Sweatshop working conditions and employee welfare: say it ain't sew.

Clark, J.R. ; Powell, Benjamin

INTRODUCTION

The term sweatshop emerged in the popular literature around the middle of the 19th century and referred to the 'sweating system' where a middleman subcontracted to make garments on a piecework basis and employed people in small workshops under harsh working conditions. In more recent times the term has been applied to factories operated by developed-country MNCs or by their subcontractors in developing countries. Both the scholarly and the popular literature have used the term 'sweatshop' pejoratively when writing about conditions in such establishments, arguing that working conditions, wages and worker protection in such establishments are below either labor market standards in the host countries or inadequate when judged in the broader context of an adequate subsistence wage. (1)

In this study, we examine worker attitudes in two firms that have been characterized as sweatshops by the National Labor Committee (NLC), one of the more influential anti-sweatshop organizations (National Labour Committee (NLC) and CEADEL, 2007, NLC and CEADEL, 2009). This study surveys workers at two firms that have been identified as exemplifying sweatshop conditions by the NLC to evaluate how outsourcing of labor-intensive activities to third-world countries has contributed to the working conditions and wages in these countries compared with the alternatives faced by the workers, to evaluate if the mix of compensation reflects employee preferences, and to evaluate how company responses to protests have impacted worker satisfaction. While our study does not support the characterization of these firms as sweatshops, we use this term for them so as not to deflect any criticism of the firms by changing the semantics of the discussion.

A substantial scholarly literature has developed debating the relative merits of sweatshops. However, a substantial gap in the empirical literature on working conditions remains. On the theoretical level, scholars have questioned whether the background conditions necessary for textbook economics to work are present in sweatshop labor markets, and they have attempted to identify economic mechanisms that may not make the sweatshop labor demand curve downward sloping (Arnold and Bowie, 2003, 2007; Arnold and Hartman, 2005, 2006; Arnold, 2010; Miller, 2003; Pollin et al., 2004). Other scholars have argued that these critics are mistaken that the lack of perfect information, possibility of efficiency wages, consumer demand for ethical goods, or presence of high profits does not undermine standard economic predictions (Powell, 2006; Sollars and Englander, 2007; Powell and Zwolinski, 2011). (2)

On the empirical front, a group of international trade economists was quick to point out that multinational firms pay more than do domestic firms in third-world countries (ACIT, 2000, also see Brown et al., 2004). However, a rival group, Scholars Against Sweatshop Labor (SASL), circulated a letter pointing out that 'While this [the fact that MNC's pay more] is true, it does not speak to the situation in which most garments are produced throughout the world--which is by firms subcontracted by multinational corporations, not the MNCs themselves' (SASL, 2001). Economists had made comparisons of a single sweatshop job to some other less desirable alternative such as scavenging or agricultural employment, but little systematic evidence existed comparing sweatshop wages with domestic alternatives until Powell and Skarbek (2006). They documented 43 individual cases of sweatshop wages in 11 countries that were reported in US popular press sources. (3) They found that the reported sweatshop wages were higher than average national income in 9 of the 11 countries.

This paper uses survey data from Guatemalan workers to empirically address the claims of the NLC. We organized our survey to address three hypotheses. The first is that workers choose to work in these factories because both the wages and working conditions are better than the available alternatives. Second, although total compensation is low by US standards, how the mix of compensation is divided between wages and other working conditions largely reflects employee preferences. Third, activism from the NLC failed to improve the lives of the workers in the firm they protested.

Skarbek et al. (2012) is the most closely related scholarly study to ours. They investigated how El Salvadoran apparel industry working conditions compared with the workers' other available alternatives. They interviewed 31 workers at two factories on a range of questions related to working conditions, wages, and other alternatives. They found that workers generally thought their wages and working conditions had improved relative to their previous employment. Their results were more mixed when workers were asked how their jobs compared with those of their peers. Most workers' jobs were superior to that which their parents had held, and the vast majority of workers who had children were able to send them to school with their factory earnings. The open-ended interview technique was useful for extracting a range of information from workers but also limited their ability to make direct comparisons between interviews and to draw quantitative conclusions.

