Behind the anti-sweatshop movement

By Eric Heubeck
web posted July 19, 1999

"There has been a real firestorm in the last few months."

That's how AFL-CIO President John Sweeney describes a string of college sit-ins and demonstrations sweeping the nation. Unlike past student protests, however, these demonstrators are agitating over labor issues, specifically the working conditions of foreign laborers who manufacture garments, sneakers and other merchandise licensed to colleges. Labor officials are no longer estranged from student radicals; they have been quick to applaud the new generation of students whose protests may have an impact that extends far beyond the college campus. Says Sweeney, "Students are embracing workers' struggles as their own...students have created a passionate blaze for workers' rights across the country." The student movement has made the sweatshop issue more prominent than the AFL-CIO could ever have done by itself. But this is not an accident—organized labor has been deeply involved in its creation and organization.

Students are pressuring college and university administrators to adopt strict labor codes that will guarantee that merchandise bearing a college's logo is not made by laborers working under conditions deemed unacceptable to the activists, so-called "sweatshop" conditions. The students, most of whom belong to a national umbrella group called United Students Against Sweatshops (USAS), have been actively promoting the campaign since 1997. Earlier the University of Notre Dame was the only school with a code of conduct on sweatshops. But students now are demanding that their colleges call on the Collegiate Licensing Company (CLC), which acts as an intermediary between 170 colleges and the manufacturers of merchandise, to come up with a comprehensive code of labor conduct.

The CLC has produced a code, but students say it does not go far enough. During the past academic year they have been staging demonstrations and sit-ins in administration buildings at a number of schools, including Duke University, the University of North Carolina-Chapel Hill, the University of Wisconsin-Madison, and the University of Arizona. In no case have sit-in protesters been removed from the buildings, and in all cases university officials have agreed to their demands. Of course, the administrators' political views often do not differ much from the students'. Indeed many college officials have praised the students for their idealism and humanity, no doubt recalling their own youthful 1960s protests. Georgetown University's dean of students could not say enough in praise of his trespassers: "I'm very, very proud of our students. This is not just about their self-interest, that's why the commitment and the passion is just remarkable."

The students object to the CLC code on several grounds: first, they say it does not provide for a "living wage"; second, it does not require that "freedom of association"—i.e., collective bargaining rights—be protected; third, it does not require that manufacturers reveal the locations of factories, something the companies claim is a trade secret. In response, the colleges that have capitulated to the student demands have agreed to request the CLC to come up with another code, and they threaten that unless specified changes are made effective by a certain date, they will withdraw from the organization.

There are several reasons why the labor movement has a heightened interest in labor-related activism on college campuses. For one thing, collegiate merchandise is a $2.5 billion industry, so the effects of student activism on the industry itself are economically significant. Second, the methods college students are using to attract attention to labor's cause—e.g., a sit-in at the college president's office—have a public relations value: the media is generally less skeptical about the motives of idealistic college students than they are of union officials. Third, the student activists are eager to target companies like Nike and Reebok that promote themselves as supporters of youth culture; such companies are especially wary of any negative publicity that could undercut the "socially conscious" image they cultivate so assiduously with young people. As a consequence, any changes these companies make in labor policy will have a social impact far beyond the specific college merchandise market.

Wider Connections

The student anti-sweatshop cause is getting quite a bit of support in the media and popular culture. In an episode of the Fox network program "Party of Five" a character played by actress Jennifer Love Hewitt leads anti-sweatshop demonstrations on her college campus. "Rock the Vote", an organization that encourages young people to become political active, plans to highlight USAS activities by airing segments about the group on MTV. Student activism has also caught the attention of leftist intellectuals like Noam Chomsky, who told USAS, "It is a privilege and honor to be able to join expressing my support and admiration for what you are doing." And author Barbara Ehrenreich has said, "I'm very excited by the campus anti-sweatshop organizing and would like to help in any way I can."

It would be a mistake to think that students activists are being motivated solely by humanitarian impulses. Their movement contains a large ideological component of deep suspicion of capitalism and international free markets. Moreover, there is ample evidence that the Leftist establishment is taking notice of the movement and has decided to support it. The Institute for Policy Studies, a 1960s creation of New Left radicals, wants to work with USAS. The New York Public Interest Research Group (NYPIRG) also says it may become involved in anti-sweatshop activities in the next school year. (PIRGs are campus groups started by Ralph Nader and his allies.) USAS also plans to work more closely with SAWSJ (Scholars, Artists, and Writers for Social Justice), a group working to promote labor issues among left-wing intellectuals. (See the June 1998 issue of Organization Trends for more on SAWSJ.)

