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Historical Development of the Sweatshop
Todd Pugatch
INTS 92: The Nike Seminar
April 30, 1998
When it's busy, we work up to sixty to sixty-three hours. The conditions in the factory are not very good. There's no air circulation. The bathrooms are outside on our floor... Almost no one goes to the bathroom, they feel embarrassed. The bathroom is outside. You have to leave the factory, go to the hallway. It's a bit dangerous because anyone can enter the bathrooms. Also, there is a part in the building that is unprotected. You can easily fall into that empty space.
Jaclyn Smith apparel worker
This worker's story is a familiar one by now: the tales of the toil of garment and shoe workers, who work extraordinary hours in debilitating conditions for subsistence pay. Her story, like that of countless others working in similar conditions, has focused much public attention on the plight of sweatshop workers across the globe. What may be surprising to know, however, is that this is not the testimony of a factory worker in Southeast Asia or Latin America, but the words of Lina Rodriguez Meza, an Ecuadoran immigrant who works at the Jaclyn Smith apparel factory in New York City. Indeed, the resurgence of the sweatshop in the past two decades has touched every corner of the world, from the least developed economies to the giants of modernization. The globalization of the economy has spawned the globalization of the sweatshop, and though the locations of the factories and the ethnicities of their workers have changed, in many cases the conditions have not.
The story of the sweatshop is the story of a mass of workers subordinated to the whims of an unflinching economic system, of workers mass-producing goods they may never be able to afford themselves. The sweatshop rose to prominence as employment moved off the farm and into the city, and employers found an apparently unlimited pool of laborers to make their products. The low entry costs and high labor intensity associated with the textile industry tended to concentrate sweatshops in apparel production, though by no means have sweatshops been confined to sweatshops only. As industrialization progressed, labor markets tightened and workplace regulations stiffened, pushing the sweatshop out of the mainstream of the economy, at least for the time being. The ascendancy of free trade and globalization in the late 20th century has led to the resurgence of the sweatshop, in developing and developed nations alike. With a nod of approval and a helpful push from national governments, the sweatshop has returned, with conditions frequently as debilitating as when they first appeared.
The term "sweatshop," a word intended to invoke the moral ire of the public by conjuring scenes such as those Meza describes above, will soon enter its third century. It is commonly used to signify a place of employment where conditions are harsh, hours are long, and pay is low. Labor advocates often toss the term about in order to win favor, sometimes without knowing if the conditions they describe are, in fact, sweatshop conditions. It will be useful, then, to move towards an accurate definition of "sweatshop" that allows us to distinguish between "sweatshop" and "non-sweatshop" conditions.
Toward a Definition of "Sweatshop"
The plight of sweatshop workers first gained a public audience with the publication of The Condition of the Working Class in England, by Friedrich Engels, in 1844. Charles Kingsley offered a formal definition of "sweating" in 1849. The "sweating system," he wrote, "is a surviving remnant of the industrial system which preceded the factory system, when industry was chiefly conducted on the piece-price plan, in small shops or the homes of the workers." The framework of this definition – that sweatshops are defined by a relationship of subcontract – was common in the early attempts to define the term.
In 1888, the British House of Lords conducted an investigation into sweatshops and presented its own definition: "although we cannot assign an exact meaning to 'sweating,' the evils known by that name are shown in the foregoing pages of the Report to be: 1) an unduly low rate of wages; 2) excessive hours of labor; 3) the insanitary state of the houses in which the work is carried on. These evils can hardly be exaggerated." Such a sweeping definition of "sweatshop" permits a wider range of workplaces to come under scrutiny, but offers only vague terms -- "unduly low," "excessive," "insanitary" -- to distinguish sweatshops from humane places of work.
Economist John R. Commons attempted a definition of the "sweating system" in 1901:
The term "sweating," or "sweating system," originally denoted a system of subcontract, wherein the work is let out to contractors to be done in small shops or homes... The system to be contrasted with the sweating system is the "factory system," wherein the manufacturer employs his own workmen, under the management of his own foreman or superintendent, in his own building... In the factory system the workmen are congregated where they can be seen by the factory inspectors and where they can organize or develop a common understanding. In the sweating system they are isolated and unknown.
