheTrianglefireledtoaburstofcity,state,andfederallaws
regulatingthegarmentindustryanddealingwithworkers'safety.Forinstance,byjusttwoyears
later,thestateofNewYorkhadpassedintolaweightnewfactorysafetyacts(McClymer1998,
88).FollowinganotherburstofunionorganizingduringtheGreatDepression,the
legislationreformmovementculminatedin1938withthepassageofthefederalFairLabor
StandardsActundertheRooseveltadministration.7Thatactestablishedthenationalminimum
wage,requiredpremiumpayforovertime,andlimitedchildlabor.

Wouldenforcingexistinglaborlawhavebeenanadequateresponsetotheworstindustrial
accidentinthehistoryoftheUnitedStates?Triangle'scoownersweretriedonmanslaughter
charges.Buttheywereacquittedbecausethejurycouldnotestablishiftheyhadorderedthe
factorydoorslockedorhadknownaboutit,apracticeFreedmanclaimedwasroutine.Inacivil
case,claimsagainsttheownerofthebuildingwereeventuallysettledfor$75pervictim.Those
rulingspromisedtodolittletoimprovethetragicconditionsofemploymentinthegarment
industryof1911.Bothhistoricalandcontemporaryevidence,then,makesclearthatsimply
enforcinglaborlawhasnotandwillnotensurethesafetyofgarmentworkers.

ADefenseofSweatshops?
Thedefenseofsweatshopsofferedupbymainstreameconomiststurnsontwoelegantlysimple
andideologicallypowerfulpropositions.Thefirstisthatworkersfreelychoosetoenterthese
jobs,andthesecondisthatthesesweatshopjobsarebetterthanthealternativeemployments
availabletothemindevelopingeconomies.Bothpropositionshaveacertaintruthtothem.
AnExchangePerspective
Fromtheperspectiveofmainstreameconomics,everyexchange,includingtheexchange
betweenworkerandboss,isfreelyenteredintoandonlytakesplacebecausebothpartiesare
madebetteroff.Hiringworkerstofillthejobsintheworldexportfactoriesisnoexception.
Ofcourse,insomecases,workersdonotfreelyenterintosweatshopemploymentevenbythe
usualstandardsofwagelabor.Sometimesworkersareheldcaptive.Forexample,a1995police
raidofafencedincompoundofsevenapartmentsinElMonte,California,foundaclandestine
garmentsweatshopwheresomeseventytwoillegalThaiimmigrantswereheldinvirtual
captivityastheysewedclothesforbrandnamelabels(Su1997,143).Othertimes,workersfind
themselveslockedintowalledfactorycompoundssurroundedbybarbedwire,sometimes
requiredtoworkfifteenhoursaday,sevendaysaweek,subjecttophysicalabuse,and,after
finesandchargesaredeductedfromtheirpaycheck,leftwithoutthemoneynecessarytorepay
exorbitanthiringfees.Thatwasthecaseforthemorethan50,000youngfemaleimmigrants
fromChina,thePhilippines,Bangladesh,andThailandwhowererecentlydiscoveredinSaipan
(partoftheCommonwealthoftheNorthernMarianaIslands,aterritoryoftheUnitedStates)
workingunderthesenearslavelikeconditionsastheyproducedclothingformajorAmerican
distributorsbearingthelabel"MadeintheUnitedStates"(ILO2000).
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

Butinmostcases,workersdochoosethesejobs,ifhardlyfreelyorwithoutthecoercionof
economicnecessity.Seenfromtheexchangeperspectiveofmainstreameconomics,thatchoice
alonedemonstratesthatthesefactoryjobareneithersweatshopsnorexploitative.
Listentohowmainstreameconomistsandtheirfollowersmakethisargument.Inresponseto
theNationalLaborCommittee'sexposofconditionsintheHonduranfactoriesmanufacturing
KathieLeeclothingforWalMart,ElSalvadoraneconomistLucyMartinezMontassuredus
that"Peoplechoosetoworkinmaquilashopsoftheirownfreewill,becausethosearethebest
jobsavailabletothem"(MartinezMont1996,sec.A,p.14).ForeconomicjournalistNicholas
Kristof(1998),thestoryofMrs.Tratiwoon,anIndonesianwoman,makesthesamepoint.She
sustainsherselfandhersonbypickingthroughagarbagedumpoutsideofJakartainsearchof
metalscrapstosell.ShetellsKristofofherdreamsforherthreeyearoldsonassheworks.
"Shewantshimtogrowuptoworkinasweatshop."
Storiessuchasthisonearepowerful.Thefactthatmanyinthedevelopingworldareworseoff
thanworkersintheworldexportfactoriesisapointthateconomistssupportiveofthe
antisweatshopmovementdonotdeny.Forinstance,afewyearsback,economistArthur
MacEwan,mycolleagueatDollars&Sense,apopulareconomicsmagazine,mademuchthe
samepoint.HeobservedthatinapoorcountrylikeIndonesia,wherewomenworkingin
agriculturearepaidwagesonefifththoseofwomenworkinginmanufacturing,sweatshopsdo
notseemtohaveahardtimefindingworkers(MacEwan1998).AndtheScholarsAgainst
SweatshopLaborstatement(2001)admitsthat"Evenafterallowingforthefrequentlowwages
andpoorworkingconditionsinthesejobs,theyarestillgenerallysuperiorto'informal'
employmentin,forexample,muchofagricultureorurbanstreetvending."
Thisisnotmeanttosuggestthattheseexchangesbetweenemployersandpoorworkerswith
fewalternativesareinrealityvoluntaryorthatworldexportfactoryjobsarenotsweatshopsor
placesofexploitation.Rather,aspoliticalphilosopherMichaelWaltzerargues,theseexchanges
shouldbeseenas"tradesoflastresort"or"desperate"exchangesthatneedtobeprotectedby
laborlegislationregulatingsuchthingsaslimitsonhours,awagefloor,andguaranteedhealth
andsafetyrequirements(Rodrik1997,35).8
PrevailingWagesandWorkingConditions
Whatmainstreameconomistssayindefenseofsweatshopsislimitedinotherwaysaswell.For
instance,anACITletter(2000)misstatestheargument.TheACITwritesthatmultinational
corporations"commonlypaytheirworkersmoreonaverageincomparisontotheprevailing
marketwageforsimilarworkersemployedelsewhereintheeconomy"But,astheSASL
authorscorrectlypointout,"Whilethisistrue,itdoesnotspeaktothesituationinwhichmost
garmentsareproducedthroughouttheworldwhichisbyfirmssubcontractedbymultinational

corporations,nottheMNCsthemselves."TheACITauthorsimplicitlyacknowledgeasmuch,
forinthenextsentencetheywritethat,"incaseswheresubcontractingisinvolved,workersare
generallypaidnolessthantheprevailingmarketwage."9
TheSASLstatementalsowarnsthattheACITclaimthatsubcontractorspaytheprevailing
marketwagedoesnotbyitselfmakeapersuasivecasethattheworldexportfactorieswe
commonlycallsweatshopsareanythingbutthat.TheSASLauthors(2001)emphasizethat

theprevailingmarketwageisfrequentlyextremelylowforgarmentworkersinlessdevelopedcountries.In
addition,therecentuniversitysponsoredstudiesaswellasanOctober2000reportbytheInternationalLabor
Organizationconsistentlyfindthatseriousworkplaceabusesandviolationsofworkers'rightsareoccurringin
thegarmentindustrythroughouttheworld.

