1

Christopher BakerCore 412

Applying Ethics: Ethical Dilemma Professor L. Halsted

11/26/12

1

2

Core 412

I will be looking into whether it is ethical for businesses to run sweatshops, and the positive and

negative effects it has on their business. I will also be looking at the positive and negative effects

for the employees who work for these corporations and the ethics of the consumers who buy the

products. Companies such as Nike, Starbucks and other major franchises have all been targeted

for running cheap labor to maximize their products and I will research and discuss to see if these

are ethical matters.

2

3

Annotated Bibliography

Powell, B., & Zwolinski, M. (2012). The Ethical and Economic Case Against Sweatshop

Labor:A Critical Assessment. Journal Of Business Ethics, 107(4), 449-472.

doi:10.1007/s10551-011-1058-8

Powell, Benjamin is a Professor of Economics at San José State University and the Director of

the Center on Entrepreneurial Innovation at the Independent Institute and Matt Zwolinski is

Professor of Philosophy at the University of San Diego. There article on “The Ethical and

Economic Case Against Sweatshop Labor” researches and distinguishes between different ways

in which various parties might seek to modify sweatshop behavior. The article also goes on to

mention if it is right ethically for cheap labor to exist to benefit a corporation. Professor Powell

and Zwolinski have conducted a tougher research on their topic and It also concludes “a list of

challenges that critics of sweatshops must meet to productively advance the debate.” This source

will be useful on my paper “The Ethics of Sweatshops and Their Effects” and will form a solid

part of the back ground section for my paper.

Skarbek, D. (2006). Sweatshops and Third World Living Standards: Are the Jobs Worth the

Sweat?.Journal Of Labor Research, 27(2), 263-274.

David Skarbek is a Lecturer in the Department of Political Economy at King's College London

and before that he was a Professor of Political Science at Duke University. His article on “

Sweatshops and Third World Living Standards” looks into comparing apparel industry wages

and the wages of individual firms accused of being sweatshops to measures of the standard of

living in Third World economies. Professor also believes that sweatshops provide above average

3

4

standard of living in Third World countries. He fights those people, union and protestors who

believe sweatshops are ethically wrong and his research leads towards the benefits of sweatshops

for less economic developed countries. This source will be a useful to my paper to give a contrast

to the benefits of sweatshops to provide a contradictory argument.

Moriarty, J. (2012). Justice in compensation: a defense. Business Ethics: A European Review,

21(1), 64-6. doi:10.1111/j.1467-8608.2011.01641.x

Jeffrey Moriarty is a professor in the Philosophy Department at Bowling Green State University.

He conducts extensive research into business ethics and has written research papers on topics

such as “How Much Compensation Can CEOs Permissibly Accept.” Professor Moriarty looks

into why very high chief executive officers of companies get paid far beyond and the very low

pay of workers in overseas sweatshops and if it is ethically right that the difference in salary is so

vast. Although this mainly focuses attention to the rights of the workers in the sweatshops I

believe it will give a different contrast to my research with a business ethic point of view in

mind.

Pookulangara, S., Shephard, A., & Mestres, J. (2011). University community's perception of

sweatshops: a mixed method data.

Jaime Mestres is an Academic Advisor at the University of Missouri in the Department of

Textile and Apparel Management. Arlesa Shephard is head of Department of Human Sciences.

Sanjukta Pookulangara, Assistant Professor-Merchandising & Digital Retailing, all respected in

each of their departments for their research articles. Their research looks into the positive effects

that sweatshops have and the critical role in the apparel industry. This positive look on sweat

4

5

shops will give me a different perspective and argument for the benefits of sweatshops and what

they have to offer in the industry.

Alexander, J. (2011). Sweatshops, Context Differentiation, and the Rational Person Standard.

PhilosophyIn The Contemporary World, 18(1), 68-74.

John Alexander was a Lecturer of Philosophy at Balliol College, Oxford and his research into the

philosophy and understanding of his research has given him a solid reputation. His article

“Sweatshops, Context Differentiation, and the Rational Person Standard” looks into to see if

sweatshops are morally correct within society and looking into what is best for the employee

rather than the business. This is quite a focused attention at a specific area of business where

usually morals don’t account for much in business, however it will give me another point of view

on my topic.