For Commons, as for Kingsley, the existence of a sweatshop does not lie in the working conditions per se, but rather in the relation of employer to employee. If the employer demands "homework" (also known as "outwork"), that is, a quota of industrial production to be completed away from a centralized place of employment, then the employees work in a "sweatshop," although such a "shop" could be spread over a wide geographic area. Low capital investment and easy entry into the market characterize these sweatshops. Workers' earnings depend on production levels, not hours. Some scholars still use the framework of Commons' definition, though the modern system of subcontracting has evolved into a complex web of foreign investment in (often foreign-managed) subcontracted factories.
Bud Konheim, CEO of Nicole Miller, Inc., a designer clothing line that bases all of its production in New York, admits he knows little about overseas working conditions, but offers another interpretation of "sweatshop" for the US: "A sweatshop goes into business when you ask your main contractor to make a thousand dresses by Friday. Although he is too busy, he takes the work... It is not a sweatshop because it has low labor costs or abuses immigrant workers, but because it makes bad things." Konheim goes on to explain the substandard quality apparel that he says is characteristic of sweatshop production. Though his definition offers a valuable insight into how sweatshops come into existence, Konheim's focus on product quality effectively removes the human element – the daily working conditions and standard of living – that the term "sweatshop" seeks to extract from the industrial process for public scrutiny.
The US General Accounting Office (GAO) defines "sweatshop" as an "employer that violates more than one federal or state labor law governing minimum wage and overtime, child labor, industrial homework, occupational safety and health, workers' compensation, or industry regulation." Accepted by many as the industry standard, the GAO definition begs the question: is a foreign factory subcontracted by a US firm a sweatshop if it violates US labor standards, but is in compliance with its host country regulations? MIT economist Michael Piore notes that although factories may have "grueling workloads, frenetically paced production schedules, and protracted shifts, all of which deplete the physical health of workers," they still may "not constitute bona fide sweatshops." For our purposes, however, the GAO definition of "sweatshop" provides the most up-to-date and technically precise meaning. This paper will use the GAO definition, but will also pay special attention to the role that systems of subcontract and industrial homework play in the existence of the sweatshop.
Important to remember is that even though the GAO definition of "sweatshop" provides a precise, legal interpretation of the term, the sweatshop can exist in many forms. In the words of historian Leon Stein, "The sweatshop is a state of mind as well as a physical fact… The sweatshop, whether in a modern factory building or a dark slum cellar, exists where the employer controls the working conditions and the worker cannot protest." Maintaining this sense of subjectivity when examining working conditions is valuable in identifying workplaces where "the worker cannot protest," lest we lose sight of the workers themselves when searching for the presence of sweatshop conditions.
Sweatshop History From the 19th Century to the New Deal
The historical development of the sweatshop can be traced to the emerging textile industry of England, New England, and New York in the 1840s. Prior to 1850, the Massachusetts textile industry employed more homeworkers than factory workers, engaging a largely rural population in non-agricultural labor, many for the first time. The seemingly unlimited supply of rural laborers and low cost of entry for firms made homework common and opened the system to exploitation. "It is by no means the case that all homework is sweated," wrote British labor advocate Clementina Black in 1907, "but it is the fact that a good deal of homework, in this country and in others, exists solely because the homeworker can be ground to the lowest stages of misery."
Homework created the first system of subcontract, by erecting a three-tiered structure with manufacturers, who purchased the materials, at the top, workers who produced for piece rates in their homes at the bottom, and subcontractors in between. The outwork system represented a significant development in relations between labor and capital. "The principle that 'labor' was a mere factor of production," wrote historian Duncan Bythell, "one more item in an impersonal list of costs, to be acquired in the cheapest market without any regard for its human dimension -- was perhaps put into practice more obviously in the outwork system than anywhere else." In 1845, the chairwoman of a group of working women in New York said she knew of employers paying wages of between 10 and 18 cents per day, including one who "would obtain girls from Connecticut who would work for less even than what he offered" if girls from New York complained about his wages.
Homeworkers as young as 5 years old toiled 14 to 18 hours a day in these home-based sweatshops, paid by the piece or by the day. An 1876 letter to the Shoe and Leather Reporter noted, "For years it was as common to see the stitching clamp in the kitchen of a Massachusetts farm house as the churn." Black quotes from a 1905 Factory Inspector's Report to illuminate the difficult conditions that homework imposed:
Paper bag making is an industry largely carried on in homes in Glasgow, and no trade is more disturbing to the home. The paste seems to find its way everywhere, and many more things than the bags are found firmly pasted together. I visited two women, who, working usually in workshops, were, during the enforced period of absence owing to the birth of a child, given employment as outworkers. Nothing could exceed the misery and squalor amongst which the work was done. In both cases the workroom was also the living room and bedroom, and the whole of the available furniture, including the bed, was covered with damp bags, some hundreds of which had to be removed in one home before I could be shown the baby. The surroundings were unpleasant ones for making bags destined to hold pastry.