In the following section we outline how our firms were selected and the specific questions were chosen to allow us to directly investigate the hypotheses set out above. We also provide descriptive statistics for the data. The subsequent section is our main contribution and contains our survey results organized around the above three hypotheses. The last section concludes.

METHODOLOGY AND DATA

No universally agreed upon international sweatshop wage and working conditions data set exists because defining what is, and what is not, a sweatshop is a matter of judgment. Exactly how low the wages, or how bad the working conditions, have to be for an establishment to be classified as a 'sweatshop' is not universally agreed upon. We follow Powell and Skarbek (2006) in letting others, who are critical of sweatshops, define what is a sweatshop for our study. Nicotex and Sam Bridge S.A. were chosen for study specifically because the NLC has filed reports accusing them of being harmful sweatshops (NLC and CEADEL, 2009).

The NLC investigates and exposes human and labor rights abuses committed by US companies producing goods in poorer countries. It has issued hundreds of reports alleging abusive sweatshop activities in dozens of countries. The NLC had identified four Guatemalan firms as sweatshops between 2006 and 2009.4 Two of the factories, Dong Bang and Fribo, closed before we could survey workers. In 2010 we surveyed a sample of workers from the remaining two factories, Sam Bridge S.A. and Nicotex.

Sam Bridge employs more than 1,000 workers and exports clothing to the United States with Briggs New York, Koret, J.M. Collection, and Pantalogy labels and produces uniforms for United Airlines. Sam Bridge was founded in 1993 and is located a short distance outside Guatemala City on the Pan-American Highway. (5) Nicotex employed approximately 320 workers. About 80% of their production was for Briggs New York and the remaining 20% for Lane Bryant. It was opened in 2007 and was located in Mixco, a suburb of Guatemala City. Nicotex recently closed.

The NLC's complaints about Sam Bridge include inadequate wages, long work hours, unpredictable overtime, penalties for workers who refuse overtime, arbitrary production goals, verbal abuse of workers, limiting water and bathroom breaks, inadequate ventilation, inadequate lunch facilities, inadequate medical care, and not paying severance to fired workers (NLC and CSSLD, 2007). The NLC succinctly summarized their view writing, 'Sam Bridge is definitely a sweatshop' (2007). NLC released a report alleging that Nicotex was a harmful sweatshop in February 2009. The list of complaints was similar: long and unpredictable hours, verbal abuse, inadequate wages, not paying bonus wages on time, not enrolling and paying for mandatory health care for all workers, and not giving mandated paid vacations (NLC and IGLHR, 2009). The NLC summarized their view writing that there are 'Illegal sweatshop conditions at the Nicotex factory' (2009a).

In May 2010 we surveyed a sample of 35 workers at each factory. (6) The NLC reports had complained that prior corporate audits were not credible, 'Management chooses the workers who will speak with corporate auditors, and for this they pick the newest, youngest and most timid workers who do not know much about the factory and who are most frightened about being fired. This guarantees a short but shallow interview' (NLC and IGLHR, 2009). To avoid this problem we did not obtain permission from either company to survey their workers. We hired a local firm, Aragon & Asociados, to randomly survey a subset of workers off company property. (7) The surveys were conducted before the factory opened, when workers left for lunch, or when they left the factory to go home. Workers were identified as they left the factory and then approached and asked to complete a written survey. Complete anonymity was verbally guaranteed to each worker when they were approached and each survey had a written statement at the top informing the workers that the survey was for academic purposes, all answers would be confidential, and we would not provide the individual surveys to companies. Our method allowed us to obtain more honest responses than we would have obtained had we gained approval from the companies. It also limited our sample to 35 workers at each firm because of the amount of time we felt we could survey workers without drawing undue attention. (8) We have no reason to believe that the subset of workers we interviewed is not representative of larger population of workers.