Thesamecanbesaidaboutotherworldexportfactories.Considerforaminutetheworking
conditionsattheIndonesianfactoriesthatproducefootwearforReebok,theStoughton,
Massachusettsbasedinternationalcorporationthat"goestogreatlengthstoportrayitselfasa
conscientiouspromoterofhumanrightsintheThirdWorld"(Zuckoff1994).Despiteitsstatus
asamodelemployer,workingconditionsatfactoriesthatmakeReebokfootwearbecamethe
focusoftheBostonGlobe1994seriesentitled"FoulTrade"(Zuckoff1994).TheGlobetellsthe
storyofYati,ayoungIndonesianwomaninTangerang,Indonesia.Sheworkssewingbitsof
leatherandlacefortennisshoessoldasReeboks.
Yatisitsatasewingmachine,whichisoneofsixtyinherrow.Therearefortysixrowsonthe
factoryfloor.Forworkingsixtythreehoursaweek,Yatiearnsnotquite$80amonthjustabout
thepriceofapairofReeboksintheUnitedStates.Herhourlypayislessthan32centsperhour,
whichexceedstheminimumwageforherregionofIndonesia.Yatilivesinanearby
tenbytwelvefootshackwithnofurniture.Sheandhertworoommatessleeponthemudand
tilefloor.
AfactoryliketheoneYatiworksinistypicallyownedbyanEastAsiancompany.For
instance,PTTongYangIndonesia,aSouthKoreanownedfactory,pumpedout400,00pairsof
Reeboksamonthin1993.Inreturn,Reebokpaiditsowner,TanChuanCheng,$10.20foreach
pairofshoesandthensoldthemfor$60ormoreintheUnitedStates.MostofTan'spayment
wenttopurchasematerials.TantoldtheGlobethatwagesaccountedforaslittleas$1.40ofthe
costofapairofshoes(Zuckoff1994).10
AMoreEffectiveResponse
AsItaughtmyseminaronsweatshops,Isettledonamoreeffectiveresponsetothemainstream
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

economicargument.Itissimplythis:Theirargumentisirrelevantfordeterminingifafactoryis
asweatshoporifworkersareexploited.Sweatshopconditionsaredefinedbythecharacteristics
ofajob.Ifworkersaredeniedtherighttoorganize,sufferunsafeandabusiveworking
conditions,areforcedtoworkovertime,orarepaidlessthanalivingwage,thentheyworkina
sweatshop,regardlessofhowtheycametotaketheirjobsorifthealternativestheyfaceare
worseyet.
Acarefulreadingofwhatthemainstreamexchangeperspectivesuggestsaboutsweatshopjobs
isnottheyare"goodnews"fortheworld'spoorbut"lessbadnews"thantheusualconditionsof
workintheagriculturalandinformalsectors.Theoppressiveconditionsoftheworkinthe
worldexportfactoriesarenotdeniedbytheirargument.Forinstance,ACITleaderJagdish
Bhagwatisayssweatshopjobsarea"tickettoslightlylessimpoverishment"(Goldberg2001,
30).
ConsideragaintheTriangleShirtwaistfireof1911.WhatshouldwesayabouttheTriangle
ShirtwaistCompany?Wasitasweatshop,asiteofexploitationofpoorimmigrantwomen?
Lookedatfromthisexchangeperspective,theanswerswouldseemtobeno."Agarment
factoryin1911wasprettybadbytoday'sstandards,butnotcomparedwithalternatesback
then,"economichistorianPriceFishbacktoldtheNewYorkTimes(Tierney1999).Hesaysthat,
accordingtothedatacollectedin1908bytheUnitedStatesImmigrationCommission,garment
workers'paywas8percenthigherthantheaverageoftwentyoneindustriessurveyed.Their
wagenearlyequaledthatofAmericanbornworkers,andwastriplethetypicalwageinItalyor
EastEurope(Tierney1999).Atthetime,evenmuckrakingjournalistsallowedthattheTriangle
factory,lodgedinamodernhighrisebuilding,was"saferthanaverage"(McClymer1998,
13438),andTriangle'sworkersreadilyadmittedthatits"steadyemployment"madethem
"eagertoworkforthecompany"(KheelCenter1998,Letters,Newman).
Butonthatbasis,arewereallypreparedtoacceptthatemploymentintheTriangleShirtwaist
factory,thesiteoftheworstindustrialfireinourhistory,wasgoodnewsfortheimmigrant
poor?Afterall,theTriangleShirtwaistCompanywas"inmanywaysatypicalsweatshop"
(KheelCenter1998,narrative2).Muchofitsworkwasoverseenbysubcontractorssweaters
whopaidtheirwomenworkersrockbottomwagesandregularlyfinedthemforlateness
(McClymer1998,130).Inaddition,thewagesoftheseItalianandJewishimmigrantwomen,
whatevertheirlevel,wereessentialforthesupportoftheirfamilies,accordingtothereportsof
RedCrossreliefworkers(McClymer1998,1079).Triangle'ssteadyemploymentalsocameat
acost.Duringthebusyseason,workerswereforcedtoendurefourteenhourdaysthatlasted
wellintotheevening(KheelCenter1998,Letters,Newman).Finally,whilethesupposedly
fireproofAschbuildingsufferedlittlestructuraldamagefromthe1911fire,itcouldnotprotect
thewomenwhoworkedintheTrianglefactory(McClymer1998,86).

WhenmeasuredagainstthesafetystandardsimposedbythestateofNewYorkandthevictories
wonforgarmentworkersintheyearsimmediatelyfollowingthefirehardlyaninappropriately
ahistoricallaborstandardtheworkingconditionsattheTriangleShirtwaistfactoryarefound
wanting.

ConfrontingCriticsoftheAntisweatshopMovement
Still,noneoftheabovespeaksdirectlytothecontentionofmainstreameconomiststhat
imposing"enlightenedstandards"advocatedbytheantisweatshopactivistsontoconditionsfor
employmentintheexportfactoriesofthedevelopingworldwillimmiseratetheveryworkers
themovementintendstohelp(ACIT'2000).
CoreLaborStandards
Tobeginwith,aslaboreconomistRichardFreeman(1994,80)writes,"Everyone,almost
everyoneisforsomestandards"(emphasisintheoriginal).Surelythatincludeseconomistswho
wouldcombatsweatshopsbyinsistingthatlocallaborlawberespected.Eventheirposition
recognizesthatthe"voluntary"exchangeoflaborforwagesmustbedelimitedbyrules,
collectivelydeterminedandobeyedbyall.
Therelevantquestionis:Whatarethoserules,andareanysobasicthattheyshouldbeapplied
universally,transcendingthenormalboundsofsovereignty?Forthemostpart,economists,
trainedafterallaseconomistsandnotpoliticalphilosophers,havelittletosayonthismatter
otherthantocautionthatoutsideofthecondemnationofslavery,thereisnouniversal
agreementabouttheappropriatenessoflaborstandardsevenwhenitcomestobondedlaborand
childlabor(Bhagwati1995,754;Brown2001,94;Irwin2002,216).
Nonethelessothereconomists,evensomecriticaloftheantisweatshopmovement,arefavorably
disposedtowardinternationallaborstandardsaboutsafetyandhealth,forcedlabor,andthe
righttoorganize.Forinstance,AliceAmsden,aneconomistwhoopposesestablishingwage
standardsondevelopingeconomies,favorstheimpositionofotherlaborstandards."Theissue,"
shesays,"isnothealthandsafetyconditions,therightofworkerstobetreatedlikehuman
beingsnottobemurderedfororganizingunions,forexample.Theserightsareinviolate"
(Amsden1995).Attimes,evenJagdishBhagwatihastakenasimilarposition(Bhagwati2002,
60).
TheInternationalLaborOrganization,inits1998DeclarationonFundamentalPrinciplesat
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