As the 19th century progressed, work moved slowly out of the home and into the factory. An 1867 ad for the Weed Sewing Machine Company depicted a mother and daughter, in their home, sewing by hand in the candlelight. The ad pitched its automated sewing machine as the liberator of these women, but conditions in the factories with improved technology were hardly better. Consider this 1868 description of a New York shop:
This is the workroom. Faugh, how it smells! There is no attempt at ventilation. The room is crowded with girls and women, most of whom are pale and attenuated, and are being robbed of life slowly and surely. The rose which should bloom in their cheeks has vanished long ago. The sparkle has gone out of their eyes. They bend over their work with aching backs and throbbing brows; sharp pains dart through their eyeballs; they breathe an atmosphere of death. Madame pays her girls four dollars a week. She herself lives in as fine a style as the richest lady she serves.
The persistence of abundant supplies of labor in the countryside allowed outwork to continue, but by the early 20th century, the rapid pace of industrialization and urbanization caused the factory system to replace outwork as the dominant mode of production. On the whole, factory workers earned better wages and labored under better conditions than homeworkers, but in many cases, the location of the sweatshop merely moved from the rural home to the urban factory.State License Superintendent Daniel O'Leary described New York City sweatshops with their "workers toiling in dark, humid, stuffy basements on Division St., children of eight years and women, many of them far from well, sweating their lives away in these hellholes." An estimated 60,000 children worked in textiles in New York City alone. Oppressive conditions, low wages, and employer negligence was common, as this anecdote from a New York newspaper illustrates:
August 4, 1904 – The seven cloakmakers who work at the Harris and Samuels Company, on the eighth floor of 97 Fifth Avenue, decided last night to stop work early, at 9 p.m. But when they wanted to get out of the place, they discovered that the boss wasn't back yet to open the locked door. One of them had a key to the shop that would open the door only from the outside. So they waited some time. But the boss forgot to return.
After waiting for an hour and a half, they opened the windows and yelled down their predicament to passers-by who called the firemen who brought a ladder that was just a few inches short of the eighth floor. Finally, one of the trapped cloakmakers remembered his key. He threw it down and one of the firemen unlocked the door.
London garment workers at the turn of the century, mostly young women, worked from 8am to 8pm, Monday through Friday, and from 8am to 4pm on Saturday. "[T]he life of the woman earning a wage by some form of needlework is no easy one," read an appeal to the British Board of Trade, "and if, being dependent upon herself, she earns – as most women do – anything much short of £1 a week, she must go short of everything beyond the very necessities." Even those at the top of the wage scale in the London garment industry merely "earn enough to house, feed, and clothe themselves healthily, and have a small sum in hand after the necessities of life have been provided."
Progressive Era muckrakers and labor activists focused public ire on sweatshops in the early 20th century, causing employers to concede some degree of better conditions to their workers. In 1910, an agreement between the International Ladies' Garment Workers' Union and New York City cloakmakers called the Protocol of Peace was an apparent breakthrough in the eradication of sweatshops. The Protocol required employers to recognize unions, establish a grievance procedure for workers, and police health and safety conditions in factories. Unions hoped that the agreement would spread throughout the textile industry and lead to the final demise of the sweatshop. But just six months after the signing of the Protocol, in a harbinger of the agreement's effectiveness, a fire at the downtown Manhattan factory of the Triangle Shirtwaist Company left 146 of 500 workers dead, despite manager and fire inspectors' prior knowledge that the factory was in violation of safety codes. Sweatshop workers would have to wait until the New Deal for any substantial alleviation of their plight.
The adoption of New Deal industrial regulations and the ascendant strength of unions in the US in the 1930s did not completely eradicate the sweatshop, but were relatively successful in pushing sweatshops to the margins of society. A key factor in the reduction of sweatshops in the 1930s was the establishment of "joint liability," which held a manufacturer responsible for the wages and conditions of its subcontractors. The prohibition of industrial homework in the 1940s caused the further decline of sweatshops, as did the establishment of the 40-hour workweek in 1940.