The average worker we surveyed was 30 years old, while the youngest was 20 and the oldest 54 years old. Slightly over half (52.9%) of our respondents were males and the average worker had worked for their company for 3.8 years, with the newest employee only having been on the job for two months while the most senior had been there 16 years. More than 61% of the people surveyed worked on the production line as apparel machine operators. An additional 8.5% each worked in product inspection, packing, or in a supervisory role. (9) Another 7% worked in pressing while 6% worked in some other capacity. These numbers were fairly consistent across both Sam Bridge and Nicotex. (10)

ANALYSIS AND RESULTS

Wages and working conditions compared with alternatives

We asked workers a series of questions comparing their current working conditions, hours, and wages with their prior employment. Most workers (56%) had previously worked as an operator in another apparel factory, and 18.5% had previously worked in a shop. Some (7.1%) had previously worked in domestic services, for another 7.1% this was their first job and these constitute most of our 'no answer' responses below. A small number of workers had a variety of other previous jobs. Table 1 summarizes how they viewed their various working conditions compared with the conditions at their prior job.

Overall employees thought their working conditions were better at Sam Bridge and Nicotex than they had been at their prior jobs. Only 10% thought they were at greater risk of injury while nearly 46% thought their risk of injury was lower. Less than 9% thought the management treated them less fairly than they had been treated by their prior managers while more than 41% thought they were treated more or much more fairly. No worker felt a greater risk of sexual harassment while more than 34% of workers thought the risk was smaller. The majority, 61%, of workers had more benefits than they did at their previous employer while only 24 % had fewer. Overall, 60 % of employees found their combined wages and working conditions were better at Sam Bridge and Nicotex than at their prior employer while only 20% thought they were worse.

These results indicate that employment in these firms was better than most workers' prior employment. Even these statistics understate how good the jobs are compared with the workers' next best alternative because for some workers their prior employment ceased being an option. Twenty-five of the 70 workers left their prior job because their plant closed or they were fired or laid off. For these workers, Nicotex and Sam Bridge might not compare favorably with their prior employment but yet could still be their best available option. For example, when these workers are excluded, the percent of workers who think their overall pay and conditions at their current job are worse than in their prior job falls from 11% to 4 % while the percent who think they are better or much better increases to 69 %.

The NLC complained that the working hours were long at Sam Bridge and Nicotex. We found that employees were working fewer hours, an average of 55.4 h now compared with 57.8 h at their prior jobs. The NLC also complained that wages were low. But here again, despite the fact the employees were working fewer hours, we find that workers were earning 11% more at Sam Bridge and Nicotex than they were paid at their prior jobs. (11) In fact, the average reported biweekly income of 1,193.1 Quetzal compares favorably with overall levels of income in Guatemala. In 2009 average GDP per capita was only 13,833 Quetzal. Yet the average Sam Bridge and Nicotex worker earned 31,022 Quetzal over the course of the year. (12)

Our results demonstrate that despite being identified as exploitative sweatshops by the NLC, most workers find that their working conditions, hours, and wages have improved at Sam Bridge and Nicotex compared with their prior jobs.

Do employees desire a different mix of compensation?

Most of the NLC's complaints about Sam Bridge and Nicotex focused on working conditions rather than wages. Some scholars have criticized those who defend sweatshops for assuming that mandated improvements in working conditions and mandated increases in wages will have the same negative effects. Arnold and Hartman write, '... defenders of sweatshops typically do not distinguish between issues such as the health and safety conditions in the factories, the number of working hours of employees, compliance with local labor laws, wages, and benefits. Indeed, they appear to assume that improvements in any one of these areas will result in inevitable and dire consequences for workers. However, these assumptions are unwarranted' (2006, p. 8). (13)

Wages and working conditions are analyzed similarly because when working conditions are poor, employers must pay a compensating differential. Employers are generally indifferent to whether they pay a worker in wages or indirectly by paying to improve their working conditions. Workers do care about the mix, and because safety and improved working conditions are normal goods, employees will demand mostly wages when their productivity is very low. This leads us to hypothesize that, although the NLC complains about many of the working conditions at Sam Bridge and Nicotex, these conditions, constrained by the overall level of compensation, roughly reflect employee desires.

