In Defense of ‘Sweatshops’: Path to End Poverty Runs through Cheap Labor

The United Nations has found a new villain in the global war on poverty: the very jobs that have lifted hundreds of millions of people out of poverty in recent decades.

A new U.N. report, “Roadmap for Eradicating Poverty Beyond Growth,” says economic growth is no longer an acceptable way to fight poverty. Why? Because it often “relies on the plundering of natural resources and cheap labour in the Global South,” a reference to the poor countries previously referred to as the Third World.

The word “plundering” should tell you where this is going. The report says that poor countries should avoid “extractive growth” that is “export-dependent … based on low-wage competition and geared towards satisfying the demand of the high-value markets of rich countries.”

Translation: If your country is sitting on valuable energy or mineral resources that the United States, Europe, and China need, tell them to look elsewhere. And if your most-valuable resource is your people, who desperately need jobs and are willing to work for less than U.S. and German workers, don’t let them be exploited like that. Save them from those “sweatshop” jobs. 

That line or reasoning might resonate with U.N. officials and nongovernmental organization activists, but it would baffle the workers doing the labor, who don’t see their hiring as exploitive. Instead, they lined up for the jobs.

Garment factories do not conscript workers when they open in Dhaka, Bangladesh, or Jakarta, Indonesia. Many would-be workers walk for hours, lie about their age, and bribe their way into getting jobs. That is not victimhood. That is how people behave when they’ve found an opportunity to improve their lives. 

The U.N. panjandrums never consider the alternatives to low-wage factory work in poverty-ridden countries. The reality is brutal: subsistence farming at the mercy of monsoon season, scavenging, informal day labor, and even prostitution.

As I explain in my recent book, Out of Poverty, compared to subsistence farming, scavenging, and other available alternatives, low-wage factory jobs are a huge step up for many workers.

Without such jobs, extreme poverty is the norm. More than one person in 10 in each of the dozen countries I examined had been living on less than $3.65 per day, the generally accepted threshold for defining extreme poverty. More than 4 in 10 were living on less than $6.85 a day, a less-severe poverty threshold. 

In all but two of the countries (Bangladesh and India), sweatshop earnings exceeded the $6.85 threshold. But even in those two countries, sweatshop earnings averaged more than $5.80 per day, while more than half of their populations lived on less than $3.65 a day. 

“Sweatshop” is a slur that wealthy Western elitists use to discredit the low-wage factory jobs that provide many African, Asian, and Latin American workers, and their countries, a stepping-stone to a better future.

Sweatshops are a part of the development process that enables countries to advance. It took the U.S. around 100 years to get through that process. South Korea, Taiwan, and Hong Kong made the jump in a generation. 

Countries that had sweatshops in the late 1990s and early 2000s saw their economies grow nearly 80% in the first decade of this century and more than 60% in the second decade. That growth translated into decreased poverty, fewer sweatshops, and better jobs.

Nearly half the population in these countries lived on less than $3.65 a day in 2000. Fewer than 18% live below that standard today. Cheap factory labor is one of the first steps up the ladder of economic development. The U.N. considers this a scandal. The poor consider it an exit from poverty.

The U.N. report admits that economic growth is what lifts poor countries while simultaneously demonizing the cheap manufacturing labor that is the main driver of such growth.

As is often the case with the U.N., ideology has trumped practicality. 

Sweatshops are not pleasant, but the best response to a bad job is a better job—and that typically comes from economic growth, the exact opposite of the agenda being pushed by the UN.