Meyers, C. D. (2007). Moral Duty, Individual Responsibility, and Sweatshop Exploitation.

Journal OfSocial Philosophy, 38(4), 620-626. doi:10.1111/j.1467-9833.2007.00402

Meyers is a professor in philosophy at Loyola University in Chicago. He specializes in applied

ethics, ethical theory and contemporary philosophy. He has recently published articles in Social

Theory and Practice, Philosophical Studies, and Synthese. His article reports on the comparison

between morals and the financial economy. This source will provide a solid structure to my

article.

5

6

Due to the expansion of corporate globalization over the past 25 years, many

controversial questions have been asked, to see if it is ethical for sweatshops to exist among

society. According to the US Department of Labor, a sweatshop is “any factory that violates

more than one of the fundamental US labor laws, which include paying a minimum wage and

keeping a time card, paying overtime, and paying on time” (Alexis M. Herman,1997).

The history of sweatshops originates back to 1830-1850, in 1844; Friedrich Engels

gained the public’s attention when he published “The Condition of the Working Class in

England” (Engels, 1844). He defined this bleak period of working conditions as “sweating,” the

workers would not be paid by the hour, but by how hard they worked, how hard they “sweat”

(Greenhouse, 2006). Work was generally in the textile industry and was conducted in very small

places; critics and journalist back then even described the conditions as being “horrid,”

“monotonous,” “long hours and the pay miserably low” (Engels, 1844). In 1889, the British

Government launched a committee to investigate sweatshops in England, and the report was

made to the public in 1889, in which it described the working conditions and listed the major

corporations at the time which were using them. Sweatshops were in full production on a global

basis by the early 1990’s. Major corporations saw it as an opportunity for cheap labor and to

maximize their profits, corporations were generating more profit than ever before (Garner,

2009).

Immigrants from eastern European countries were seen as easy targets for major

corporations, who were paid low wages. As unemployment in eastern European countries was at

an all-time high in the early 1900’s, this caused an increase in demand for immigrants searching

for jobs (Kristof, 2009). This therefore meant that companies could pay their employees very low

wages, and therefore, if the worker demanded for a higher wages, or was complaining about the

6

7

long hours, there would always be another worker willing to work in the sweatshop as

unemployment was so high. Companies at the time had full control of the supply and demand of

jobs in their industry. Employees would be grateful of any job no matter what the conditions

were (Kristof, 2009).

As the jobs were mainly labor intensive, this meant the workers lacked the education or

knowledge which would enable them to improve the working conditions. Workers were

generally of all ages, sometimes as young as the age of six to late 40-50s, and generally women

(Greenhouse,2006). Companies at the time used to pay by “piece rate.” This is where workers

would be paid by the amount of shoes, socks, trousers and shirts made. According to New York

times reporter Steven Greenhouse, sweatshops employees could work up to “48 straight hours”

(Greenhouse, 2006). Greenhouse also mentions that, employees were stripped of passport and

Identification cards, the workers had been removed of all identification they can be imprisoned

or deported; “they're trapped, often held under conditions of involuntary servitude” (Greenhouse,

2006). Sweatshops were not just seen in the textile industry, but in agriculture too. Legal and

illegal immigrants would pick fruit and vegetables from the land, and were sometimes abused

and punished if they didn’t meet their daily requirement (Greenhouse, 2006) . And as the

workers lacked education they had no knowledge of who to contact to fight for their rights; the

workers did not know any different; this was their job, and was their life (Greenhouse,2006).

The first steps to improve sweatshops were in 1903 in the United States, when New York

eliminated the production of tobacco products (New York Times, 2012). Before the legislation

was put in place, the production of tobacco products was being made in homes. Jacob Riis, a

photo journalist at the time, produced a book of powerful images of the condition of sweatshops

called “How the Other Half Lives” (New York Times, 2012). The images were disturbing and

7

8

made the problems aware to the public; the main point of Jacob’s book was to inform the public

that if you buy from companies who were using sweatshops, you are encouraging the industry

even more, you are keeping the business alive and making them more money (New York Times,

2012). However, at the time, there was no “trade standard” put in place, and people didn’t know

which companies were using sweatshops. And the companies who employed cheap labor didn’t

want the consumers to find out either; this would take another 10 years to become evident (New

York Times, 2012).