The NLC complained that Sam Bridge employees had to work long hours, often 55 to 60 h in a week, which includes mandatory overtime. The workers we surveyed estimated they worked 52h a week. Only 12.5% of workers desired to work longer hours. More importantly, 97% of workers said they would not be willing to earn less in order to have fewer hours. The hours may be long, but the workers are poor and desire the hours to help feed and clothe their families.

The NLC complained that Sam Bridge managers would curse at and humiliate the workers. The NLC reports that the supervisors taunt the workers, shouting: 'Do you have garbage for brains? ...' 'Why can't you reach the goal ... You're all like shit, like piss water' and 'It's easier to work with animals than you. You're good for nothing' (2007). However, when asked 'How would you rate how fairly the managers treat you' all of the employees we surveyed reported chose 'fairly' or 'very fairly'.

The NLC reported that managers told Sam Bridge employees that they only needed to use a bathroom once per 10h shift, but 91% of the workers surveyed reported they could go to the bathroom any time they wanted and 6% said they could go up to four times per day. Only 3% of workers reported being limited to two bathroom breaks.

Other complaints by the NLC include a lack of fans, an inadequate medical clinic, and lack of adequate space for employees to have lunch. Yet all of the employees we surveyed reported that they were satisfied with their job. Most tellingly, all workers surveyed reported that they were unwilling to earn less to have more pleasant working conditions, and 97% were unwilling to earn less for safer working conditions.

The NLC complained that Nicotex had long mandatory overtime hours, it failed to register all of its workers for mandatory health care through the Guatemalan Institute of Social Security, and alleged that Nicotex was cheating workers out of their paid vacation. In addition to the legal 44h work week, 'overtime work is common, obligatory and excessive, which is a violation of Guatemalan law. It is common for the women to be forced to work 20 to 25 hours of overtime a week' (NLC and IGLHR, 2009). Furthermore, 'The workers are never notified of overtime in advance. Rather, management decides, often just 30 minutes before the shift's end, instructing the workers that they must stay' (NLC and IGLHR, 2009). Our survey revealed that Nicotex workers were averaging just more than 59 h a week. Importantly, nearly 83 % of workers surveyed said they would not be willing to reduce the number of hours worked if it resulted in lower pay. In fact, 20% said they would like to work more hours. We also asked workers if they would be willing to accept lower pay if their employer made their hours more predictable. Nearly 86% said they would not.

Guatemalan law requires all employers to enroll their workers in the Guatemalan Institute of Social Security, which provides health and pension benefits. When workers are enrolled, 4.83% is deducted from their wages, and the employer contributes an additional 10.67% of their wages. When workers' payments are up to date, they have access to special hospitals and clinics. The NLC claims that Nicotex enrolled only 20 % of its workers at any one time in order to avoid making larger contributions. As a result, workers could not depend on being in the enrolled minority and often would not have access to health care. We asked workers if they would be willing to accept lower pay in order to have health insurance; only 20% were.

Guatemalan law requires every worker to be guaranteed 15 days paid vacation after they have worked for a firm for one year. The NLC alleged that, 'No worker at Nicotex has had a single day's paid vacation since the factory opened in November of 2007' (2009a). When asked to honor legally mandated vacation time, supervisors reportedly responded, 'Forget it. Nicotex never rests. If you feel tired, then resign and go to your home. There you can sleep. The gates are wide and open. If you go, we will replace you in five minutes' (NLC and IGLHR, 2009). We asked workers if they would be willing to earn less to have paid vacation. Nearly 69 % of workers were unwilling to give up any pay for vacation.

Employees at both firms were asked if they would be willing to accept lower wages to improve any of 10 working conditions. Some of these questions addressed specific NLC complaints at one firm or the other and some were more general. Table 2 summarizes their answers.