Work,tookasimilarposition.TheILOheldthateachofits175members(eveniftheyhavenot
ratifiedtheconventionsinquestion)wasobligated"torespect,topromoteandtorealize"the
fundamentalrightsof"freedomofassociationandtheeffectiverecognitionoftherightto
collectivebargaining,theeliminationofallformsofforcedorcompulsorylabour,theeffective
abolitionofchildlabourandtheeliminationofdiscriminationinrespectofemploymentand
occupation"(2002a).
Theempiricalevidenceoftheeffectofthesecorelaborstandardsoneconomicdevelopmentis
ambiguous.Forinstance,theOrganizationforEconomicCooperationandDevelopment
(OECD)foundthatcountriesthatstrengthenthesecorelaborstandards"canincreaseeconomic
growthandefficiency"(OECD2000,14).InternationaltradeeconomistJaiMah,ontheother
hand,foundthatratificationoftheILOConventionsonfreedomofassociationandontheright
tonondiscriminationnegativelyaffectedtheexportperformanceofdevelopingcountries(Mah
1997,781).AndastudyconductedbyDaniRodrik,anotherinternationaltradeeconomist,
suggestedthatlowcorelaborstandardsenhancedacountry'scomparativeadvantageinthe
productionoflaborintensivegoodsbutdeterredratherthanattracteddirectforeigninvestment
(Rodrik1996,59).
TheLivingWage
Nevertheless,almostallmainstreameconomistsdrawthelineatlaborcodesdesignedtoboost
wagesasopposedtoleavingthedeterminationofwagestolabormarketoutcomes.Thatsurely
goesforlaborcodesthatcallforthepaymentofalivingwage,usuallydefinedasawage
adequatetoliftaworkerandtwodependentsoutofpoverty.TheACITworriesthatif
multinationalcorporationsarepersuadedtoincreasetheirwages(andthoseoftheir
subcontractors)"inresponsetowhattheongoingstudiesbytheantisweatshopmovementmay
concludeareappropriatewagelevels,thenetresultwouldbeshiftsinemploymentsthatwill
worsenthecollectivewelfareoftheveryworkerswhoaresupposedtobehelped.(2001).
AndACITleaderBhagwatidismissesthecallformultinationalsandtheirsubcontractorstopay
alivingwageassomuchfirstworldprotectionismcloakedinthelanguageof"social
responsibility"(Bhagwati2000,11).Asheseesit,students'demandthata"livingwage"be
paidindevelopingcountrieswoulddulltheonecompetitiveadvantageenjoyedbythese
countries,cheaplabor.
But,inpractice,wouldalaborstandarddemandingthatmultinationalcorporationsandtheir
subcontractorsboosttheirwagesbeyondthelocalminimumwageandtowardalivingwagebe
ajobskiller?OnthatpointtheACITletterissilent,asjournalistsFeatherstoneandHenwood
pointout(2001a).
Theseeconomistsmaybeshortonevidenceabouttheeffectsofhigherwagesonthedemand

forlaborbymultinationalcorporationsandtheirsubcontractors,buttheyarelongonauthority.
Theirpropositionisassimpleasthis:"Eitheryoubelievelabordemandcurvesaredownward
sloping,oryoudon't,"asaneoclassicalcolleaguesaidtome.Ofcourse,nottobelievethat
demandcurvesarenegativelyslopedwouldbetantamounttodeclaringyourselfaneconomic
illiterate.
Still,wecanaskjusthowresponsivearethehiringdecisionsofmultinationalcorporationsand
theirsubcontractorstohigherwages.Thereisrealreasontobelievethattherightansweris,not
veryresponsive.
EconomistsRobertPollin,JamesHeintz,andJustineBurnsrecentlylookedmorecloselyatthis
question(Pollinetal.2001).Theyexaminedtheimpactthata100percentincreaseinthepay
forapparelworkersinMexicoandintheUnitedStateswouldhaveoncostsrelativetotheretail
pricethosegarmentssellforintheUnitedStates.Theirpreliminaryfindingsarethatdoubling
thepayofnonsupervisoryworkerswouldaddjust50centstotheproductioncostsofamen's
casualshirtsoldfor$32intheUnitedStates,orjust1.6percentoftheretailprice.Andevenif
thewageincreasewerepassedontoconsumers,whichseemslikelybecauseretailersinthe
U.S.garmentindustryenjoysubstantialmarketpower,Pollinetal.arguethattheincreasein
priceiswellwithintheamountthatrecentsurveyssuggestU.S.consumersarewillingtopayto
purchasegoodsproducedunder"good"workingconditionsasopposedtosweatshopconditions.
(SeeElliotandFreeman[20001foradetaileddiscussionofsurveyresults.)Moregenerally,
usingasampleoffortyfivecountriesovertheperiod199297,Pollinetal.foundno
statisticallysignificantrelationshipbetweenrealwagesandemploymentgrowthintheapparel
industry.Theirresultssuggestthatthemainstreameconomists'claimthatimprovingthequality
ofjobsintheworldexportfactories(byboostingwages)willreducethenumberofjobsisnot
evidentinthedata(Pollinetal.2001).
Evenifthiscounterexampleisnotconvincing,itisimportanttorecallthatthedemandcurve
thatdefinestheresponsivenessofmultinationalcorporationsandtheirsubcontractorstowage
increasesforfactoryworkersisatheoreticaldevicedrawnwhileholdingothereconomic
circumstancesconstant,includingpublicpolicy.Inreality,thosecircumstancesareneitherfixed
norunalterable.Infact,tocounteractanynegativeeffectthathigherwagesmighthaveon
employment,theSASLstatementcallsfortheadoptionofnewpolices,whichinclude
measurestoexpandtheoverallnumberofrelativelyhighqualityjobs;relieffromexcessiveforeigndebt
payments;raisingworkerjobsatisfactionandproductivityandthequalityofgoodstheyproduce;and
improvingthecapacitytobringfinalproductstoretailmarkets.(SASL2001)
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

