How to Take the Sweat Out of Sweatshops

“Recently a manufacturer of McDonald's "Happy Meal" toys was charged with employing thirteen year olds, working them sixteen hours per day for three dollars.” Then an American child ate the Happy Meal and played with the toy for a few hours until he discarded it among his hundreds of other toys. The working conditions in foreign sweatshops shock us when compared with our lives and our children. Conditions such as overtime forced up to one hundred and ten hours a week, managers shoving amphetamines (speed) in the mouths of their workers so they can work forty-eight hours straight until they collapse and employers pressuring female employees to have abortions so they don’t miss a day of work can at best be described as inhumane and criminal (Wells). Citizens of developing nations work in these conditions, forced by their impoverished circumstances, at the hand of huge, wealthy, multi-national corporations such as Nike, Gap and Levi Strauss. From these conditions the term “sweatshop” is derived. Conditions need to change in sweatshops, that is obvious. Yet can conditions really be improved by contending against these faceless billion dollar corporations?

Since the discovery of the sweatshop Americans have banded together to incite change. Starting with the students of Duke University who learned that their school’s paraphernalia was produced in sweatshops, anti-sweatshop consumer activist movements have since expanded exponentially into hundreds of universities and organizations across the nation (Goldberg). Consumer activism is not new; it has been around since the beginning of this nation. Indeed it could be said that consumer activism formed the United States. The face-painted “Indians” native to Boston, Massachusetts once commandeered an English vessel loaded with tea to demonstrate their displeasure with the taxes placed on tea. The famous activist Upton Sinclair followed the industrial revolution by initiating reforms in working conditions through his book, The Jungle (Wikipedia). This spirit and desire to incite change in the world is part of who we are as Americans.

But can these small groups of individual make a difference contending with Goliath corporations? Historically, activists have propelled changes in working conditions. In 1911 – around the same time as the publication of Sinclair’s The Jungle – an anti-sweatshop movement that began with the Triangle Shirtwaist fire helped move millions of unskilled laborers out of poverty and into better working conditions (Goldberg). Consumer movements have a great deal of influence because, simply enough, they are consumers. The old adage, “the customer is always right,” and the theory of supply and demand explain this influence. Consumer demand is the reason that companies exist. If the consumer demands that the product not be made by children forced to work thirteen hours a day and the company does not provide that, the company will not exist. The customer is always right. Recent events and studies have shown that consumer activism does have an impact.

Many cases exist in which consumer activism has improved working conditions in sweatshops of developing nations, specifically those of Indonesia and Cambodia exemplify activist power. Indonesia has been a hub of sweatshop production for large corporations such as Nike Inc. for many years now. Nike will be the focus of this case study because of the size of its presence in Indonesia and the renowned activist movements against it. In 1990 the average number of workers in specific factories or sweatshops devoted to footwear was 738 people. Once sweatshops were unveiled and the activist movements began, their effect has been drastic. According to a study done by Ann Harrison, an economist at the University of California Berkley, “The combined effects of the minimum wage legislation and the anti-sweatshop campaigns led to more than a 50 percent increase in real wages and a doubling of nominal wages for unskilled workers at targeted exporting plants.” In response to that, most economists would ask, “but what happened to unemployment?” Basic economic theory states that as wage, the price of labor, increases firms demand less of it and unemployment rises. So, counterintuitive though it may be, consumer activism and minimum wage laws resulted in increased wages as well as increased employment in Indonesia. And comparatively, consumer activism had a greater positive effect on wages and employment than did minimum wage. Indonesian sweatshops whose product was solely distributed domestically – thereby only affected by minimum wage laws – saw an increase in average wage of $154 between 1990 and 1996, while sweatshops whose product was always exported – affected by consumer activism - saw an increase in average wage of $263. In employment, while sweatshops with domestic distribution did not see a statistically significant rise in employment, the average number of employees in sweatshops of purely exported products rose by 362 (Harrison). These positive effects of consumer activism in conditions, wages and employment are surprising but can be explained. With the conditions and wages as poor as they were, even an increase from fifty cents to a dollar is huge and even beneficial to Nike. “As Nike increased spending on wages and expensive public relations campaigns to mend its image, its market share of the global footwear market rose by almost 50 percent.” Consumer activism can make a difference and these results show that it did in Indonesia.