On eight of the 10 questions, when both firms are averaged together, more than 90% of the workers answered 'No'. Paid vacation was the most popular improvement, but even here more than 81% of the workers answered that they wouldn't sacrifice any wages for vacation. Nearly 65 % of workers surveyed answered that they were unwilling to give up any wages for improved conditions across the board for all l0 questions.

This research supports the view that although working conditions may be poor by US standards, the mix of compensation between wages and working conditions roughly reflects employee preferences, given their overall low level of productivity. (14)

Impact of activist activity

The complaints against Nicotex were released in February 2009. In August 2009 Nicotex signed an agreement with the Guatemalan Center for Studies and Support for Local Development, which had coauthored the complaint with the NLC, to improve conditions. We asked workers to answer our survey based on how conditions were before the agreement was reached in the prior two sections. In this section we asked questions about how things have changed since the agreement.

Profit maximizing firms employ labor up to the point where the cost of the last marginal worker equals their marginal revenue product and the mix of compensation reflects that mix desired by the employee. Thus, when demands for improved working conditions from activists are satisfied it must either raise the cost of labor and lead a profit maximizing firm to use less labor or cause the firm to improve compensation on margins demanded by activists while decreasing compensation on margins employees care more about. (15)

According to the NLC, the agreement ensures that 'the workers have won the right to healthcare. Significant health and safety improvements have been implemented. All overtime will be voluntary. Vacation time and pay will be honored. And workers are guaranteed their right to defend their legal, women's and labor rights' (NLC, 2009). Other provisions include greater access to water and bathroom breaks and less verbal abuse from supervisors.

We find evidence that Nicotex compensated for the demanded improvements along the margins that economic theory predicts. Twenty-six percent of workers saw their hours reduced, yet before the reforms 83% of workers said they would be unwilling to work fewer hours if it meant earning less. We also asked workers if their pay had been reduced and 14% reported it had. Nicotex also dealt with the higher cost of labor by employing fewer workers. Eighty-three percent of workers reported that fewer people worked for Nicotex in May 2010 than had before the agreement with the NLC.

When asked a general question, 'Have your working conditions improved [since the agreement]', only 31% answered yes while 69% said they had not. It's not clear whether Nicotex simply did not implement the agreed on changes or whether it had and workers viewed the change as net lack of improvement because Nicotex compensated on other margins. However, we also asked employees 'Overall, how do you feel about your conditions [since the agreement]'. Fewer than 3% answered 'much more satisfied' and only 17 % answered 'more satisfied'. The most frequent response, given by 49% of the workers, was 'the same'. However, 31% of workers reported that they were 'less satisfied' with their overall conditions since the agreement. This is some indication that Nicotex did implement reforms but that the reforms satisfied the preferences of the NLC at the expense of the preferences of the Nicotex employees.

In a follow-up visit in April 2011 we learned that Nicotex had closed in the year since our survey. Whether the closure was related to increased costs resulting from the NLC agreement or whether it was due to other economic forces is not possible to determine. However, Harrison and Scorse (2010) find an increase in small firm closures in Indonesia in response to anti-sweatshop activism.

Overall, we find evidence that Nicotex responded to protests by the NLC just as economic theory would predict. As a result, more workers indicated that they are less satisfied with their current conditions than indicated that they were more satisfied since Nicotex agreed to the NLC's demands.

CONCLUSION

Prior research found that sweatshop wages compare favorably with domestically available alternative employment. But many complaints from scholars and activists focus on working conditions rather than wages and little prior research systematically compared sweatshop conditions with the relevant alternatives. This research begins to address this gap in the literature.

We organized our research around three hypotheses. The first is that workers choose to work in these sweatshops because the wages and working conditions are superior to the available alternatives. We find that workers had shorter hours, improved pay, and generally felt their working conditions were better while working in the sweatshops we studied compared with their prior jobs.