"Shiftingthedemandcurveforlaboroutward,"sayseconomicsociologistPeterEvans(2002),
"isalmostthedefinitionofeconomicdevelopmentmakingpeoplemorevaluablerelativetothe
commoditiestheyneedtolive."This"highroad"approachtodevelopment,addsEvans,hasthe
additionalbenefitofaugmentingthedemandforthecommoditiesthatworkersproduce.
HistoricalChangeandSocialImprovement
Alaborcodethatrequiresmultinationalcorporationsandtheirsubcontractorstopayaliving
wage,providesafeandhealthyworkingconditions,andallowworkerstoorganizewouldbe
likelytohaveyetmoreprofoundeffectsonthesedevelopingeconomies.Onthispoint,the
antisweatshopactivistsandtheircriticsagree.Whattheydisagreeaboutiswhetherthese
broadereffectswillbeahelporhindrancetoeconomicdevelopmentandanimprovedstandard
oflivinginthedevelopingworld(Freeman1992).
Mainstreamcriticsarguethatlaborcodesarelikelytohavewidespreaddebilitatingeffects.The
institutionalizationoftheselaborstandardsproposedbyactivists,theyargue,wouldderaila
marketleddevelopmentprocess(Irwin2002,214;Sengenberger1994,1011).
Astheyseeit,laborintensivesweatshopsaregoodstarterjobstheveryjobsthatsuccessful
developingeconomiesanddevelopedcountriesusedas"steppingstones"toanimproved
standardoflivingfortheircitizens.Andineachcase,thesecountriesoutgrewtheir"sweatshop
phase"throughmarketleddevelopmentthatenhancedproductivity,notthroughthe
interventionsofanantisweatshopmovement(Krugman1994,116).
TheseeconomistsoftenusetheAsianeconomiesasexamplesofnationaleconomiesthat
abandoned"sweatshoppractices"astheygrew.TheirlistincludesJapan,whichmovedfrom
povertytowealthearlyinthetwentiethcentury,andthetigereconomiesSouthKorea,Hong
Kong,Singapore,andTaiwanwhichgrewrapidlyinthesecondhalfofthecenturytobecome
middleincomecountries(Irwin2002;Krugman1994;Krugman1997;
Lim1990;Weidenbaum1999).PaulKrugman(1997)allowsthatsometigersreliedonforeign
plantowners(e.g.,Singapore)whileothersshunnedthem(e.g.,SouthKorea).Nonetheless,he
maintainsthattheirfirststageofdevelopmenthadoneconstant:"It'salwayssweatshops"
(Meyerson1997).
Foranyonewhodoubtsthatmarketleddevelopmentthatbeginswithasweatshopphase
producesintergenerationalprogress,MurrayWeidenbaum(1999)invokesthepersonalstoryof
MiltonFriedman,theNobelPrizewinningeconomist."Ifhisparentswerenotwillingtowork
solongandhardundersweatshopconditions,theycouldnothaveearnedthemoneytoinvestin
hiseducation,"writesWeidenbaum."Weshouldallbegratefulforthatinvestmentbya

previousgenerationofFriedmansandforthecircumstancesthatenabledthemtomakethat
enlightenedchoice."
Buttheseargumentsdistortthehistoricalrecordandmisrepresenthowsocialimprovementis
broughtaboutwitheconomicdevelopment.First,theclaimthatdevelopedeconomiespassed
throughasweatshopstagedoesnotestablishthatsweatshopscausedorcontributedtothe
enhancedproductivitythattheysayimprovedworkingconditions.Second,inthedeveloped
world,thesweatshopphasewasnotextinguishedbymarketledforcesalonebutwheneconomic
growthcombinedwiththeverykindofsocialaction,orenlightenedcollectivechoice,that
defendersofsweatshopsfindobjectionable.
EvenNobelPrizewinningeconomistSimonKuznets,whoseworkdidmuchtoinspire
economists'faithinthemoderatingeffectsofcapitalistdevelopmentoninequality,wouldfind
themainstreameconomists'storyofmarketledsocialprogressquestionable.Kuznetsbasedhis
famoushypothesisthatafterinitiallyincreasing,inequalitywilldiminishwithcapitalist
economicdevelopmentnotontheoperationofmarketforcesalone,butonthecombinedeffect
ofeconomicgrowthandsociallegislation.11Forinstance,inhisfamous1955American
EconomicReviewarticle,Kuznetswrites,
Indemocraticsocietiesthegrowingpoliticalpoweroftheurbanlowerincomegroupsledtoavarietyof
protectiveandsupportinglegislation,muchofitaimedtocounteracttheworsteffectsofrapidindustrialization
andurbanizationandtosupporttheclaimsofthebroadmassesformoreadequatesharesofthegrowingincome
ofthecountry.(1955,17)

Thelaborcodescalledforbytheantisweatshopmovementwouldseemtobeanexampleofthe
"protectiveandsupportinglegislation"thatKuznetssaysiskeytospreadingthebenefitsof
economicgrowthmorewidely.
Tobesure,laborstandardsintheabsenceofeconomicgrowthwillbehardputtomakeworkers
betteroff.EconomistAjitSinghandAnnZammitoftheSouthCentre,anintergovernmental
organizationdedicatedtopromotingcooperationamongdevelopingcountries,makeexactly
thispointintheirarticleopposingcompulsorylaborstandards(SinghandZammit2000,37).As
theynote,overthelastfewdecades,wagesinrapidlygrowingSouthKoreaincreasedmuch
morequicklythanthoseinslowlygrowingIndia,eventhoughIndiahadmuchbetterlabor
standardsinthe1950sthanSouthKoreadid.12
Evenso,whileeconomicgrowthmightbenecessaryfortheeradicationofsweatshopabuse,it
isnotsufficient.U.S.economichistorymakesthatclear.IntheUnitedStates,theShirtwaist
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

strikeof1909,thetragedyoftheTriangleShirtwaistfiretwoyearslater,andthehardshipsof
theGreatDepressioninspiredtheunionizationofgarmentworkersandledtotheimpositionof
governmentregulationsonthegarmentindustryandotherindustries,beginningwiththeNew
YorkFactoryActsandextendingtotheFairLaborStandardsActof1938.Thepowerofthose
reformsalongwiththepostwarboomnearlyeradicatedsweatshopsintheUnitedStates.
Earlyinthepostwarperiod,theincidenceofsweatshopabusehadfallensuchthatInternational
Ladies'GarmentWorkers'Union(ILGWU)presidentDavidDubinskycouldclaiminaspeech
that"wehavewipedoutthesweatshop"(Ross2002).Whilenodoubtarhetorical
embellishment,evidencesuggestsU.S.sweatshopshadbeeninfactmarginalized."Bythemid
1960s,"reportsAlanHowardoftheUnionofNeedletrades,IndustrialandTextileEmployees
(UNITE),"morethanonehalfoftheworkersintheU.S.apparelindustrywereorganizedand
theirrealwageshadbeenrisingfordecades"(Howard1997,155).
Sincethen,sweatshopshavereturnedtotheU.S.garmentindustry.Theenforcementreportsof
theDepartmentofLabor(DOL)confirmthehighlevelsoflaborviolationsinthegarment
industry.Accordingtotheirgarmentenforcementreports,duringfiscalyear2000the
department'sWageandHourDivisionconductedatotalof434investigationsnationwideand
found217,orexactlyhalf,ofthesecontractorsandmanufacturersinviolationoftheFairLabor
StandardsAct(DOL2001).UsingadefinitionofsweatshopdevelopedbytheGeneral
AccountingOfficeoftheU.S.Congressabusinessthatregularlyviolatesbothwageorchild
laborlawandsafetyorhealthlawssociologistRobertRoss(2002)producedsimilarresults.He
estimatesthatjustabout60percentofthe960,000apparelworkersintheUnitedStatesworked
insweatshopconditionsinthelate1990s.13
Whythereturnofthesweatshop?Oneofthechiefreasonswasthatcutbacksingovernment
programslefttheDepartmentofLaborillequippedtoenforcelaw.Duringthe1970s,underthe
Carteradministration,theDOLhad1,600wageandhourinspectors.Thatnumberwasslashed
to700undertheReaganadministration.EvenundertheClintonadministration,itincreased
onlyto942in1997(Foo1994).Atthesametime,thenumberofworksitestobepatrolledby
thisdwindlingforceofinvestigatorshadnearlydoubled.
TheresurgenceofsweatshopsintheUnitedStatesunderlinestheimportanceofpoliticalrules
andenforcementandmakesclearthat"economicdevelopment"mayincreaseoverallincome
levels,butitwillnotbyitselfeliminateinhumanworkingconditions.Inaddition,thereturnof
sweatshopscastsdoubtonthedepictionofsweatshopsasastagethatcountriespassthrough
justonce,astheirmarketsexpandandproductivityincreases.
Finally,nomatterhowmistakenthesemainstreameconomistsmightbeabouthowsocieties
haveridthemselvesofsweatshops,theyareperhapsrightthatpasteconomicdevelopments
havegonethroughasweatshopstage.Onthatscore,Iwouldreplyexactlyasonewellknown