The International Ladies Garment Works Union and Protocol of Peace, based in New

York was the breakthrough in the industry, which established a clear set of guidelines

corporations and any business had to follow which included, working conditions, wages,

ventilation and safety conditions (New York Times, 2012). Unions thought that this new

regulation would help benefit the situation; however six months after the regulation was made

public and set in place with corporations, a fire in manufacture Textile Company in Manhattan

started and left 146 of the 500 workers dead (Triangle Shirtwaist Factory Fire, 2011). It was

clear that the working conditions and the safety of the workers was still far from Unions desired

goal (Triangle Shirtwaist Factory Fire, 2011).

A perfect example of the profits that was being made by the sweatshops is Nike. Started

in 1972, an American based company, Nike contracted companies in China to manufacture their

products when their company started to incur high demand with the public. Their labor costs

were too high, paying their workers four to six dollars, which at the time which was reducing

their profit margins. Just to mention Germany’s average hourly wage in 1975 was $18 per hour

(Meyers, 2007). When they moved their manufacturing to China, they reduced their labor cost

per hour by over 600%. The workers in China were being paid $0.84 per hour, and when Nike

8

9

was selling a pair of shoes for $99, labor cost would only amount 0.8% of the retail price,

compared to a 6% cost which they would incur if the pair of shoes were manufactured in the

United States (Meyers, 2007). From a business prospective and making profit, Nike is doing the

right thing as they are reducing the costs; however they are maximizing their profits by taking

advantage of another culture (Meyers, 2007).

On the other hand, according to Meyers who is a professor in philosophy at Loyola

University in Chicago, Kant’s categorical imperative would disapprove of employees being

taken advantage; “unfair situations and driving hard bargains against desperate workers,

companies undermine the autonomy of these workers who have no other realistic options.”

Kant’s “golden rule” would also say that Nike’s action of them taking advantage of their workers

is wrong and Professor Myers mentions if the owners of the company were to put themselves in

their employee’s shoes and work the hours and the conditions they are doing, would they be

happy the way they were treated; if not then to exploit others in that way is morally wrong

(Myers, 2007). Kant’s categorical imperative, asks us whether or not we can universalize our

actions and that it is your duty to help others, and your intentions of looking after others.

Personhood would not apply here either as Nike’s intentions are taking advantage of their

employees to make more profit, which goes against Kant’s theory (Kant, 1804).

The problem however, although Nike in the United States received a bad reputation for

moving their manufacturing process to China resulting to increasing number in unemployment in

the United States, countries like China rely on large companies like Nike to help their

infrastructure, employment and GDP (Myers, 2007). China welcomes large corporations to

contact them and manufacture their products as it benefits their economy despite the working

conditions (Myers, 2007). When Apple computers looked to build a manufacturing plant in 2000

9

10

after the increasing demand within the industry, to make all their software and products, they

were contacted by the major cities of America (Walter Isaacson, 2011) . Each included their own

personal proposals of what their city could offer Apple; for example the cost of the building and

the cost of labor. When China contacted Apple; they flew the entire board to Beijing, and

showed them around the building which they had already built fully set up with all the required

machinery to manufacture. (Walter Isaacson, 2011). D. Kristof reporter from the New York

Times in 2009 reported “Yet sweatshops are only a symptom of poverty, not a cause, and

banning them closes off one route out of poverty.” Kristof, also mentions that many of citizens in

these third world countries would “love the opportunity” to work in these sweat shops as it far

better from the conditions of the other jobs available. Kristof mentions in his article that the best

way to help and benefit people in these less economic countries, “isn’t to campaign against

sweatshops but to promote manufacturing there.” Kristof named his article “Where sweat shops

are a dream” (Kristof, 2009).

Manufacturing products to foreign countries should not be prevented because the

economy and globalization of industries would gradually decline and have severe consequences

to countries infrastructure. Countries rely on other countries to help benefit their economy.

