Are “Sweatshops” Moral in Business?

Recently, our small church group was discussing the issue of global poverty and the existence of sweatshops in third world countries.  During the discussion the leader stated that the corporate use of sweatshops was immoral and something that all people should abhor.  As members of the group nodded in agreement, one member asked if it would be realistic to just increase wages across the board and, if so, by how much.  The economist in me thought that could only be done if the prices of the products were able to be increased to cover the increased cost of production, while remaining competitive.  What should the corporate CEO or private business owner do in a competitive free market?

The term “sweatshop” goes back to nearly two centuries to England when the rural poor moved into cities to take jobs of guild workers in the garment industry at much lower rates of pay and in any working conditions.  This pejorative term, as it is used today, has been redefined to include all firms having unhealthy conditions or an unsafe working environment, violating federal or state regulations, paying extremely low wages, or using child labor.  Increasingly, this term has been applied to manufacturing plants located in third world and undeveloped countries.

Moral outrage and condemnation are common among the opponents of sweatshops resulting from globalization where jobs are transferred from high-wage developed countries to low-wage undeveloped countries, such as Indonesia, Bangladesh, Philippines, and even China and India.  Should all stakeholders including stockholders, customers, and CEO’s, insist that developing countries maintain the working conditions and standards of Western developed countries?

In 1997, Paul Krugman wrote, “bad jobs at bad wages are better than no jobs at all”[1] in a New York Times (NYT) editorial article.  He reported that a huge garbage dump in Manila, known as Smokey Mountain, was a favorite media symbol of Third World poverty.  Several thousand men, women, and children lived on that dump, enduring the stench, the flies, and the toxic waste in order to survive by combing the garbage for scrap metal and other recyclables.  They lived there over any other available alternatives.  In this op-ed piece, Krugman pointed out that while wages and working conditions in the new manufacturing plants (sweatshops) of the Third World were appalling, they were an improvement over the “previous, less visible rural poverty” or even the combing of others’ garbage.

More recently, Nicholas Kristof (2009) wrote in the NYT, “while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.”[2]  Would Kristof or Krugman consider these opportunities to freely choose to work in a factory rather than combing a garbage dump or slaving on a rural farm to be immoral?  As billions of poverty stricken workers have increased their wellbeing in these work environments, should we condemn them and continue to consider them to be immoral?


[1] Krugman, P. (1997, March 21). In praise of cheap labor. Bad jobs at bad wages are better than no jobs at all. New York Times. Retrieved from    http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html

[2] Kristoff, N. D. (2009, January 14). Where sweatshops are a dream. New York Times. Retrieved from                 http://www.nytimes.com/2009/01/15/opinion/15kristof.html?_r=3&

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