Powell on Sweatshops and Martin at AidWatch

Chris Coyne

Ben Powell has an excellent guest post over at AidWatch on sweatshops and development.  See Ben's paper with David Skarbek for more on this topic (also see this paper by Ben).

Also, Adam Martin is the guest editor of AidWatch while Bill Easterly and Laura Freschi are on a brief vacation.  Adam's first post as guest editor is here.  Be sure to check AidWatch for more.

Comments

[Z]

“People work in sweatshops because compared to alternatives, the employment there is better. A minimum wage, the lowest legal wage, hurts more workers than it helps. To find an employee who has benefited from a minimum wage is easier than knowing the costs: the business that closes because it cannot afford higher wages, the business that does not expand, and the business that never opens are examples. The people who are not hired do not complain because they do not know they were harmed. Why do all workers not make the minimum wage? Why do the restaurants in this city not collude to keep the salaries of chefs at the minimum wage? Competition prevents this. If one restaurant paid a chef the minimum wage, another restaurant could offer a slightly higher salary to attract the chef, and in the desire to hire the chef various restaurants could bid up the salary to attract the chef. If an unskilled worker can only produce $2 worth of value to someone, but the minimum wage is $6, someone is unlikely to accept the $4 loss by hiring the unskilled worker. Minimum wage does not force an employer to hire anyone. By being unable to produce value equal to the minimum wage many unskilled laborers are excluded from the legal labor market. Minimum wage supporters say supporting a family on the minimum wage is hard to impossible. Low wage jobs are not meant to support families. Many low wage earners are supported by their parents. People should only have families when they earn enough to support them. The common alternatives to sweatshop labor for the poor are begging, prostitution, starvation, and theft.” – Viception (http://viception.wordpress.com)

[Kyle8]

Sweatshops in third world countries are a favorite "cause" for the Glittering Ignoratti.

So they think they are doing a good thing if they shut down a factory and take away those people's jobs.

Back to the fields for you Hadji, or maybe begging or prostitution. But you just can't make anymore shoes and earn any actual money, some rich American celebrity said so!

[Felix]

I'm inclined to agree with you.
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