Still, sweatshops persisted as the high unemployment of the Depression led many to accept employment under almost any conditions. Southern textile workers complained that employers were routinely violating the Code of Fair Compensation, which prohibited child labor, established a 40-hour workweek, and set a minimum wage for the industry. US Labor Secretary Frances Perkins cautioned in 1933, "The red silk bargain dress in the shop window is a danger signal. It is a warning of the return of the sweatshop, a challenge to us all to reinforce the gains we have made in our long and difficult progress toward a civilized industrial order."
The Return of the Sweatshop
Perkins' warning turned out to be prophetic.
Globalization has given rise to a new, more complex form of subcontract, in which firms in developed nations seek manufacturers in developing nations that can provide the highest quality product at the cheapest cost. Multinational textile firms have become, in essence, marketing and design companies that rely on foreign subcontractors for their production needs, a system that estranges corporations from the production process. The emergence of "manufacturers without factories," grounded in the principle of lower production costs and higher profits, has shifted responsibility for workplace health and safety from the corporation to the subcontractor, leaving behind a largely unregulated system with incentives for labor exploitation. Oftentimes agents, who are not employees of the parent company and have no accountability for labor practices, arrange subcontracting for apparel firms, allowing firms to produce their goods in factories they have never even seen. Since most multinationals dwarf the size of their subcontractors, the subcontractor is usually captive to the corporate bottom line in order to stay in business, leaving workers as the sacrificial lambs. "Unless you're a specialty producer, the big retailers have to be your customer," said Charles Brenner of the American Textile Manufacturing Institute. "You don't tell Wal-Mart your price. Wal-Mart tells you."
Sweatshops arise not only from subcontracting arrangements with multinationals, but also from domestic producers who take advantage of the low wages and lax labor regulations of their home countries. An hourly wage comparison in the garment industry in selected nations suggests the great likelihood of the emergence of sweatshops in developing nations:
1997 Average Hourly Wage in Garment Industry, Selected Countries (US$)
United States
Comparisons of purchasing power, rather than absolute wage rates, is more useful in determining workers' standards of living, but such a comparison lies beyond the scope of this paper. However, several studies of workers producing for US firms in Mexico are instructive: workers at the Aluminum Company of America's Ciudad Acuna plant earn between $21.44 and $24.60 per week, but a weekly basket of basic food items costs $26.87. Mexican GM workers earn enough to buy a pound of apples in 30 minutes of work, while GM workers in the US earn as much in 5 minutes.
Moreover, comparisons of wage rates across time periods is exceedingly difficult, but anecdotal evidence suggests that today's sweatshops workers receive even less of the fruits of their labor than in times before. British labor advocates writing in 1907 offered an individualistic explanation for the existence of London sweatshops, claiming that workers' wages "depend generally far more upon the personality of the employer... than upon any difference in the quality or nature of the work." They note that wages are sometimes directly dependent upon the pay of the employer himself, suggesting a sense of obligation on the employer's part to share a proportion of his earnings with his workers. The captains of industry today feel no such obligation. The return of the sweatshop occurs amidst an economic system producing record profits for corporations and CEO compensation thousands of times the wages of their sweatshop workers. In 1996, Disney CEO Michael Eisner earned 325,000 times the hourly wage of his Haitian subcontracted employees.
Determination of hourly wage rates is often complicated by the widespread practices of "piece rate" wages, sub-minimum training wages for new employees, pay deductions, production bonuses, complex pay stubs, or no pay stubs at all, making it difficult for workers to know whether they have been paid correctly or fairly. A 1993 CBS report found Indonesian Nike workers were being paid below minimum wage, according to pay stubs. Though Nike nominally pays workers by the hour, they are penalized for failing to meet production goals, instituting a de facto piece rate system. "They yell at us when we don't make the production quotas and if we talk back they cut our wages," one Indonesian Nike worker told Far Eastern Economic Review in 1991. Vietnamese Nike workers forego their bonus if they fail to meet daily production goals, and can be fired if they fail three times. A Nike plant in China deducts up to 40 percent of workers' pay, while another non-Nike Chinese plant deducts for using the toilet more than twice a day. These notices posted at an East Java, Indonesia factory are indicative of the kind of cost-cutting at the workers' expense that is common in overseas factories:
To all workers. A charge of Rp100 [US$0.05] will be deducted from pay every Saturday for the cost of washing the dishes used to eat meals at work.