Professor David Skarbek, a Lecturer in the Department of Political Economy at King's College

London mentions in his article that sweatshops should not be seen as a negative, but a as

positive to the employees and countries that get the opportunity to work there (Skarbek, 2006).

Professor Skarbek mentions that “apparel industry wages equal or exceed average income per

worker in eight of ten countries.” Despite the 70 hour long week, Skarbek mentions that you

have to put the employees circumstances as the main focus, and the cost of living in countries

such as China, and Bangladesh is a relative to the cost of their wages (Skarbek, 2006). Out of

10

11

the ten countries where sweatshops are most popular around the world, the average cost of living

exceeds no more than two dollars. However out of the ten countries, nine of them exceed this

daily cost of living. Professor Skarbek goes onto mention that although the sweatshop industry

has been highly criticized of exploiting in less economic countries, the workers are better off

than most of their citizens. Professor Skarbek’s article lists all the financial questions about

sweatshops, and provides valid points about the positive effects sweatshops bring to third world

countries; however he fails to address the question “is it ethical for sweatshops to among in our

society” (Skarbek, 2006). In his article he indicates that earning money can lead to happiness; he

fails to address the length of time and working conditions the employees have to go through to

earn this money to survive the cost of living in their society (Skarbek, 2006). This would be

against Utilitarian theory, and the cost benefits, the 70 hour work weeks, which are up to 60%

longer than most countries. Theorist John Stuart Mill would say the “quality of happiness is more

important,” as the employees would have a very limited time and amount of happiness working

the length of hours and the working conditions they are surrounded in (Mill, 1873). However

utilitarian’s also state “the greatest good for the greater number of people” and you could say a

sweatshop produces a greater volume of products which would give a greater amount of

happiness to customers.

The best way to get the attention of these companies using sweatshops is to reduce their

profits. For the first time in 1997 workers stood up for themselves and more than 10’000 workers

from Nike’s China factory went on strike (Powell, 2007). As demand was still high for Nike’s

products this strike caught the attention of the board of Nike headquarters, because if you have

no manufacturing work force, you have no product, and therefore resulting to loss in sales and

profit (Powell, 2007). Nike made instant improvements; less than $1 wages were replaced by

11

12

above minimum wages, and random factory inspections were aloud for the first time by the Fair

Labor association (Powell, 2007)

Powell mentions that “safety improvements may be small as percentage of revenues

compared with profits but as a percent of revenue is utterly irrelevant” (Powell, 2007). Powell

Professor of Economics at San Jose University mentions that companies who spend money on

focusing and spending money on their latest products to grow sales, could have spent less money

improving the working conditions of their employees which in return would have increased their

sales. Powell mentions that by improving working conditions of your employees, this maximizes

productivity and quality of your product, which in result will lead to great sales from your

customers (Powell, 2007). Companies needed to spend less to generate more, where companies

were focusing on the next product all the time; they forgot to pay attention to their employees

who were making their product. Powell also goes onto mention that “forced labor” is morally

wrong and the workers do not have the choice of any other job options (Powell, 2007). And this

lies a problem, when employees only have a choice “among miserable and undesirable

conditions” you are exploiting human rights (Powell, 2007).

Powell’s article would follow after theorist Immanuel Kant that “it is your duty to help

others” (Kant, 1804). Powell would encourage companies to look after their employees and treat

them with “good intentions” and see them as a priority within the company (Powell, 2007).

Working conditions, wages and hours would have to be of good standard and the directors of the

company would seek that the employees were looked after and treated well; it would be their

“duty” to make sure they were happy (Kant, 1804).

12

13

The basic business principles of looking after your employees and they will look after

you in return, seem to be forgotten. Sweatshops have required a bad stigma behind them for

obvious reason, and modern day companies have changed their business model, moving away

from maximizing their profits but giving back. The public now understands over time the issues

with sweatshops and the conditions of the workers, and this has affected companies globally.

Consumers of products do not want to be associated with companies with bad business ethics,

and companies are now finding ways of giving back profits to make their brand look green, and

not all about profits. Major corporations such as Nike, Apple, Starbuck and Convers, just to

name a few now brand some of their products with the “Product Red” brand. (Nixon, 2008)

Founded in 2006, with an objective to eliminate Aids in Africa, companies display the “Product

Red” label on their products, which donates a percentage of the profit to the “Global Fund.”