Second, we hypothesized that the mix of compensation would largely reflect employee preferences because workers care about their mix of compensation and employers are largely indifferent to how total compensation is divided between wages and other benefits. We find that many of the specific allegations the NLC made against the working conditions in these sweatshops reflected the preferences of workers. When asked if they would be willing to give up some wages in order to improve various working conditions employee responses were overwhelmingly negative.

Because the mix of compensation largely reflects employee preferences, we hypothesized that responding to demands of first world activists would make employees worse off. Our survey revealed that Nicotex used less labor, paid lower wages, and more workers felt that their overall conditions had become worse rather than better since their firm agreed to demands made by the NLC. It is impossible to say whether it was the demands of the NLC that caused the changes or other economic factors because of the case study methodology of this research. However, given the answer to our second hypothesis it is likely that complying with NLC demands made workers worse off.

Some caution is in order in interpreting our results. This is a single case study of two firms in one country. Clearly more case studies in other countries are warranted. Unfortunately, due to the nature of the question we are addressing, we are limited to small sample case studies because no larger data set has been assembled.

Despite such limitations there are reasons to believe that this research has significant relevance beyond a study of these two firms. First, these companies were selected for study precisely because the NLC singled them out for protest. Thus our findings that these companies are superior to the available alternatives and provide a mix of compensation largely in line with employee preferences are strongly suggestive that other export factories in Guatemala who were not singled out for protest are also likely to be superior to workers' other options and their conditions also reflect employee preferences. Thus, so-called sweatshops, and low wage apparel manufacturers in general, in Guatemala should not be the subject of protests, boycotts, or trade sanctions in the United States.

Second, our empirical findings are consistent with what standard economic theory would predict. Absent physical coercion, workers choose jobs that are better, in their own judgment, than their next best alternatives. Furthermore, profit maximizing firms will allow the mix of compensation to be driven by employee preferences. Although further case studies of alleged sweatshop conditions in other countries are warranted, we expect that the general conclusion of such studies will be consistent with our findings.

Acknowledgements

We thank David Skarbek, the editor, and an anonymous referee for comments on a previous draft, Nicolas Cachanosky for valuable research assistance and translation services, Giancarlo Ibarguen and Carla Castillo de Hess for helping to arrange the surveys and Edgar Rene Ortiz Romero for assistance with factory site visits.

REFERENCES

Academic Consortium on International Trade. 2000: ACIT anti sweatshop letter. July 2000. http:// www.fordschool.umich.edu/rsie/acit/Documents/Anti-SweatshopLetterPage.html.

Arnold, D. 2010: Working conditions: Safety and sweatshops. In: Brenkert, G and Beauchamp, T (eds). The Oxford Handbook of Business Ethics. Oxford University Press: New York.

Arnold, D and Bowie, N. 2003: Sweatshops and respect for persons. Business Ethics Quarterly 13(2): 221-242.

Arnold, D and Bowie, N. 2007: Respect for workers in global supply chains: Advancing the debate over sweatshops. Business Ethics Quarterly 17(1): 135-145.

Arnold, D and Hartman, L. 2005: Beyond sweatshops: Positive deviancy and global labour practices. Business Ethics: A European Review 14(3): 206-222.

Arnold, D and Hartman, L. 2006: Worker rights and low wage industrialization: How to avoid sweatshops. Human Rights Quarterly 28(3): 676-700.

Brown, D, Deardorff, A and Stern, R. 2004: The effects of multinational production on wages and working conditions in developing countries. In: Baldwin, R and Winters, A (eds). Challenges to Globalization: Analyzing the Economics. University of Chicago Press: Chicago.

Esbenshade, J. 2004: Monitoring sweatshops: Workers, consumers, and the global apparel industry. Temple University Press: Philadelphia.

Hall, J and Leeson, P. 2007: Good for the goose, bad for the gander: International labor standards and comparative development. Journal of Labor Research 28(4): 658-676.

Harrison, A and Scorse, J. 2010: Multinationals and anti-sweatshop activism. American Economic Review 100(1): 247-273.

Miller, J. 2003: Why economists are wrong about sweatshops and the anti-sweatshop movement. Challenge 46(1): 93-122.

