BY: LAURA P. HARTMAN
University of Wisconsin at Madison
School of Business
BILL SHAW
University of Texas at Austin
RODNEY STEVENSON
University of Wisconsin at Madison
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Paper ID: Labor Standards Working Paper No. 9901
Date: December 1999
Contact: LAURA P. HARTMAN
Email: Mailto:lhartman at bus.wisc.edu
Postal: University of Wisconsin at Madison
School of Business
975 University Ave.
Madison, WI 53706 USA
Phone: (608) 262-7920
Fax: (608) 262-8773
Co-Auth: BILL SHAW
Email: Mailto:bevo1 at mail.utexas.edu
Postal: University of Texas at Austin
Austin, TX 78712 USA
Co-Auth: RODNEY STEVENSON
Email: Mailto:resteven at facstaff.wisc.edu
Postal: University of Wisconsin at Madison
Madison, WI 53706 USA
ABSTRACT:
At the close of the twentieth century, sweatshops remain an
integral part of the world economic order. Most sweatshops are
in developing countries where governments implicitly sanction
them as an instrument of economic development. Multinational
corporations and other advanced economy suppliers reduce
operating costs by importing sweatshop products. Consumers who
do not pay attention to supply sources buy sweatshop products
that are priced lower than domestically produced goods.
All sweatshops, by definition, have at least one highly
questionable labor practice, such as paying workers extremely
low wages, requiring long hours of work, operating with
unhealthy and unsafe work environments, limiting worker rights,
and employing child labor. As with exams, however, whether a
questioned practice is found acceptable or unacceptable depends
on the perspective of the grader. Certain sweatshop practices,
such as slave labor, are considered fundamentally or culturally
unacceptable by ethicists simply because the practice exists.
For other practices ethicists look at the extent to which a
practice deviates from universal or cultural norms in assessing
acceptability. At some level, ethicists would find that
practices are unacceptable because required work hours are too
long, wage rates are too low, workplaces are too much of a
threat to health and safety conditions, or employees are too
young. For economists, or at least neoclassical economists,
acceptability is assessed based on the economic result. Wages
are not too low if more workers are employed; hours are not too
long, work conditions are not too poor, and employees are not
too young if low operating costs bring economic growth.
Unless economic and ethical dimensions are completely
orthogonal, there are workplace conditions that enable ethically
minded corporations to operate economically with developing
country sweatshops. But those practices can not be put in place
and sustained unless the results are acceptable to governments,
industries, and consumers. A government in a non-industrialized
country might enact and enforce labor laws if the result does
not significantly threaten its economy. Producers might abide by
labor constraints if the result does not significantly raise the
cost of production. Consumers might pay higher prices if they
are assured that the worst labor practices have been
eliminated.
This paper considers the adverse nature of sweatshop
practices, critically examines their economic and ethical
implications, and assesses whether various ethical theories
provide sufficient guidance for establishing labor practices
that balance ethical concerns and economic consequences. An
Integrated Social Contract Theory methodology is applied to
identify a minimum set of hypernorms that could serve as a
foundational base for balancing ethical and economic concerns.
The paper concludes with recommendations on how businesses can
ethically acquire developing country imports and how governments
and consumers can reinforce those efforts.
JEL Classification: A13,D63,D81,E13,E24,F02,F11,J00,O01,O11,O19