Examples are, Apple donates $10 of every Nano ipod that sells, Nike donating 100% of every

set of Red laces which are sold, and Starbucks donating $0.05 on every Product Red beverage

(Nixon, 2008).

Companies such as Product Red and many more nonprofit companies would never have

started if it was not because of sweatshops. We could say this is the positive outcome of the

many years of all those people who worked those long hours in awful conditions. We have to

thank the employees who worked for these companies because if the attention of sweatshops was

never addressed and these major corporations were still getting away with cheap labor and

disregarding human rights just to maximize their profits, these companies would still be using

sweatshops, and would not be investing their money and changing their business model and

brand to giving back their profits to benefit companies for good causes such as Product Red. This

new business brand image of giving back has started an influx of new business with the objective

13

14

of giving back. Companies such as Toms Shoes donates a pair of shoes every time you purchase

one of their shoes, using their company slogan as “one for one” (Toms, 2012) they have donated

over one million shoes to children in less economic developed countries. This is a great example

of Social Contact theory which states “if you benefit from something you give something back”

(Thomas Hobbes, 1679). Social Contract Theory also states “a state of nature” that makes life

“poor, nasty and short” and that there are no “social goods, ie no industry or farming. The quality

of the workers goes against Hobbes theory, “that people must not hurt other people”, the

employees of these workers are not enjoyable working conditions (Thomas Hobbes, 1679)..

Jaime Mestres is an academic Advisor at the University of Missouri in the Department of

Textile and she mentions that it is down to “consumer social responsibility” if sweatshops are

ethical. Professor Mestres states three factors “Concern about Sweatshops,” “Knowledge about

Sweatshops” and “Beliefs about Foreign Industry” which a consumer thinks about before

willingness to pay or purchase a product from a company (Mestres, 2011). A study was

conducted at Marymount University where “70% students are were willing to pay an extra $1 on

a $20 article of clothing if they could be sure that the workers who made the item were paid a

livable wage and worked in safe and clean conditions” (MU Center for Ethical Concerns, 1999).

This Aristotle approach of “for good of all humans” that came within, by the students expresses

indicates Professor Mestres three step theory before purchasing the product. Another point to

address is that these were educated students at a top university; if the same question was to non-

university Students, or men or women from who lacked the privilege of an education, 70% of

them might not be willing to donate the $1 as they might lack the education and knowledge of

sweatshop (MU Center for Ethical Concerns, 1999).

14

15

To conclude the points that I have stated above, there are some positive outcomes of

sweatshops. Companies who invest money in overseas, in the form of opening up sweatshops,

benefits the country’s economy by opening employment opportunities. This has many beneficial

factors as it brings in money to the employees and their country. However exporting your

employment abroad to take advantage of another countries work force to improve your profits is

wrong. And this is what I believe the what sweatshops stands for. Having firsthand experience

when visiting a sweatshop in the Seychelles in 2009 when I started my own clothing line, the

only benefit of using a sweatshop is to make more profit. However witnessing the conditions and

the hours the workers had to work for you to make more money was not humane. Companies are

always looking for ways to cut their cost down to maximize their profits and they found a way.

Companies such as Nike only exported their work force to a less economic developed country to

reduce their labor costs. It was a quick fix; attention wasn’t paid to the employee’s conditions,

working hours or pay, but just the volume of products they produced for the cheapest price.

However without the cause of these sweatshops we wouldn’t have companies which give back so

much of their profits every year to help out others who are less as fortunate as the majority of the

people in the world. Sweatshops have made companies re-think and change the way they

conduct themselves in business as they have now been highlighted and recognized in society by

the members of the public who buy the products from these companies.

15

16

References

Powell, B., & Zwolinski, M. (2012). The Ethical and Economic Case Against Sweatshop Labor:

A Critical Assessment. Journal Of Business Ethics, 107(4), 449-472.

doi:10.1007/s10551-0111058-8

SKARBEK, D. (2006). Sweatshops and Third World Living Standards: Are the Jobs Worth the

Sweat?.Journal Of Labor Research, 27(2), 263-274.