economistdidtoa1997NewYorkTimesarticlethatmadethesamepoint.Hisletterreadthis
way:
YourJune22WeekinReviewarticleonsweatshopsquotessomeprominenteconomiststotheeffectthat
sweatshops,whichtheyconfusewith"lowwagefactories,"are"anessentialfirststeptowardmodernprosperity
indevelopingcountries."Sweatshopsindeedexistedin19thcenturyBritainduringearlyindustrialization,
leadingtoaburstofsociallegislationtoridthecountryoftheseills.Butnothingrequiresustogothatroute
again.NationsshouldjoinnongovernmentalgroupsliketheInternationalLaborOrganizationtoridtheworldof
sweatshops.Inaddition,wecanrequiremultinationalstoapplyourownlabor,safetyandenvironmental
standardswhentheymanufactureabroad.InRome,theymustdonotasRomansdobutaswedo.Theirexample
wouldspread.

Surprisingly,theauthorisnoneotherthanJagdishBhagwati(1997).Iwouldonlyaddto
Bhagwati'spowerfulpreACITletterthatthestudentledantisweatshopmovementhas
increasedthelikelihoodthatfutureeconomicdevelopmentsmightavoidthesweatshopstage.
Unlikeearlierperiods,whenlaborstandardswereimposedinresponsetothedemandsoflabor
organizationsandanurbanpopulationofthedevelopingworldalone,firstworldconsumers
todayarealsopushingmultinationalcorporationstoimprovetheworkingconditions
inthefactoriesoftheirsubcontractors(BrunettandMahon2001,70).
FastidiousnessorCommodityFetishism?
Mainstreameconomistshaveonelastprobingquestionforantisweatshopactivists:Whyfactory
workers?
Krugman(1997)asksthequestioninamostpointedway:"Whydoestheimageofan
Indonesiansewingsneakersfor60centsanhourevokesomuchmorefeelingthantheimageof
anotherIndonesianearningtheequivalentof30centsanhourtryingtofeedhisfamilyonatiny
plotofland,orofaFilipinoscavengingonagarbageheap?"
Itisagoodquestion.Thereareplentyofpoorpeopleintheworld.Some1.2billionpeople,
aboutonefifthoftheworldpopulation,hadtomakedoonlessthanU.S.$1adayin1998
(WorldBank2001).Theworld'spooraredisproportionatelylocatedinruralareas.Mostscratch
outtheirlivelihoodfromsubsistenceagricultureorbyplyingpettytrades,whileothersonthe
edgeofurbancentersworkintheinformalsectorasstreethawkersorthelike(Todaro2000,
151).Inaddition,ifsweatistheissue,journalistKristof(1998)assuresusthat"thiskindof
work,hoeingthefieldorworkinginpaddies,ofteninvolvesmoreperspirationthanfactory
work."
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

Sowhyhastheplightoftheseruralworkers,whoareoftenpoorerandsweatmorethanworkers
intheworldexportfactories,notinspiredafirstworldmovementdedicatedtotheirbetterment?
"Fastidiousness"isKrugman'sanswer."Unlikethestarvingsubsistencefarmer,"saysKrugman,
"thewomenandchildreninthesneakerfactoryareworkingatslavewagesforourbenefitand
thismakesusfeelunclean.Andsothereareselfrighteousdemandsforinternationallabor
standards"(1997;emphasisintheoriginal).
Ironically,Krugman'sanswerisnotsodifferentfromtheoneMarxwouldhavegiventothe
question.Marx'sanswerwouldbecommodityfetishismorthatcommoditiesbecomethe
bearersofsocialrelationsinacapitalisteconomy(Marx1967).Purchasingcommoditiesbrings
usincontactwiththelivesofthefactoryworkerswhomanufacturethem.Buyingjeans,tshirts,
orsneakersmadeinLosAngeles,Bangkok,orJakarta,ortheexportzonesofsouthernChina
andLatinAmerica,connectedstudentsinmyseminartothewomenandmenwhoworklong
hoursinunhealthyanddangerousconditionsforlittlepayintheapparelandathleticfootwear
industries.Anditwasthelivesofthoseworkersthatmymostpoliticalstudentssoughtto
improvethroughtheirantisweatshopactivism.Beyondthat,asconsumersandcitizenstheyare
empoweredtochangetheemploymentpracticesofU.S.corporationsandtheirsubcontractors.
Krugman'scomplaintisnoreasontodismisstheconcernsoftheantisweatshopmovement.
Historically,theorganizationoffactoryworkershasbeenoneofthemostpowerfulforcesfor
changingpoliticsinthedemocraticdirectionthatKuznetsoutlines.Krugman'scomplaintdoes,
however,suggestthattheplightofsweatshopworkersneedstobeseeninthecontextof
pervasiveworldpovertyandthegapinginequalitiesoftheglobaleconomy.
Theglobaleconomy,totheextentthatweliveinatrulyunifiedmarketplace,connectsusnot
justwithsweatshopworkers,butwithoppressedworkersoutsidethefactorygatesaswell.By
pointingouttheseconnectionstomystudents,Ihopedtodemonstratetheneedtobuilda
movementthatwoulddemandmoreforworkingpeopleacrossthemultipledimensionsofthe
worldeconomy.Campaignstoimproveconditionsintheworldexportfactoriesshould,of
course,bepartofthatmovement.Butthatmovementmustalsotackletheoftenworse
conditionsoflowwageagriculturalworkers,poorfarmers,streetvendors,domesticservants,
smallshoptextileworkers,andprostitutes.Onlywhenconditionsforbothgroupsofworkers
improvemighteconomistsbeabletosayhonestly,assomethingotherthanaFaustianbargain,
thatmoreworldfactoryjobsaregoodnewsfortheworld'spoor.

Notes
1.Whilemenandwomensuffersweatshopabuse,youngwomenoverwhelminglyconstitutethe