The Arca Foundation recently contributed $40,000 to USAS by funnelling its contribution through an advocacy group called the People of Faith Network. Founded in 1952 as the Nancy Reynolds Bagley Foundation, Arca has $72 million in assets, and a quick look at its pattern of giving discloses its ideological agenda. Arca supports organizations that seek closer U.S. ties to communist Cuba, a lifting of the embargo, and appreciation of Cuba's revolutionary culture—one grant recipient received $2000 to "pursue the conservation of graphical political poster art of revolutionary Cuba."

But the labor movement provides USAS with its most important contacts. In fact, USAS appears to be largely a creation of organized labor. Eleven student leaders of the anti-sweatshop movement are alumni of the AFL-CIO's "Union Summer" program, in which college students are taught the techniques of labor organizing. (See box above.) This month the AFL-CIO is hosting a USAS organizing conference at its George Meany conference center in Maryland. It is significant that the sweatshop issue became prominent on college campuses only after several USAS leaders attended a Union Summer program in 1997. The students interned with the Union of Needletrades, Industrial and Textile Employees (UNITE), which represents garment workers and is the most important union agitating against sweatshops. UNITE continues to advise the students on strategy, paying for and participating in organizational conference calls for student leaders. According to Time magazine, it even gave students strategic advice by phone during their sit-ins.

The Anti-Sweatshop Movement Beyond the Campus

The issue of sweatshops is not a new one. For years the International Ladies Garment Workers Union, a forerunner of UNITE, used the story of a tragic 1911 fire at New York City's Triangle Shirtwaist Factory to convince the public that unions were a necessity in the clothing industry. But sweatshops are now a hot topic because of several recent developments. One was the determination of Labor Secretary Robert Reich to make sweatshops a high priority when he took office in 1993. Reich had little success in promoting the issue until April 1996, when the nonprofit National Labor Committee created a media frenzy by announcing that a line of clothing bearing the name of television personality Kathie Lee Gifford was produced by sweatshop labor in Honduras.

The intense media attention on Gifford and her attempt to extricate herself from accusations of complicity in sweatshop labor abuses offered the Clinton Administration the opportunity it sought. It invited Gifford to join it in the creation of a new group composed of corporations and non-governmental organizations (NGOs) that were dedicated to addressing the issue. In August 1996 President Clinton, with Gifford at his side, announced that he would form the Allied Industry Partnership (AIP) to establish labor standards for all companies agreeing to participate in it. AIP, which receives some federal support, then created the Fair Labor Association (FLA) as an enforcement organization for Partnership members.

AIP-FLA members initially included a number of clothing manufacturers and retailers, non-profit advocacy groups like the Interfaith Center for Corporate Responsibility (ICCR), and two unions, UNITE and the Retail, Wholesale and Department Store Union. However, both unions left AIP when the code was announced in the fall of last year. So did ICCR, a coalition of religious groups which uses shareholder resolutions to promote a leftist agenda. The AFL-CIO also denounced the agreement. However, other NGOs and all AIP corporate members remained in the organization. Corporate AIP-FLA members include Liz Claiborne, L.L. Bean, Nike, Reebok, Patagonia, Nicole Miller, Phillips Van Heusen, and Kathie Lee Gifford—companies which have been subject to defamation campaigns despite their best efforts to maintain an image of progressive social consciousness. AIP member NGOs include the International Labor Rights Fund, the Lawyers Committee for Human Rights, the Robert F. Kennedy Memorial Center for Human Rights, and the National Consumers League.

The unions, the student groups, and many other human-rights activist groups which are closely allied to unions have lobbied hard to discredit the AIP-FLA rules. They use arguments similar to those used against the CLC: the agreement does not guarantee a "living wage" and collective bargaining rights for workers. Most importantly, even though the FLA does address child labor and health and safety issues, the unions and their allies object to any monitoring of AIP factories that uses "corporate" auditing firms. The ICCR says it decided to FLA, most since the rash of sit-ins, and student activists consider this a betrayal of their post-sit-in agreements. (The colleges still can adopt codes that are more strict than the FLA.) USAS has been particularly vociferous in opposing the FLA code. Not wanting to lend legitimacy to the partnership, it rejected a seat on the AIP board. "The FLA is nothing but an industry dominated PR tool that fails to guarantee the end of sweatshops," said one student leader.

