Economics

Haitian Underwear Workers and Their Small Wages

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the people of Haiti demand cozy cotton gifts

The Nation recently posted and then pulled a story about the politics behind an increase of the minimum wage in Haiti. (Looks like the premature posting was a snafu with their local partner publication for the story, Haiti Liberté.)

A couple of years back, the Haitian government decided that it would be an awesome idea to more than double the minimum wage to 61 cents an hour from 24 cents an hour. Many U.S. companies—including Hanes and Levi Strauss—have contacts with* factories in Haiti and were none-too-pleased about the proposed increase. Through the dark magic of lobbying Obama's State Department got involved and a partial exception was carved out for textile companies.

The Columbia Journalism Review excerpted this key passage from the Nation story:

Still the US Embassy wasn't pleased. A deputy chief of mission, David E. Lindwall, said the $5 per day minimum "did not take economic reality into account" but was a populist measure aimed at appealing to "the unemployed and underpaid masses."

CJR reaches for the snark in response:

Well, hey. Imagine Haitians doing things for their "unemployed and underpaid masses" rather than rich Yankee corporations. The outrage! 

The folks at CJR also own calculators, and they were able to figure out that the cost of the proposed increase would come to less than one-sixth of the salary and bonus of Hanes' CEO. 

wait till we get our hanes on you

But the "economic reality" is that a massive increase in the minimum wage will screw the unemployed masses—making it more expensive to employ each person rarely means more people wind up employed—and won't do much for their underpaid brethren in the long term anyway. When it comes time for Hanes to decide whether to build that second (or third or fourth) factory in Haiti, the extra $12.5 million a year (by CJR's calculations) that the Haitian government tried to extract from their firm will be on the minds of the executives and shareholders.

The question is never whether a company can "afford" to increase worker salaries. The question is whether the world's skivvies- and dungarees-makers will choose to keep doing business in Haiti. That's something the Obama administration gets, even if CJR doesn't.

The piece will be back up on Wednesday, according The Nation's website.

Via Mark Lambert, who always tips well.

*Updated: The factories are contactors, not directly owned by Levi Strauss.