As for Cambodia, the results have been similar. In the 80’s and 90’s sweatshops were widespread. However, today Cambodia is selling itself as “sweat-free.” Consumer activism has created a demand for “sweat-free” goods and Cambodia has responded by improving their working conditions in order to attract companies looking for good publicity. Cambodia’s garment industry has recently achieved the number one global ranking in working conditions and that bodes well for companies like Gap, Nike and Levi Strauss looking to improve their public image. Due to bad publicity and consumer activism these companies have responded to Cambodia’s “sweat-free” movement and have contracted their labor. Cambodia’s share of United States’ garment imports rose from 9 percent to 14 over the past few years. Consumer activism has raised production costs for Gap, Nike, Levi Strauss and other companies, yet the demand for production from “sweat-free” Cambodia has increased (Lynch). These results demonstrate that consumer activism is achieving better working conditions in Cambodia yet the principle applies everywhere. Consumers, who are always right, demanding “sweat-free” goods will get them. Indonesia and Cambodia are just two examples yet the companies who employ their labor – Nike, Gap, Levi Strauss and others – have been responding to consumer activism in the same way throughout the world by demanding improved working conditions in sweatshops.

These brand-name companies pay the higher cost of improved working conditions in order to maintain their reputation. Companies work hard to develop trust to associate with their brand. “A brand is the symbolic embodiment of all the information connected with a company, product or service. It also encompasses the set of expectations associated with a product or service which typically arise in the minds of people (Wikipedia).” A brand is not something that can be bought but must be earned. Companies like Nike, Gap and Levi Strauss are worth more than their balance sheet would indicate due to their brand. Their brand quantifiably increases their profits and any threat to that brand could be devastating. A recent article in Business Week ranked and estimated the value of brands such as Nike, Gap and Levi Strauss. The brands of both Nike and Gap are valued over 7 billion dollars while Levi’s brand is worth over 3 billion (Business Week Online). This is why “Nike couldn’t ignore the possibility that all those crazy kids campaigning against foul labor practices in Asian or Mexican sweatshops might have something to do with falling sales (Greider).” Nike Inc. provides an excellent example of the importance of the brand because so much anti-sweathop campaigning has been directed against Nike. Trying to protect their brand Nike created the Fair Labor Association in the 1990’s which monitors the factories of participating companies. Then in 2005 the company publicized the names and locations of their contracted factories, a huge acknowledgement of consumer activist influence (Jung). And again desperately trying to mend their image, earlier this year Nike and other companies in need of brand improvement joined with the world’s most famous humanitarian, Bono, lead singer of U2, in creating Product Red. Product Red will raise funds to fight diseases but Nike sees it as a way to look like a superhero replacing the villainous, shifty-eyed look they carry now (Milmo). Yet Nike isn’t the only company concerned about their brand; the concern is universal. Walmart’s spokeperson William Wertz wrote, “No question that such a reputation is a plus. Having confidence that a factory is doing the right things for workers in terms of pay, benefits, working conditions, etc., is important to us (Lynch).” Additionally, the importance of a company’s brand is beneficial to the consumer; it gives us a weapon. Brands force social change. “Positive social change in the developing world is happening more quickly than it otherwise would specifically because of corporations’ need to protect brand value by meeting consumers’ expectations (Hilton).” Company’s dependence on brand means that any challenge to it will demand their utmost attention.

Even with the improvements conditions are still worse than American facilities. Corporations are still outsourcing to developing nations because the wages are still much lower than those of the United States. Yet eliminating sweatshops is not the answer. “No one should defend the horrors – factories with locked doors during fires, employers who confiscate passports and harass workers, etc. – but the fact remains that, on the whole, what most opponents call "sweatshops" are actually a good thing.” As put by Columbia University economist Jagdish Bhagwati sweatshops are a “ticket to slightly less impoverishment.” Economists, both liberal and conservative, are united in their opinion that sweatshops equal progress (Goldberg). In fact, Harvard economist Jeffrey Sachs wrote in The New York Times of 1997 that “my concern is not that there are too many sweatshops but that there are too few…those are precisely the jobs that were the stepping stones for Singapore and Hong Kong, and those are the jobs that have to come to Africa to get them out of back-breaking rural poverty (Hilton).” Sweatshops represent about 80% of Cambodia’s total export earnings, and when you ask a local Cambodian for their opinion they will say, as Sophia Mang did, “I like this life better. Both the farm and this are hard work but this is a better life (Lynch).” The word sweatshop may incite opposition but think of the alternatives – prostitution and hunger – and the benefits to sweatshops become immediately apparent.

There is an answer to thirteen year olds working sixteen hours a day for three dollars. The answer is consumer activism. Corporations such as Nike, Gap and Levi Strauss have outsourced their production to developing nations due to low cost labor but their products are still sold in the United States. Because of that, consumers have power. Consumer activist movements have shown these multi-national corporations that the working conditions of their factories are important and because the customer is always right things have improved. The evidence shows that consumer activism improves working conditions, wages and even lowers unemployment. Improvements occur because of the corporation’s dependence on their brand. “Brands are not the enemy of those wanting to make world a better place, but their greatest ally (Hilton).” Consumer activism improves working conditions in sweatshops of developing nations because consumer activism motivates brand name companies to maintain their reputation.

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