workforceofthe"worldmarketfactories"inthedevelopingworld(ElsonandPearson1997,
191).Womenworkershavealsobeenthefocusoftheantisweatshopmovement.Female
employmentisgenerallyhighintheclothingindustryandinexportprocessingzones.In1995,
womenmadeup74percentoftheglobalworkforceintheclothingindustry(ILO2000,26).
2.Infall2000,1taught"SweatshopsandtheGlobalEconomy,"afirstyearseminaratWheaton
College,asmallNewEnglandliberalartscollege.Muchofthatcoursewasdevotedtoexposing
theworkingconditionsinglobalfactoriesinthetextile,shoe,andtoyindustries,andassessing
theeffortsofstudentandconsumerledmovementscenteredinthefirstworldtoimprovethose
conditions.Italsodevotedconsiderabletimetoassessingtheargumentseconomistsuseto
defendsweatshopsandcriticizetheantisweatshopmovement.Thecoursesyllabusispostedat
www2.wheatonma.edu/Academic/AcademicDept/Economics/Syllabi/Syllabi.html."Teaching
AboutSweatshopsandtheGlobalEconomy,"whichappearedinRadicalTeacher,describesmy
experienceteachingthecourse(Miller2001).
3.Thereisnouniversalagreementaboutthedefinitionofasweatshopintheantisweatshop
movement.Forinstance,sociologistsRogerWaldingerandMichaelLapparguethatsweatshop
laborisaformofwhattheOrganizationforEconomicandCooperativeDevelopment(OECD)
calls"concealedemployment,"whichescapesstateregulation(WaldingerandLapp1993,89).
TheirdefinitionwouldcoverthereturnofsweatshopstotheUnitedStates.Italsocovers
subcontractorsoffirstworldmultinationalcorporationswhoemployworkersintheformal
sectorofthethirdworldunderlaxregulatorystandards,aswellastheminusculefirmsin
informalsectorsofthedevelopingworldthatarenotsubjecttoregulation.Othersweatshop
critics,suchaslaboreconomistMichaelPiore,insistthattheterm"sweatshop"shouldbe
reservedfor"aspecificorganizationofwork"characterizedby"verylowfixedcosts"(Piore
1997,136).Insweatshops,workersareusuallypaidbythepiece.Otherfixedcostsrent,
electricity,heatareheldtoaminimumbyoperatingsubstandard,congested,unhealthy
factories,typicallyoverseenbya"sweater"orsubcontractor(Piore1997,135).Stillothersuse
thetermsweatshopasavividmetaphortodescribelousyjobsrangingfrombicyclemessengers
whoworkin"SweatshopsoftheStreets"(Lipsyte1995),tocruiseworkerswhoendure
"SweatshopsatSea"(ReynoldsandWeikel2000),toadjunctprofessorsatcolleges"whomight
aswellbesweatshopworkers"(Scarf2000).
4.InthecaseofChina,theInternationalLaborOrganizationwritesthat"theexistenceofa
singletradeunionlinkedtotheCommunistParty[theAllChinaFederationofTradeUnions]in
itselfsaysmuchaboutfreedomofassociationinthecountry"(ILO2000,66).TheOrganization
forEconomicCooperationandDevelopmentreportsthatinChina"therighttostrikeisnot
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

recognized"(OECD2000,101).InIndonesia,severalcoreILOconventionsremainedunratified
untilJune1999,whenthenPresidentJ.B.Habibiefacedanationalelection.TheSuharto
regimeneversignedILOlaborconvention87,whichrecognizestherightofworkersto
organize;convention138,establishingaminimumageofemployment;convention105,
outlawingforcedlabor;andconvention111,banningdiscriminationinemployment(ILO1998;
ILO1999a;ILO1999b).Thailand'sandMalaysia'srecordsaresimilarlydismal.Thailandhas
failedtoratifybothILOconventionsrecognizingtherightofworkerstoorganize(conventions
87and98)andtheminimumageconvention,138.Therighttostrikeisnotrecognizedin
Thailand'sstateenterprises,andauthoritiescanprohibitstrikesintheThaiprivatesector
(OECD2000,104).MalaysiahasnotratifiedILOconvention87andnotonlyhasfailedtosign
convention105callingfortheabolitionofforcedlabor,buthascondemnedit(ILO1998).And
therighttostrikeinMalaysiais"severelylimited"(OECD2000,106).Accordingtoastudyof
wagesatIndonesianfactoriesproducingNikefootwear,theminimumwageforJakartain1997
providedafamilyofthreelessthan$1perdayforeachfamilymember,theUnitedNations'
definitionofextremepoverty(Benjamin1998).Thesamestudyfoundthattomeetthe
minimumphysicalneedsofawomanworkingforNikeintheIndonesianarearequired$35
monthandthattheusualwagepaidbyNikesubcontractorsfellwellbeloweventhatamount
(Benjamin1998).InThailand,Bangkok'sminimumwage,whichkeptpacewithinflation
duringthe1990sboom,neverextendedtomostofthe800,000Thaigarmentworkers,thegreat
bulkofwhomwereemployedbysubcontractors(PasukandBaker1998,13940).
5.Theseargumentsalsoapplytocountriesinthedevelopedworld.Forinstance,theUnited
StateshasfailedtoratifysixoftheILO'seightFundamentalHumanRightsConventions,
coveringfreedomofassociationandcollectivebargaining,eliminationofforcedand
compulsorylabor,eliminationofdiscriminationinrespecttoemploymentandoccupation,and
theabolitionofchildlabor(ILO2002b).Bhagwatirightlycomplainsthatdiscussionsof
internationallaborstandardshavefocusedonconditionsinthedevelopingworldwhile
remainingsilentabout"themuchdocumentedquasislaveryconditionsformigrantlaborin
AmericanagricultureinGeorgiaandMississippi"(Bhagwati2002,7172).Headdsthata
recentHumanRightsWatchreport,UnfairAdvantage,documentshowU.S.legaldoctrine
violatesinternationallyrecognizedworkers'rightstoorganizebyallowingemployersto
permanentlyreplaceworkersonstrikeandbybanningsecondaryboycotts(Bhagwati2002,77).
Bhagwati'scomplaintmakesitclearthatmerelyenforcinglocallaborlaw,evenintheUnited
States,isinsufficientforcombatingabusiveworkingconditions.
6.Infact,theTrianglefactorywasNewYorkCity'slargestmanufacturerofshirtwaiststhe
"longsleeved,highneckedblousefittedverysnuglyatthewaist"thatwasastapleofmost
women'swardrobesinearlytwentiethcenturyUnitedStates(McClymer1998,xvi).
7.TheconnectionsbetweentheTriangleShirtwaistfireandtheselegislativeresponsesarewell

established.Inresponsetothefire,theNewYorkStateLegislatureestablishedtheFactory
InvestigatingCommissionthatinitiatedmuchofNewYorkState'sreformlegislation.Alsothe
commissionwascochairedbyRobertWagner,whowentontobecomeaU.Ssenatorand
sponsorofmuchoftheNewDeallegislationduringthe1930s.TheothercochairwasAlSmith,
wholater,asgovernorofNewYork,wouldpioneermanyofthesocialprogramsthatFranklin
Rooseveltintroducedonanationallevel(McClymer1998,8).FrancesPerkins,aneyewitness
tothefire,supervisedmuchofthestaffworkoftheFactoryInvestigatingCommission.She
laterbecamethefirstwomantoholdacabinetrankinU.S.history,servingassecretaryoflabor
undertheRooseveltadministration(McClymer1998,7).
8.Thissortof"asymmetricbargainingpower,"actuallyanysortofbargainingpower,goes
unrecognizedinstandardeconomicmodels(Stiglitz2000).
9.Whencorrectlystated,thelimitationsoftheclaimthatworkingforthesemanufacturing
subcontractorsisbetterthantheotheropportunitiesavailabletothesonsanddaughtersof
recyclersandotherpoorworkersareevidentinthewritingsofdefendersofsweatshops.For
instance,thewritingsofeconomistLindaLim,anACITsignatorywhoisdismissiveofthe
effortsoftheantisweatshopmovement(whichshedescribesas"patronizingwhiteman'sburden
stuff"),convincedseveralstudentsinmysweatshopseminarthatwomenwhoworkinthe
world'sexportfactoriesareexploited(FeatherstoneandHenwood2001b).
Inherearlierwork,LimreportsthatinEastAsia,"thewagesearnedbywomeninexport
factoriesareusuallyhigherthanwhattheycouldearnaswagelaborersinalternativelowskilled
femaleoccupations"(Lim1990,109).Butatthesametime,thewagesofwomenintheexport
industriesarelowerthanthewagesofmenwhoworkinthoseindustriesandlowerthanthose
offirstworldwomenwhoworkinthesameindustries.Thatistrue,eventhoughthirdworld
women'sproductivity"isacknowledgedtobehigherthanthatofeitheroftheseothergroups"
(Lim1997,223).EvenforLim,thatmakesthesewomen"themostheavilyexploitedgroupof
workersrelativebothtotheiroutputandothergroups"(Lim1997,223).WhateverLim'swork
suggestsabouttherelativeattractivenessofthesefactoryjobs,itwentalongwaytoward
convincingmystudentsthattheseworkplacesaresitesofexploitationandproperlydescribedas
sweatshops.
10.HowisYatilikelytobefaringtoday?Thanksinparttoaggressiveconsumercampaignsin
theUnitedStates,spearheadedbysuchgroupsasGlobalExchange,campusorganizations,and
unions,ReebokcommissionedanindependentIndonesianfirmtostudyconditionsinfactories
thatdobusinesswithReebok.MurrayWeidenbaumactedasaconsultantforthatreport.Oneof
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