The students oppose using auditing firms to monitor factories because they fear AIP corporate members will pressure them to whitewash evidence of labor abuses. When four schools—Harvard, Notre Dame, the University of California, and Ohio State—considered creating their own code ofconduct using as a monitor the business advisory firm PricewaterhouseCoopers, Harvard students denounced the choice. The students and unions argued that any monitor with corporate clients has a conflict of interest. They also objected to PricewaterhouseCooper's confidentiality policy which gives only clients—i.e., the colleges—access to their reports. (The AIP-FLA monitoring reports would be made public.) The students demanded "a monitoring plan that will rely on the work of indigenous non-profit labor, religious and human-rights groups." But most corporations are understandably reluctant to open their factories to inspection by activists they have good reason to distrust.

Consider the tactics implicit in the statement of an activist group called the Campaign for Labor Rights (CLR). CLR has been especially active in protesting corporate factory operations in Central America. Its favorite targets include Phillips-Van Heusen, Disney and Nike, and it has organized "leafleting actions" at stores that carry Van Heusen-made products, including Van Heusen, Gant, Izod, and Bass shoes. A CLR e-mail update recently sent to its supporters urges activists to be wary of corporate codes of conduct. But then it qualifies this by suggesting that activists should not lose sight of the benefits such codes can sometimes offer: "Just as the various voluntary codes present a common danger for our movement, they also offer a common opportunity: to use them as leverage in corporate campaigns." (Corporate campaigns are political and public relations campaigns intended to damage company reputations.) "In the words of Bama Athreya of the International Labor Rights Fund: ‘Codes of conduct have...been incredibly useful in corporate campaign work, since they provide a neat and easy target. Let's face it, hypocrites are more interesting than mere wrongdoers...'" One wonders how officials at Mattel, Levi Strauss, and Reebok might react to this disclosure. The International Labor Rights Fund was responsible for developing their own voluntary codes of labor conduct in China.

And yet the intense opposition of unions and activists groups to the FLA obscures one basic fact: the FLA shares their outlook. After all, the FLA is largely the creation of the Clinton Administration's Labor Department. And NGOs that have stayed in FLA say they consider it merely a first step toward a "sweat-free" world economy. Their disagreement with the unions and students is over strategy, not ends. In fact, several NGOs in the FLA also receive funding from the Arca Foundation. Their differences in philosophy cannot be significant. (See box on page 4.)

Many FLA member companies publicly agree with their critics that the problem of sweatshops is real and widespread, although this "acknowledgement" is surely an attempt to deflect negative publicity generated by labor and human-rights groups. Indeed, the FLA does not reject the living wage in principle; it responds that it is only unwilling to impose requirements before it can determine what the "living wage" is in any particular country. Since the Labor Department is currently collecting data to allow it to come up with the answers, the FLA will not have long to wait.

Nike, the leading manufacturer of running shoes, has become an unlikely ally of the labor unions and human-rights groups. It has urged colleges to join the AIP, and it calls for independent monitoring of all companies that make sneakers. Clearly Nike wants to make sure that its competitors bear the same costs, scrutiny and bad publicity that it has been forced to endure. Reebok also has been heavily criticized, and it too has attempted to appease its critics. Among other things, Reebok is permitting the American Center for International Labor Solidarity, an overseas arm of the AFL-CIO, to teach its own factory workers about collective bargaining, and it's paying the Center for the privilege.

Many smaller companies may ultimately decide that it makes no sense to do business with colleges that force them to jump through so many regulatory hoops. But this will only mean that larger companies like Nike and Reebok, which have decided to accept costly and unreasonable codes of conduct, may very well increase their college business.