Moriarty, J. (2012). Justice in compensation: a defense. Business Ethics: A European Review,

21(1), 64-6. doi:10.1111/j.1467-8608.2011.01641.x

Pookulangara, S., Shephard, A., & Mestres, J. (2011). University community's perception of

sweatshops:a mixed method data

Alexander, J. (2011). Sweatshops, Context Differentiation, and the Rational Person Standard.

PhilosophyIn The Contemporary World, 18(1), 68-74.

Meyers, C. D. (2007). Moral Duty, Individual Responsibility, and Sweatshop Exploitation.

Journal OfSocial Philosophy, 38(4), 620-626. doi:10.1111/j.1467-9833.2007.00402

Herman, A. (1997). Sweatshops. Solutions.United States Department of Labor. Retrieved from

16

17

http://www.dol.gov/oasam/programs/history/herman/speeches/sp970603.htm

Greenhouse, S. ( 2006). An ugly side of free trade. New York Times. Retrieved from

http://www.nytimes.com/2006/05/03/business/worldbusiness/03clothing.html?pa

ewan d=all

Nixon,R. ( 2008). Bottom line for red. New York Times. Retrieved from

http://www.nytimes.com/2008/02/06/business/06red.html?pagewanted=all&_r=2&

Kristof, D. (2009). Where sweatshops are a dream. New York Times. Retrieved from

http://www.nytimes.com/2009/01/15/opinion/15kristof.html?_r=0

Isaacson, W. (2011) Steve Job. Simon & Schuster's

New York Times. (2011) Triangle Shirtwaist Factory Fire. Manhattan. Retrieved from

http://topics.nytimes.com/top/reference/timestopics/subjects/t/triangle_shirtwaist_factor

_fi/index.html

17

18

Reflection

My first initial thoughts on sweatshops were the typical stereotype opinions which we

have labeled sweatshops with in our society; harsh working conditions, immoral, cheap labor,

abusive and corporations taking advantage of their employees. However with firsthand

experience and research for my ethical question, I have gained knowledge that there is more to

understand about this heated topic.

One of the main reasons why I chose this topic was the because of the invaluable

experience I had when I launched my own clothing brand in 2009. When looking for a supplier

to manufacture my clothing, I immediately thought of China and East Asia with my very limited

knowledge of this topic. I decided to fly out to these countries where the cost of manufacturing

of textiles was cheaper than some European countries. Visiting countries like the Seychelles,

Hong Kong and Thailand and experiencing sweatshops on a firsthand basis I gained an insight to

what sweatshops are really about, and what a text book could not teach me.

One of the main reasons why people start a business or venture into business is to make

money, and if that is your initial objective and goal to make money, using sweatshops in the

textile industry gives you the best possible chance to make this happen, saving as much as 80%

on labor and manufacturing costs, increases your chances of making profit. However

experiencing the working conditions in which the employees were surrounded in; the 80%

saving in costs was not worth the saving to encourage the sweatshop industry. So in the end I

found a lovely Italian family in Milan who has been designing clothes for many years, and they

make fantastic quality clothing and we pay them accordingly. We have a fantastic relationship

18

19

with our manufactures, they are happy and we are happy, and I believe this is the art of good

business. If everybody in your chain of supply is happy and getting their fair share of money and

nobody is getting taken advantage of, this is good for everyone, and ethically the right way to go

about business.

However when researching my topic and discovering Professor Skarbeks article on

sweatshops I released that there may be some positives as result of sweatshops which did change

my opinion slightly. Professor Skarbeks research stated that 19/20 countries that used

sweatshops excelled the daily average income of that country. Despite the working conditions

and the long hours that the employees are working, you have to see this as a positive and a step

in the right direction. Corporations such as Nike have invested millions of dollars to build

manufacturing plants in places like China and have created thousands of jobs; this is a positive

outcome of sweatshops. If we can then channel these sweatshops into enjoyable places to work,

less hours, increased pay and focus more on the employees rather than just profit margins this

would be step in the right direction, not only for the employees but the businesses that influence

sweatshops.

19