thefactoriesinvestigatedwasPTTongYang.AccordingtotheLondonGuardian(October19,
1999),thefourteenmonthstudy"foundevidenceofhealthandsafetyabuses,sexual
discriminationandcommunicationproblems.SafetynoticeswereoftenhandedoutinEnglish,
forexample."Othersafetyproblemsinclude"lackoflabelsfordangerouschemicals...and
inadequateventilation."Accordingtothereport,womenfacespecialproblems,suchasaccess
tofewtoiletsdespitethefactthattheyrepresent80percentoftheworkforce,andunder
representationamonghigherrankingworkers.Inresponse,TongYangIndonesiaintroduced
newmachinerythatusedsaferwaterbasedsolvents,installedanewventilationsystem,and
boughtnewchairswithbacksthatprovidedmoresupportthantheolderones.Despitethose
efforts,morebasicproblemsremain.WagesstillhoverjustabovetheinadequateJakartaarea
minimumwage,andworkerscontinuetogowithouteffectivecollectivebargaining,deniedthe
righttoformindependentunions(Bernstein2000).
11.ForathoroughgoinganalysisoftheprogressiveunderpinningsofKuznets'sarticleandits
subversiveimplicationsfortheneoliberalpolicyagenda,seethethirdchapterofArthur
MacEwan'sNeo LiberalismorDemocracy?EconomicStrategy,Markets,andAlternativesfor
the21stCentury(1999).
12.Forthesereasons,SinghandZammitfavormeasuresintendedtopromotemoreequitable
andstableeconomicgrowthinthedevelopingworld,suchasmanagedworldtradeandcontrols
oninternationalcapitalmovements,insteadofcompulsorylaborstandards(SinghandZammit
2000,67).
13.RossbaseshisestimatesonaDepartmentofLaborstudyofcontractorsinNewYorkCity
andLosAngelesregions,thetwoleadingproductioncentersofthetextileindustry.Usingthe
multiplelaborlawviolationsdefinition,theDepartmentofLaborclassified61percentofthese
contractorsassweatshopoperators.Rossaddstohiscountthe20percentofsewingmachine
operatorswhoworkathome,andheappliestheresulttothetotalnumberofU.S.apparel
workers.

ForFurtherReading
AcademicConsortiumonInternationalTrade(ACIT).2000.LettertoPresidentsofUniversities
andColleges,July29(www.spp.umich.edu/rsie/acit/).
Amsden,Alice.1995."InternationalLaborStandards:HypeorHelp?"BostonReview
20,no.6(bostonreview.mit.edu/BR2O.6/amsden.html).
Begley,Sharon,etal.1990."TheNewSweatshops."Newsweek,September10:50.
Benjamin,Medea.1998.SanFrancisco:GlobalExchange(wwwglobalexchange.org).
Bernstein,Aaron.2000."AWorldofSweatshops:ProgressIsSlowintheDrivefor
BetterConditions."BusinessWeek,November6:84.

Bhagwati,Jagdish.1995."TradeLiberalizationand'FairTrade'Demands:
AddressingtheEnvironmentalandLabourStandardsIssues."WorldEconomy
18,no.6:74559.
_____.1997.Letter.NewYorkTimes,June23:sec.A,p.18.
_____.2000."NikeWrongfootstheStudentCritics."FinancialTimes,May2:11.
_____.2002.FreeTradeToday.Princeton:PrincetonUniversityPress.
Brown,DrusillaK.2001."LaborStandards:WhereDoTheyBelongontheInternational
TradeAgenda?"JournalofEconomicPerspectives15,no.3(summer):89112.
Brunett,Erin,andJamesMahon,Jr.2001."MonitoringCompliancewith
InternationalLaborStandards."Challenge44,no.2(March/April):5172.
Elliot,K.A.,andR.B.Freeman.2000."WhiteHatsorDonQuixotes?HumanRights
VigilantesintheGlobalEconomy."NationalBureauofEconomicResearchConference
onEmergingLaborMarketInstitutions(www.nber.org/confer/2000/si2000/elliot.pdf).
Elson,Diane,andRuthPearson.1997."TheSubornationofWomenandthe
InternationalizationofFactoryProduction."InTheWomen,Gender,and
DevelopmentReader,ed.NalineVisvanathanetal.,pp.191202.London:ZedBooks.
Evans,PeterB.2002.Personalcommunication,April.
Featherstone,Liza,andDougHenwood.2001a."Economistsvs.Students."Nation,
February12:5,24.
_____.2001b."ClothesEncounters:ActivistsandEconomistsClashOverSweatshops."Lingua
Franca11,no.2(March):2633(www.linguafranca.com).
Featherstone,Liza,andUnitedStudentsAgainstSweatshops.2002.StudentsAgainst
Sweatshops.NewYork:Verso.
FeministsAgainstSweatshops.2002.www.feminist.org/other/sweatshops.html.
Foo,LoraJo.1994."ImmigrantWorkforce."YaleLawJournal103,no.8(June):21792212.
Freeman,RichardB.1992."LabourMarketInstitutionsandPolicies:Helpor
HindrancetoEconomicDevelopment?"InProceedingsoftheWorldBank
AnnualConferenceonDevelopmentEconomics,pp.11756.Washington,DC:World
Bank.
______.1994."AHardHeadedLookatLabourStandards."InInternationalLabour
StandardsandEconomicInterdependence,ed.WernerSengenbergerandDuncan
Campbell,pp.7992.Geneva:InternationalLaborOrganization(InternationalInstitute
forLaborStudies).
Goldberg,Jonah.2001."SweatshopChic:TheKnowNothingsFindaCause."NationalReview,
April4.
Howard,Alan.1997."Labor,History,andSweatshopsintheNewGlobalEconomy."InNo
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