Workers wanting to wash before going home will be required to pay Rp50 [US$0.025] and another Rp50 will be charged to workers parking their bicycles in the factory grounds.
The historical parallels with earlier factories are striking here; Black notes that in England in 1907 "there do exist places where there is a fine of 6d. for washing."
Forced labor of various sorts, such as debt bondage (similar to indentured servitude), captive migrant labor, prison labor, and child labor plagues developed and developing countries alike. International attention focused on child labor in recent years after Iqbal Masih, a Pakistani carpet slave, was murdered at age 12, allegedly ordered by company owners after Masih spoke out on child slavery. Masih had been sold into slavery by his parents for $16 at age 4. He was chained to a loom to work 12 hours a day, 6 days a week until age 10, when he escaped and began to protest child labor. Many other incidences of forced labor and child labor have been brought to light recently, including:
In China, forced and unpaid prison labor is common. The International Labor Organization estimates 250 million children between the ages of 5 and 14 are working worldwide, about 12.5 million of whom work in export industries. The unofficial estimate of child labor in Indonesia is 3.3 million children of a total population of under-16 year olds of 69 million. In Thailand, the unofficial estimate of 4 million in child labor represents 20% of Thailand's under-16 population. The United States imports an estimated $100 million per year in goods produced by children in slavery or bonded labor, according to the New York Times.
Descriptions of working conditions in modern overseas factories are often comparable to those of US and English factories a century before:
Conditions in glass factories in Ferozabad [India] have been compared to Dante's Inferno. The intense heat from furnace temperatures reach 1,400 to 1,600 degrees Celsius; there is a lack of ventilation, pieces of broken glass everywhere, and dangling electric wires. Adults and children work without protective gear such as shoes, gloves, or goggles. Both adult and child workers stand outside furnaces dipping iron rods into molten glass, bringing it out, and throwing it to glass molders or blowers. Boys as young as 11 and 12 sit on the floor for long hours in front of the pot furnaces, melting and fastening glass bangles and beads. Often glass splinters injure the workers and pieces of glass cut into the children's bare feet. Children have to run very fast with the molten glass before it cools. They often bump into one another, sometimes scorching each other's bodies.
Safety conditions in factories are often a sham. In one Chinese cutlery factory, 100 of the 400 workers are "maimed or injured," and many still work under the unsafe conditions "since they had been unable to find jobs elsewhere because of missing fingers and arms." A 1997 Ernst and Young audit of the Tae Kwang Vina factory in Vietnam found that Nike workers are exposed to toluene levels up to 177 times the legal standard, with 77 percent of employees in one sector of the plant getting respiratory diseases. An investigation into a fire at a toy factory outside Bangkok that killed 188 workers in 1993 found that, like the Triangle Shirtwaist fire 82 years before, many safety laws were breached within the building. Government negligence allows such abuses to persist. In Indonesia, underfunding of labor code enforcement agencies and bribery of government factory inspectors, who number only 1 per every 3,895 factories, makes strict enforcement of labor laws nearly impossible.
Such egregiously poor working conditions cause a furor when discovered, but far more prevalent than these violations are the unseen effects of contemporary factory conditions. Though the cleanliness and sophistication of new technology often gives the appearance of safe working conditions, the daily toil of such work can bring problems to workers, as well. In data processing, for example, an occupation accorded much prestige because of its use of technology and skilled labor, "occupational hazards such as backache, eyestrain, blurred vision and headaches are also encountered by female workers as a result of sitting and concentrating for long periods."
Long hours are common. Some plants force employees into working extraordinary amounts of hours. Teenage workers in some Honduras and El Salvador factories routinely sleep on the factory floor, since their long hours do not afford them a chance to return home. A Price Waterhouse audit of Nike factories in China found that some require seven days of work per week, a violation of Chinese labor law. Many workers who ostensibly have the choice of whether to work overtime must do so in order to survive on their paltry wage rates.
