Students Against Sweatshops

option=com_content&task=view&id=107&Itemid=37 LIVING WAGES What is a living wage? A living wage is a wage that meets a worker's basic human needs. The National Labor Committee has compiled a list of actual wages around the world and of what living wages would be. A methodology for determining living wages was arrived at during a Living Wage Working Summit at Berkeley. There have been some claims that living wages will result in unemployment and a worsening of workers' lives. These concerns have proven more hypothetical than worrisome. David Tannenbaum of Princeton has written a good article for Business Today addressing some of the economic myths surrounding reform of the garment industry. Won’t living wages just hurt workers by making companies move their factories? Capital mobility is a critical concern for workers and activists, but fortunately, there are many factors that mitigate against the realization of such moves. First, a company’s decision to invest in a given country is based on a variety of issues including the legal environment, human capital, transportation infrastructure, and real exchange rate thus, the decision to leave will not hinge on the cost of labor alone. Well, then, according to the laws of free market economics, living wages artificially raise the "price" of labor above its market rate. Won’t that accelerate unemployment and inflation? Critics of minimum wage laws and living wage ordinances argue that raising people’s wages without an increase in their productivity will cause employers to reduce their demand for labor because of the higher cost, thus causing higher unemployment. However, many labor economists have argued and evidence from the experience of U.S. city ordinances indicates that this simply doesn’t happen in reality. The experience of cities like Detroit that have adopted living wage ordinances shows that it actually improves efficiency and competition, reduces turnover and absenteeism, and increases worker morale. In addition, the apparel industry is such a wildly profitable industry, that it is likely that manufacturers would sooner take a cut in profit that reduce their workforce and hence their production. With regard to inflation, economists, researchers, and government officials agree that higher wages would not cause generalized inflation, since such a relatively small proportion of the population is employed by this sector. Will living wages make the price of garments go up for consumers? In research that has been done, we have calculated that the total labor cost for the

sewing of a $15 college t-shirt was less than 3 cents, or less than 0.2% of the total cost of the t-shirt. In general, almost 75% of the ticket price for a garment made in a sweatshop is devoted purely to profit for the manufacturer and retailer. A company will not be forced out of business if it raises wages, but it will be forced to take a marginal cut in profit. Some companies are so adamantly opposed to any reduction in their profit that they will move a plant to another country to keep labor costs low. Paying workers a living wage will not bankrupt the massive manufacturers currently paying pitifully low wages with no benefits of any kind. Research has consistently proven that an unexploited worker is a better worker. People are most efficient when they aren’t tired, hungry, and scared. Paying workers a living wage can only increase their productivity. Paying fair wages has the added bonus of allowing workers to n consumers, contributing to the health of the economy as well. Why do workers need such a high wage? Isn’t the cost of living much cheaper overseas? A living wage is calculated based on a cost of living estimate of the specific region where workers live. Although basic goods do often cost less in developing countries, the fact is that foreign sweatshop workers do not earn enough money to support themselves and their families. Countries frequently set a very low minimum wage to attract companies and bring jobs to their struggling economies. We want these companies to pay their workers a living wage, not just an artificially low minimum wage. A living wage enables workers to meet their basic needs for food, shelter, clothing and medical care and to set aside money for future purchases.

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