Sweat:Fashion,FreeTrade,andtheRightsofGarmentWorkers,ed.AndrewRoss,
151172.NewYork:Verso.
InternationalLaborOrganization(ILO).1998.TheSocialImpactoftheAsianFinancial
Crisis.Bangkok,Thailand.
_____.1999a.TowardFullEmployment:ProspectsandProblemsinAsiaandthePacific.
Bangkok,Thailand.
_____.1999b."IndonesiaRatifiesCoreILOConventions."Pressrelease,June7.
_____.2000.LabourPracticesintheFootwear,Leather,TextilesandClothingIndustries.
Geneva:InternationalLaborOrganization.
______.2002a.DeclarationonFundamentalPrinciplesatWork.ilo.org/public/

english/standards/deci/declaration/index.htm.
_____.2002b.Ratifications.ilolex.ilo.ch:1567/english/docs/declworld.htm.
Irwin,DouglasA.2002.FreeTradeUnderFire.Princeton:PrincetonUniversityPress.
Kernaghan,Charles.2000.MadeinChina:TheRoleofU.S.CompaniesinDenying
HumanandWorkerRights.NewYork:NationalLaborCommittee.
KheelCenterforLaborManagementDocumentationandArchives.1998.CornellUniversity,
IndustrialLaborRelations(www.ilr.cornell.edu/trianglefire.html).
Kristof,Nicholas.1998."Asia'sCrisisUpsetsRisingEfforttoConfrontBlightofSweatshops."
NewYorkTimes,June15:sec.A,p.1.
Krugman,Paul.1994."DoesThirdWorldGrowthHurtFirstWorldProsperity?"Harvard
BusinessReview(JulyAugust):113121.
_____.1997."InPraiseofCheapLabor:BadJobsatBadWagesAreBetterThanNoJobsat
All."Slate,March27.
Kuznets,Simon.1955."EconomicGrowthandIncomeInequality."American
EconomicReview45,no.1(March):128.
Lim,Linda.1990."Women'sWorkinExportFactories."InPersistentInequalities,
ed.IreneTinker,pp.101119.NewYork:OxfordUniversityPress.
_____.1997."Capitalism,Imperialism,andPatriarchy."InVisvanathaneta!.,ed.,TheWomen,
Gender,andDevelopmentReader,pp.21629.
Lipsyte,Robert.1995."Voicesfromthe'SweatshopoftheStreets."NewYorkTimes,
May14:sec.A,p.18.
MacEwan,Arthur.1998."AskDr.Dollar."Dollars&Sense,no.219(September!October):51.
_____.1999.NeoLiberalismorDemocracy?EconomicStrategy,Markets,and
Alternativesforthe21stCentury.London:ZedBooks.
Mah,JaiS.1997."CoreLaborStandardsandExportPerformanceinDevelopingCountries."

WorldEconomy20,no.6(September):77385.
Marx,Karl.1967.Capital.Vol.1.NewYork:International.
Martin,Douglas.2001."RoseFreedman,LastSurvivorofTriangleFire,Diesat107."New
YorkTimes,February17:sec.B,p.8.

MartinezMont,Lucy.1996."SweatshopsAreBetterThanNoShops."WallStreet
Journal,June25:sec.A,p.14.
McClymer,JohnF.1998.TheTriangleStrikeandFire.NewYork:HarcourtBraceCollege.
Meyerson,AllenR.1997."InPrinciple,aCaseforMore'Sweatshops."NewYork
Times,June22:sec.4,p.5.
Miller,John.2001."TeachingAboutSweatshopsandtheGlobalEconomy."Radical
Teacher,no.61:814.
OrganizationforEconomicCooperationandDevelopment(OECD).2000.InternationalTrade
andCoreLabourStandards.Paris:OECD.
PasukPhongpaichitandChrisBaker.1998.Thailand'sBoomandBust.ChiangMai,Thailand:
SilkwormBooks.
Piore,Michael.1997."TheEconomicsoftheSweatshop."InRoss,ed.,NoSweat,
pp.13542.
Pollin,Robert,JustineBurns,andJamesHeintz.2001."GlobalApparelProductionand
SweatshopLabor:CanRaisingRetailPricesFinanceLivingWages?"PoliticalEconomy
ResearchInstitute,WorkingPaperseries,no.19.
Portes,Alejandro.1994."ByPassingtheRules:TheDialecticsofLabourStandardsand
InformalizationinLessDevelopedCountries."InSengenbergerandCampbell,ed.,
InternationalLabourStandardsandEconomicInterdependence,pp.15976.
Reynolds,Christopher,andDanWeikel.2000."ForCruiseShipWorkers,VoyagesAreNo

Vacations."LosAngelesTimes,May30:pt.A,p.Ai.
Roberts,Dexter,andAaronBernstein.2000."ALifeofFinesandBeatings."BusinessWeek,
October2:122.
Rodrik,Dani.1996."LaborStandardsinInternationalTrade:DoTheyMatterand
WhatDoWeDoAboutThem?"InEmergingAgendaforGlobalTrade:HighStakes
forDevelopingCountries,ed.RobertZ.Lawrence,DaniRodrik,andJohnWalley,
pp.3579.Washington,DC:JohnsHopkinsUniversityPressfortheOverseas
DevelopmentCouncil.
_____.1997.HasGlobalizationGoneTooFar?Washington,DC:InstituteforInternational

Economics.
Ross,Robert.2002."TheNewSweatshopsintheUnitedStates:HowNew,How
Real,HowMany,Why?"InFreeTradeandUnevenDevelopment:TheNorth
AmericanApparelIndustry,ed.GaryGereffi,DavidSpencer,andJenniferBlair,pp.
100122.Philadelphia:TempleUniversityPress.
Scarff,Michelle.2000."TheFullTimeStressofPartTimeProfessors:ForthePittanceThey're
Paid,AdjunctProfsatOurCollegesMightasWellBeSweatshopWorkers."Newsweek,
Challenge,vol.46,no.1,January/February2003,pp.93122.
2003M.E.Sharpe,Inc.Allrightsreserved.
ISSN05775132/2003$9.50+0.00Challenge/JanuaryFebruary

2003

MillerWhyEconomistsAreWrongAboutSweatshops

May15:10.
ScholarsAgainstSweatshopLabor(SASL).2001.October(www.umass.edu/periIsasl/).
Sengenberger,Werner.1994."InternationalLabourStandardsinaGlobalized
Economy:TheIssues."InSengenbergerandCampbell,ed.,InternationalLabour
StandardsandEconomicInterdependence,pp.316.
Singh,A.,andA.Zammit.2000."TheGlobalLabourStandardsControversy:CriticalIssuesfor
DevelopingCountries."Geneva:SouthCentre(www.southcentre.org/publicatons
/labour/toc.htm).
Stiglitz,Joseph.2000."DemocraticDevelopmentastheFruitsofLabor."Keynoteaddressof
theannualmeetingsoftheIndustrialRelationsResearchAssociation,Boston(available
atwww.globalpolicy.org/socecon/bwiwto/wbank/stieg2.htm).
Su,Julie.1997."ElMonteThaiGarmentWorkers:SlaveSweatshops."InRoss,ed.,NoSweat,

pp.14350.
Tierney,John.1999."TheBigCity:A1911FireasGoodTV,BadHistory."NewYork
Times,October18:sec.B,p.1.
Todaro,Michael.2000.EconomicDevelopment.7thed.NewYork:AddisonWesley.
U.S.DepartmentofLabor(DOL).2001.NoSweat:GarmentEnforcementReports,
October1999December2000(www.dol.gov/dol/esa/public/nosweat/nosweat.htm).
Waldinger,Roger,andMichaelLapp.1993."BacktotheSweatshoporAheadtotheInformal

Sector?"InternationalJournalofUrbanandRegionalResearch17,no.1:629.
Weidenbaum,Murray.1999."ADefenseofSweatshops."InChildLaborand
Sweatshops,ed.MaryWilliams,pp.2628.SanDiego:Greenhaven.
WorldBank.2001.WorldDevelopmentReport2000/2001.NewYork:OxfordUniversity

Press.
Zuckoff,Mitchell.1994."TakingaProfit,andInflictingaCost."Firstpartofaseriestitled

"FoulTrade."BostonGlobe,July10:sec.A,p.1.
Toorderreprints,call1 800 352 2210;outsidetheUnitedStates,call717 632 3535.

1
2

12

13

10
11