Some factories that do not meet the criteria of a "sweatshop" nevertheless are repressive work environments, due to the humiliating treatment of workers. Physical and verbal abuse of various forms have been reported in many factories; some of the abuses are isolated incidents, while others are systematic. The practice of forcing women to prove menstruation, a degrading act, is common for employers who attempt to screen employees for pregnancy or to deny menstruation leave. A maquila worker in Ciudad Juarez, Mexico, was forced to prove menstruation before she was hired, so that her employer would not have to pay maternity benefits. "[T]hey asked me for the sanitary napkin," she said. "I had to show it in front of the nurse... I felt very ashamed. But I really needed the job. So, ni modo, in spite of feeling ashamed, I showed her the napkin." Although Indonesian law allows workers two days menstruation leave, workers are often required to prove menstruation, and are routinely denied bonuses if they take it. On International Women's Day in 1997, 56 female workers at a Vietnamese Nike plant were forced to run around the factory, 12 of whom fainted.
Workers toiling under such conditions often have few avenues to address workplace grievances due to the weaknesses of collective bargaining laws and judicial systems in many developing nations. In El Salvador, maquila operators use union membership information obtained from the Ministry of Labor to blacklist workers. This accounts for the existence of only five unions in the entire maquila sector of El Salvador, according to NGOs. In Indonesia, the Suharto regime recognizes only one union, FSPSI, and its representatives are chosen by FSPSI leadership or by employers, not by workers. Though nominally legal, independent unions face many legal restrictions in order to organize or to strike, rendering them almost powerless to operate through legal channels. Muchtar Pakpahan, chairman of SBSI, an unsanctioned union, is in jail for treason for his efforts to organize workers. In 1993, Marsinah, a worker in a watch factory, was murdered by military officers after representing fellow workers in a wage dispute. Unable to organize, workers in many nations have instead developed strategies of "low-intensity resistance": creative, often ingenious ways of exhibiting discontent with work without risking the repercussions of formal protest. "Go-slows," claiming possession by ghosts or spirits, citing religious reasons or "female problems" for not working, ignorance of orders or details, and mass absenteeism are just some low-intensity resistance strategies. Barbados data-entry workers discovered that by repeatedly pressing a superfluous keystroke, they could artificially boost their electronically monitored productivity levels and earn bonuses. Some Malaysian factory workers even devised ways to destroy machinery without being caught. Yet such strategies of low-intensity resistance, though indicative of widespread labor discontent, are unlikely to have much effect on an economic system as powerful as the one that has given rise to these workplaces.
The Globalization of the Sweatshop
The rapid globalization of the economy and the reduction of trade barriers in the postwar era have set loose a system of wage arbitrage in which multinational corporations seek to minimize input costs, including labor, in order to maximize production and profits. The staggering economies of scale that result from this system has led to the creation of huge factories subcontracted by foreign multinationals, many of which have exhibited sweatshop conditions. A relentless global search by multinationals for the cheapest labor costs has exerted a downward pressure on wages in the developing world. In three quarters of the countries now hosting US apparel companies, real wages have declined. A study conducted in Java, Indonesia found that 40 percent of employers were paying less than the minimum wage, at a time when the Indonesian government conceded that the minimum wage was only 60 percent of what a single adult needed to survive. Ironically, the reemergence of the sweatshop in the postwar era, both in the United States and abroad, has been facilitated, not slowed, by the United States government's aggressive free trade and free market policies.
In the first round of the General Agreement on Tariffs and Trade (GATT) in 1947, the United States won many exemptions from trade rules for the textile industry. Relaxing trade restrictions on textiles made it easier for the industry to move across borders in search of cheap labor, and encouraged the importation of cheap textile goods to stimulate the industry abroad. A provision in the US Tariff Schedule adopted in 1963 allowed for near duty-free offshore assembly of garments. At the same time, a wave of automation and relocation was sweeping the textile industry, fueled by competition from Asian firms. In the early 1960s, only 6 percent of the textile industry was automated, a proportion which increased to 40 percent by the late 1980s. Since automation could not easily spread to the labor intensive garment sectors of the industry, many US firms relocated their labor intensive production abroad, taking advantage of low wages in order to remain competitive. In 1980, 70 percent of apparel purchased in the US was produced domestically, but by the early 1990s, the amount declined to only half.
