Terrible Working Conditions and the Costs of Improvement


Working Conditions

As with wages, critics deplore the working conditions in sweatshops. The very name implies hot, stuffy conditions. In many cases the workers live and work in the same factory. Their comings and goings are monitored, controlled, and limited. Workers may be fined if they leave the factory without permission or if they are late for their shifts. Locked doors and guarded fences and gates are reportedly common at sweatshops. Safety information may not be given, and safety measures may not be taken at all. These sorts of conditions would be unacceptable in the US, but they are endured by workers in sweatshops.

Maitland argues that the safety standards in sweatshops may indeed be low, but he offers two arguments that aim to justify these low standards. The first is that these jobs are actually safer than the other jobs that are available to these workers. If your other options are tilling the fields or searching for semi-valuable metals in the garbage dump, then you might well take a job that is indoors, has comparatively good pay, and doesn’t involve garbage dumps or oxen. It’s a reasonable choice.

The second argument is that if the workers in a sweatshop were allowed to form unions with the intent of improving wages or working conditions, they will end up hurting themselves in the end. This argument is a bit more convoluted than the last one. Maitland argues that when workers band together in a collective bargaining agreement they may well succeed in improving their working conditions. If this were all there were to the story then all would be fine. The problem is that these sweatshops are not just in competition with the other sweatshops in the area. They are in competition with factories all over the world. Even if all of the workers in a particular city were able to band together, they could not hope to reach the rest of the world. Multinationals are not bound to only make contracts in Beijing. When the unionized workers in Beijing improve their wages it will make their labor more costly than the labor of workers in Indonesia, India, Belize, or Morocco. The multinationals will simply move their business to those locations and out of Beijing.

What would happen here, according to Maitland, is that the workers would price themselves out of the market. They would effectively increase their unemployment by making their labor much less desirable than other worker’s labor. The effort to improve their lives would make them much worse. After all, a lousy job is still better than no job. Thus, it is better that their wages remain low and their conditions deplorable.

Arnold and Bowie’s Solution

Arnold and Bowie respond that this is not the only foreseeable scenario. They point to examples of sweatshop nations which have increased the wages and improved the working conditions without becoming undesirable to multinationals. There are a few options available to the multinationals that would allow them to create better conditions for the workers without sacrificing enough productivity or profits to damage them in the marketplace.

The first consideration is that if worker’s pay is increased they will become more productive. The Efficiency Wage is the wage below which worker productivity decreases. If sweatshop workers are literally being paid “starvation wages” then they are certainly being paid below the efficiency wage. The objective is to pay the workers enough that they are able to obtain adequate nutrition, health, and satisfaction in their lives. Happy, healthy workers are productive workers, and this applies as much to sweatshop employees as it does to anyone else. There are many potential reasons that workers are paid below the efficiency wage, but none of them justify continuing to pay below this level.

Another option that employers have is to improve the conditions within their production facilities. This could be done in a plethora of ways, but it need not cost much to do so. It’s true that some improvements might be expensive (new machines, safety equipment, etc), but small things also have the potential to greatly improve workplace safety for employees. Warning signs on dangerous equipment could prevent workers from hurting themselves accidently. Safety training and chemical information could increase compliance with safety rules and prevent all sorts of harms. Regardless of the measures that employers take, some measures are necessary. If those who argue like Maitland are correct that safety improvements would result in much higher unemployment, then the burden of proof is on them. It seems at least economically feasible that many improvements could be made without putting workers out on the streets.

Talking past each other

It is worth noticing that Maitland and Arnold & Bowie don’t necessarily disagree with each other. They appear to be addressing the same situations and proposing diametrically opposed actions (leave alone vs. make changes), but they actually aren’t.

The phrase “talking past each other” refers to the phenomenon of people talking about different subjects while believing that they are talking about the same thing.

Maitland’s suggestion that workers should not be allowed to band together and improve their working conditions because it would result in greater unemployment instead of benefits might be a good one. He is probably right that workers who do this will set a price for labor above that which the market would otherwise set, and this probably would result in greater unemployment.

Arnold and Bowie suggest that there are many ways in which employers and multinationals could improve labor standards which would not result in damage to the company’s profits or the worker’s employment. They’re probably right that workers who are paid at the efficiency wage will be more productive than workers who aren’t. They’re also right that many safety improvements present minimal costs and great benefits.

The fact that these two parties are suggesting opposing courses of action doesn’t automatically mean that they are disagreeing.  In fact, they are each addressing actions at opposite ends of the employment equation. Maitland’s argument implies that workers can’t alter their situation without causing unemployment while Arnold and Bowie’s argument implies that the employers have a moral obligation to improve worker’s conditions and wages. In essence, the workers can’t help themselves but the employers are obligated to help them anyway. They could both agree that the employers should do more for the employees, and they might both agree that employers aren’t doing enough to help their employees live decent human lives.

Next, let’s take a look at a pair of cases involving multinational corporations and their actions with regard to sweatshops.