Living Economics

The Case for Sweatshops
Sweatshops in low wage countries supplying goods to American companies may offer better paying jobs than other local firms.

Those of us who delivered papers when we were kids were glad we had the opportunity to make pocket change and would have been angry at anyone who tried to persuade our employers not to hire us because we had to get up before dawn every morning and were paid by the piece with no benefits.

Think how much angrier we would have been had we depended on those jobs, not for spending money, but for our very livelihood. But that is exactly what the seemingly well-meaning lobbying groups are trying to do when they intimidate American companies and consumers who wish to buy goods made with low-wage labor.

But none of these lobbying groups seems to have asked what happens to the children who lose their jobs. The answer, simply, is that they are worse off. This follows from the most important principle in economics: Voluntary exchange benefits both buyers and sellers. Work, other than slave labor, is an exchange. A worker chooses a particular job because she prefers it to her next-best alternative. To us, a low-paying job in Honduras or in Los Angeles' garment district seems horrible, but for many adults and children, it's the best choice they have. You don't make someone better off by taking away the best of their bad options.

Take the 31 cents an hour some 13-year-old Honduran girls allegedly earn at 70-hour-a-week jobs. Assuming a 50-week year, that works out to over $1,000 a year. This sounds absurdly low to Americans, but not when you consider that Honduras's GDP per person in 1994 was the equivalent of about $600.

Should you feel guilty for buying clothing made in Honduras, Vietnam, or Bangladesh, remember this: You're helping the workers who made it and who were unlucky enough to have been born in a poor country.

References:
  • Henderson, D. R. "The Case for Sweatshops," Fortune. 10/28/1996.
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