United States policy has continued to encourage the proliferation of sweatshops through the relocation of textile firms abroad. The Multi Fiber Agreement of 1973, the Caribbean Basin Initiative (CBI) of 1983, and successive rounds of GATT, culminating in the 1994 round, have all promoted offshore assembly of apparel. The US Agency for International Development (USAID) began a project in 1991 to encourage "targeted US firms" to invest overseas in apparel and other "labor intensive assembly activities." US support for the Salvadoran Foundation for Economic and Social Development (FUSADES, part of the CBI), which accounts for 94 percent of the FUSADES budget, has promoted US investment in El Salvador. FUSADES has provided $27 million for worker training programs, and contributed $32 million for factory start-up costs in El Salvador in 1988 alone. An advertisement funded by FUSADES in Bobbin, a prominent US trade journal, shows a teenage woman working at a sewing machine, with a caption that reads:
Rosa Martinez produces apparel for U.S. markets on her sewing machine in El Salvador. You can hire her for 33 cents an hour. Rosa is more than just colorful. She and her co-workers are known for their industriousness, reliability and quick learning. They make El Salvador one of the best buys.
Another ad, funded by USAID, boasts, "Jamaica offers low labor costs and a highly productive, English-speaking work force." Yet another reads "Want to cut your labor costs?" in large, bold letters, above the words "Honduras: a country committed to progress." Prodded by their own government, US firms can now take advantage of labor costs as low as 12 cents an hour in Haiti and 31 cents an hour in Honduras and El Salvador. The situation is similar to American industry of the early 20th century, when low labor costs in the South pushed Northern firms to relocate. When the New England shoe industry began its southern migration in the 1920s, it sought low wages and weak unionization. Indeed, there was a "parrallel between the growth of strong effective unions in a given center and the relative decline of shoe manufacturing in that center."
Government officials in developing countries understand the correlation between labor costs and foreign investment, but any desire they have to protect workers is stifled by the imperatives of economic growth. Tran Dinh Hoan, Vietnam Minister of Labor, said in 1995, "Vietnam cannot set its minimum wage higher than other regional countries…otherwise foreign investment will not come to Vietnam, but will go elsewhere." Asked why he did not prosecute labor law violators more aggressively, Hiang Sitha, director of the Cambodian Ministry of Social Welfare, said, "Before we take action, we must think carefully about the possible consequences. If we punish them too severely, we risk losing these investors."
In the United States, the result of the emigration of apparel industry has been devastating. Employment in the industry is down 18.9 percent since 1980, and real wages fell 17 percent between 1978 and 1991. There are 860,000 apparel workers in the US today, earning less in real wages than in 1955. The US apparel industry average wage of $19,225 exceeds only the average wages for the retail and fast food industries, among legal labor sectors. Wages in the illegal sector, which comprises a substantial portion of the US garment industry, are much lower. Although President Reagan's attempt to lift the ban on homework failed, his legacy of deregulation has left only 800 Department of Labor inspectors for 2 million workplaces. Once pushed to the margins of the US apparel industry, the sweatshop has been reborn in this milieu of free trade, deregulation, and wage arbitrage: the GAO estimates that over one third of New York City's 6500 garment shops are sweated, as are 4500 of Los Angeles' 5000 and 400 of Miami's 500 shops.
Conventional wisdom states that sweatshops are the inevitable byproduct of a free market economy, a necessary stage in the economic development of a nation. The prominence of the sweatshop in the economic history of the industrial nations, especially the United States and England, has led to an acceptance of the sweatshop as a necessary evil that will eventually lead to better times for all. Yet by their definition, the sweatshop is an aberration from the legally accepted workplace environment. Sweatshops are not, nor have they ever been, the "natural" result of an economic system, but the deliberate attempt by firms to exploit and marginalize their labor force, abetted by approving governments.
Rarely questioned is the role of governments in the persistence of the sweatshop. "Much of the poverty and economic disorder in the world today stems from the system we have tragically allowed to develop," says Jay Mazur, president of the Union of Needletrades, Industrial and Textile Employees (UNITE), "in which practical economic power has been allowed to divorce itself from legal responsibility." If we accept Stein's definition of the sweatshop – "…where the employer controls the working conditions and the worker cannot protest" – it follows that sweatshops persist because their workers have been denied the channels necessary to better their conditions. To reverse "the system we have tragically allowed to develop" requires that sweatshop workers organize to win better conditions for themselves, and that governments, consumers, and citizens of developed and developing nations alike support them in their efforts. If workers become empowered to advocate for themselves, the 21st century will see the establishment of greater legal responsibility on the part of governments, multinational corporations, and factory owners, replacing exploitation with justice.
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