National Labor Committee (NLC). 2009: Major worker rights victory in Guatemala. 13 October. http://www.nlcnet.org/alerts?id=0022.

National Labor Committee (NLC) and CEADEL. 2007: Alert--Violation of CAFTA at Sam Bridge SA Guatemala. Institute for Global Labour and Human Rights, 21 October. http://www.nlcnet.org/ alerts?id = 0072.

National Labor Committee (NLC) and CEADEL. 2009: Women exploiting women. Institute for Global Labour and Human Rights, 25 February. http://www.nlcnet.org/reports?id=0535.

Pollin, R, Burns, J and Heintz, J. 2004: Global apparel production and sweatshop labour: Can raising retail prices finance living wages? Cambridge Journal of Economics 28(2): 153-171.

Powell, B. 2006: In reply to sweatshop sophistries. Human Rights Quarterly 28(4): 1031-1042.

Powell, B. (forthcoming): Sweatshops: Creating jobs and economic growth. Cambridge University Press: Cambridge.

Powell, B and Skarbek, D. 2006: Sweatshops and third world living standards: Are the jobs worth the sweat? Journal of Labor Research 27(2): 129-140.

Powell, B and Zwolinski, M. 2011: The ethical and economic case for sweatshop labor: A critical assessment. Working Paper.

Scholars against sweatshop labor. 2001: Political Economy Research Institute, October. http:// www.peri.umass.edu/253/.

Skarbek, D, Skarbek, E, Skarbek, B and Skarbek, E. 2012: Sweatshops, opportunity costs, and non-monetary compensation: Evidence from El Salvador. American Journal of Economics and Sociology 71 (3): 539-561.

Sollars, G and Englander, F. 2007: Sweatshops: Kant and consequences. Business Ethics Quarterly 17(1): 115-133.

Zwolinski, M. 2007: Sweatshops, choice, and exploitation. Business Ethics Quarterly 17(4): 689-727.

(1) For scholarly articles making these claims, see Arnold and Bowie (2003, 2007), Arnold and Hartman (2005, 2006), Arnold (2010), and Miller (2003). Anti-sweatshop activists also often make these claims. See the websites of the National Labor Committee, United Students Against Sweatshop Labor, and UNITE for examples. Powell (forthcoming) surveys the claims and demands of the anti-sweatshop groups in Chapter 2.

(2) See Zwolinski (2007) for an article that counters the philosophical arguments made by some of these scholars.

(3) Powell (forthcoming) expands that study to cover more recent years and a total of 85 sweatshops in 18 countries. He also offers a more comprehensive examination of the economics of sweatshops.

(4) A fifth firm, Legumex, was also identified by the NLC. We did not include Legumex in our study because it is an agro-industrial plant rather than an apparel producer. The vast majority of the debate around sweatshops has focused on the apparel industry, and virtually none of the debate has included firms in the agricultural sector.

(5) It was originally named Sam Lucas and again recently changed its name to SAM SOL but ownership has remained the same.

(6) Surveys were completed over a period of three days from 19 May to 22 May.

(7) Aragon y Associatesis headquartered in Guatemala City. Founded in 1972 they have conducted more than 5,000 research studies that have analyzed or gathered the opinions of more than 2.5 million people across Central America, the Caribbean, and South America.

(8) This is a larger sample than prior published surveys of sweatshop workers (Esbenshade, 2004; Skarbek et al., 2011).

(9) Excluding the six employees who worked in some form of supervisory role does not significantly change any of our results.

(10) The exceptions were that all of our supervisory workers and most packers worked for Sam Bridge while most inspectors and pressers worked for Nicotex.

(11) We did not find significant differences in improvement between our whole sample and just those who had voluntarily left their prior employment in either the wages or number of hours worked.

(12) A finding that is consistent with many examples found in Powell and Skarbek (2006).

(13) See Hall and Leeson (2007) for more on the dire consequences that would likely result from imposing more stringent working conditions standards on poorer countries. They compare the level of development of many countries where sweatshops are located today with the level of development the United States had achieved when they adopted similar standards and find that many of these countries are years away from reaching a similar level of development.

