Last Saturday I went out shopping for sneakers. I badly needed a replacement and shopped at Shoe Carnival in the Westchase area of Houston. I have no special love for Shoe Carnival, but it is convenient and well-supplied, and I’ve been shopping there for over five years.
This time, the manager accosted me and asked if I needed any help. I usually love being asked these bland open-ended questions by sales workers, so I started asking her about the footwear industry: the inventory turnover rate, the number of shoes in the store, things like that. She was not helpful at all (well, I thought, YOU were the one accosting ME). Then I asked what I considered to be a fairly important question: what did she know about labor standards at the factories where these tennis shoes were produced? She laughed at the question, and said she couldn’t provide that information.
“Really?” I said. “Why not?”
“And even if I did have that information,” she added, “I probably wouldn’t tell you.”
That made me a little miffed. After thinking some more, I decided not to buy the pair of shoes I had in my hands and instead go home and do some Internet research.
So I did that. I spent 30 minutes–30 minutes!–researching the topic. Here’s what I found:
First, there exists an organization to police factories that produce sneakers. It’s called the Fair Labor Association. Looking over the website, I see that the organization is clearly inadequate. It only inspects a small number of factories, only a fraction of which are in China.
Googling some more, I find an excellent report in Nov 2006 Business Week by Peter Dexter and Pete Engardio. They found that big Western companies have produced labor standards, but it’s typically been difficult to enforce or to monitor in China. Chinese workers are willing to work for less, not unionized and in China labor standards are rarely enforced. So even if Nike says they are “complying with local labor laws,” these laws are rarely enforced, so it’s hard to know how the workers are doing (Here’s a description of labor conditions at a typical Nike factory (probably out of date)).
Based on Chinese government figures, the average manufacturing wage in China is 64 cents an hour, according to the U.S. Bureau of Labor Statistics and demographer Judith Banister of Javelin Investments, a consulting firm in Beijing. That rate assumes a 40-hour week. In fact, 60- to 100-hour weeks are common in China, meaning that the real manufacturing wage is far less. Based on his own calculations from plant inspections, the veteran compliance manager estimates that employees at garment, electronics, and other export factories typically work more than 80 hours a week and make only 42 cents an hour.
Here’s lengthy excerpts from an interview with the head of the Fair Labor Association Auret van Heerden. This explains why the problem is not simply outsourcing but bad processes for manufacturing and supply chain management:
In China, the biggest issue facing the FLA is systemic underpayment of wages and excessive overtime in supplier factories. Why are these problems so prevalent?
One is that the brands book and confirm orders really late. And they often change their orders after booking. The brands want to order later and they don’t want to hold product. Then you add price pressures into that and it is really tough for the supplier [to not overwork its workers].
But the factory often doesn’t order the materials until too late and they are often delivered late [to the factory], too. The factory production layout is often a mess, so the supplier gets behind schedule and over budget even before they know it. Then they have to catch up. And to save money, they extend hours, but don’t pay overtime premiums. And the suppliers also lack proper training. The styles [of clothing and footwear] are becoming more complicated and are changing more frequently.
What does this mean financially for the suppliers?
Well, this means there are lots of reworks and quality problems and then there are lots of charge-backs [fees charged by the labels to the suppliers]. There are charge-backs for all kinds of things: If they are late with the product delivery, there is a charge-back. And if there are defects, there is one, too. And these guys [the suppliers] will do anything to avoid air freighting [which is much more expensive]. And these are not companies that can call up SAP and say we need the software to manage my production.
Is there a solution that allows the supplier to get the job done without having to make its workers put in overtime?
Well, they can add a second or third shift to avoid having to pay overtime. But that assumes the factory has accommodation for more workers and assumes there is transportation for them to get to the factory if they don’t live there.
And then there are the worker themselves, who often want to make as much money as possible even it if means working overtime. A lot of activists will say just pay the workers a living wage [so they don’t have to do overtime]. But if you raise many of these Chinese workers’ wages 100%, they will still want to work on Sundays.
To summarize: despite the publicly stated desire of Western companies to do auditing, local conditions and supply chain management make it very difficult for them to do so.
Now let’s return to America at Shoe Carnival. What can you do? I consider myself an educated consumer; on the other hand, I don’t want to spend a lot more on shoes or have to be bothered to do exhaustive research every time I want to buy a pair of sneakers. And generally, I don’t subscribe to the politics of organized labor. But clothing manufacturing is one area where labor unions can make a difference….especially when the government is lax about enforcing labor rules. The great thing about the Internet is that you can learn about vendors and stores you’d never otherwise have access to. Here’s a few:
- Here’s a list of companies committed to better labor standards for their apparel products.
- Here’s a list of low-priced shoes offered by Nosweat Apparel. They don’t look overly stylish, but if you can live with that, the price is definitely right.
- Here’s a fascinating interview with the head of Nosweat. Here, they even publish a paystub of a typical worker!
- Interestingly, university apparel stores exert a lot of influence on the clothing industry in the USA, and these stores are receptive to student opinions. Your university might have Fair Labor products or else could be persuaded to carry these things.
I remain convinced that the American consumer can be motivated to support a company that uses good business practices. The hard part is making this information accessible and ensuring that this information is accurate. That means third party auditing and reasonable accommodations for differing labor standards in each country. The other hard part is making sure that companies with these good business practices still offer competitively-priced products. No one wants to pay 25-50% more just to have a good conscience.
More than a hundred years ago Marx envisioned a “class consciousness” whereby workers in different countries would identify with working class people in other countries (transcending national borders). Now we have another social force transcending national borders: a “consumer consciousness” which uses Internet-collected information to empower the individual to vote for higher worker standards with their pocketbooks.
Thanks to the Internet, consumers can avoid supporting deplorable factories and middle-men retailers who assume customers are not curious about such things.