Sweatshop

Once thought a nasty relic of history, sweatshops have reemerged in both advanced industrial and newly industrial economies. Sweatshops are production sites where workers are subjected to multiple violations of their respective nation's labor laws regulating occupational safety and health, wages and work hours, child labor laws—the institutionalized reforms won in hard-fought struggles waged in the 19th and early 20th centuries by labor and consumers unions. The struggle continues even today. Sweatshops occur because they are easily hidden from public view and because they are loosely tied to larger, name-brand manufacturers. While apparel manufacturing is often associated with sweatshops, the “sweating” model also operates in other light manufacturing industries such as toys, small appliances, and even service industries.

Sweatshops arise in industries where little capital investment in physical plant and equipment is required and where the production process can be subdivided and some functions contracted out. Segmenting jobs and reassigning pay for those jobs reduce labor costs because firms can keep their research and development jobs in house while farming out assembly work to contractors and their subcontractors. When prejudice and institutionalized discrimination create lower-cost labor pools like immigrants (especially undocumented), women, children, the disabled, and the elderly, the conditions are ripe for the “sweating system.” Piecework and extra-high production quotas force workers' earnings below the society's established wage and hour laws, and worksites are small, cramped, dangerous—and out of sight of government regulators.

Consumer pressure for low-priced consumer goods also contributes to the reemergence of sweatshops, because the locus of control over the production process has moved from the manufacturers to mega-retailers such as Wal-Mart. Instead of retail products and prices determined by the costs of manufacturing, the process is reversed: the retail price sets the manufacturing costs. Since retail corporations often control access to raw materials or components used in the manufacturing process, the only area of flexibility for manufacturers is control of labor costs. The pressure to squeeze more labor out of workers to meet production demands means ever-increasing use of the sweating system of contracting and subcontracting in both developing and developed economies.

Finally, as retailing spills over into services, sweatshops even appear in service-related industries. Workers in call centers for banking, billing, and reservations increasingly work to quotas, and face outsourcing of jobs (probably off-shore), and the “business model” increasingly infiltrates the formerly “safe” professional industries of medicine and health care, law and legal services, and lower and higher education.