(14) We followed up these surveys by visiting Sam Bridge and meeting with the owner/director, Myung Chul Kim, 27 April 2011. We asked him if he would be willing to give paid vacation if the workers were willing to accept less in wages. He replied 'People need money, not vacations. Guatemala is very poor'. When asked about shortening the hours his employees worked he responded that the workers desired the hours but that he would like to avoid paying overtime because it costs him more money but he has to use overtime because of the late penalty clauses attached to US orders. When asked directly if he cared whether he paid a worker the equivalent of $4 an hour in wages or whether he paid $3 in wages in $1 in other benefits, not surprisingly, he answered that it did not matter to him.

(15) Although not the main focus of their study, Harrison and Scorse (2010) report that non-wage benefits were not decreased in Indonesian firms when wages were increased in response to minimum wage laws and activist pressure. However, they include a single variable for all non-wage benefits and they never say what this measure is comprised of or how it might aggregate all possible non-wage working conditions. They did find that mandated minimum wage increases led to large decreases in employment.

JR CLARK [1] & BENJAMIN POWELL [2]

[1] The University of Tennessee at Chattanooga, 313 Fletcher Hall, Dept. 6106, 615 McCallie Avenue, Chattanooga, TN 37403-2598, USA.

E-mail: J-Clark@utc.edu

[2] Suffolk University, 8 Ashburton Place, Boston, MA 02108, USA.

E-mail: benjaminwpowell@gmail.com Table 1: How do current working conditions compare with conditions at prior job Much more Safer Same safe How safe (from injuries and 2.9% 42.9% 37.1% death) is your current job? How do managers and Much Fairer Same supervisors treat you? fairer 1.4% 40.0% 42.9% How safe are you from More Same harassment? exposed 0.0% 58.6% Do you have more or More Same fewer benefits? 61.4% 4.3% Do you consider your wages Much Better Same and working conditions? better 14.3% 45.7% 20.0% Less safe Much less No safe answer How safe (from injuries and 10.0% 0.0% 7.1% death) is your current job? How do managers and Less fair Much No supervisors treat you? Less fair answer 8.6% 0.0% 7.1% How safe are you from Less No harassment? exposed answer 34.3% 7.1% Do you have more or Less No fewer benefits? answer 24.3% 10.0% Do you consider your wages Worse Much No and working conditions? worse answer 11.4% 0.0% 8.6% Table 2: Desirability of the mix of compensation Nicotex Sam Bridge Are you willing to work for lower pay if your employer: Yes No Yes No Reduced the number of hours you have to work 17.1% 82.9% 6.0% 97.1% Made your hours more predictable 14.3% 85.7% 2.9% 97.1% Gave you more bathroom breaks 2.9% 97.1% 2.9% 97.1% Gave you Longer lunch breaks 5.7% 94.3% 2.9% 97.1% Made your working conditions more pleasant 17.1% 82.9% 0.0% 100.0% Made your working conditions safer 5.7% 94.3% 2.9% 97.1% Provided health insurance 20.0% 80.0% 8.6% 91.4% Gave you paid vacation 31.4% 68.6% 5.7% 94.3% Treated you more fairly 20.0% 80.0% 0.0% 100.0% Reduced the risk of sexual harassment 0.0% 100.0% 0.0% 100.0% Total Are you willing to work for lower pay if your employer: Yes No Reduced the number of hours you have to work 10.0% 90.0% Made your hours more predictable 8.6% 91.4% Gave you more bathroom breaks 2.9% 97.1% Gave you Longer lunch breaks 4.3% 95.7% Made your working conditions more pleasant 8.6% 91.4% Made your working conditions safer 4.3% 95.7% Provided health insurance 14.3% 85.7% Gave you paid vacation 18.6% 81.4% Treated you more fairly 10.0% 90.0% Reduced the risk of sexual harassment 0.0% 100.0%