The Ideology of the Anti-Sweatshop Activists

Many human-rights activist groups share the political and economic positions of the unions. They agree with unions on much domestic economic policy and oppose free trade and free markets. The National Labor Committee, which "exposed" Kathie Lee Gifford, was instrumental in convincing student sweatshop activists to reject the initial CLC code of conduct, and it is often cited by the media as a "human-rights group." But in this instance the NLC's agreement with labor is more than coincidental because it is a creation of organized labor: it acts as the representative of 23 labor unions and its board of trustees is composed entirely of union presidents. The governments of Honduras and Nicaragua have accused the NLC of deliberately trying to chase foreign investment away from their countries in order to protect American labor unions.

Most of the groups active in the sweatshop campaign oppose all voluntary initiatives like the FLA. Global Exchange, for example, bemoans "the weakness of voluntary corporate efforts as a substitute for enforcing existing laws and adopting legislation and trade agreements designed to protect workers rights in the global economy. While we will continue to pressure the FLA and other voluntary monitoring efforts to raise their standards, we will also seek new ways to pressure governments and international institutions to enforce mandatory standards..." Many anti-sweatshop groups also support ideas like one proposed by U.S. Representative Bernie Sanders (I-VT), who has suggested legislation to allocate public monies to go directly to "independent monitoring organizations."

The ideology underlying the anti-sweatshop campaign is anti-market and anti-corporate. Activists believe that corporations are dangerous for workers unless they are fettered by government restrictions and the countervailing power of labor unions. The executive director of the NLC has raised fears of "a global sweatshop economy with no checks and balances"—not a global economy which merely contains sweatshops, but a global sweatshop economy. Sweatshops are presumed to be a characteristic of a free economy. As one student activist writes, "In this increasingly global economy, we need to do more to protect human and worker rights around the world, and to set internationally enforceable standards. Otherwise, American workers are pitted against desperately poor workers in other countries in a race to the bottom-fighting over who will accept the lowest wages and benefits, the worst health safety conditions and the most miserable working and living conditions." Many of the messages posted on the USAS e-mail list register opposition to bills introduced in Congress promoting free trade with Africa, the Caribbean Basin and Latin America. They are considered part of the "neo-liberal" paradigm; that is, one promoting flexibility for labor and capital. The activists want a world where unions are active in all countries and where trade rules codify standards that all countries must obey.

It is ironic that even though they attack U.S. corporations, unions prefer to deal with them. The anti-sweatshop campaign is distressed when corporations do not own and operate overseas factories, but contract work to foreign-owned businesses. Susan Cowell, vice president of UNITE, has said, "Subcontracting usually leads to a lowering of standards. It's shifting the risk and cost to the contractor and leads to a decline in working conditions."

Most "human-rights groups" allied with unions echo this theme. A group called Co-op America argues, "U.S. manufacturers have found that they no longer need to own and operate their own factories. In a world virtually free of borders, they look for subcontractors in countries where labor and operating costs are lowest." Co-op America also blames what it calls "the muddle in the middle": "As the playing field has shifted overseas, the number of middle merchants has increased. Contractors, importers, agents and others are each trying to make a profit from those directly below them on the supply chain..." This is, of course, how firms in a free market are supposed to operate, but for Co-op America it is the essence of "corporate greed."

According to Sweatshop Watch, another human-rights group, sweatshops result because "most contractors are put in a ‘take it or leave it' position and must accept whatever low price is given to them by manufacturers or see the work placed in another sewing shop. The contractors must ‘sweat' profits out of their workers, cut corners and operate unsafe workplaces...Retailers squeeze manufacturers, who in turn squeeze their contractors, who sweat meager profits out of garment workers." But even retailers with private labels are at fault because they earn "enhanced profits without the middleman manufacturer."

UNITE's Campaign Against Sweatshops

Because labor unions like UNITE know they will not flourish when global capital and labor markets are free, they try to convince workers that sweatshops are an endemic problem in the U.S. and abroad. UNITE has sponsored lunch-time rallies of garment workers to protest sweatshops and it has supported boycotts and leafleting outside clothing outlets like the Gap and Guess? claiming they benefit from sweatshop labor.

UNITE is conducting a public relations campaign against the sneaker manufacturer New Balance, charging that it "profits from exploiting workers in China and other developing countries." The company rejects the accusation, saying that it is a union bargaining ploy. UNITE has organized protests outside New Balance stores on the issue, but it is also trying to win its first collective bargaining contract with the company. Employees at a New Balance distribution center in Massachusetts voted by a margin of 37 to 35 to unionize in April 1998. Despite the close margin, UNITE wants a closed shop in which all employees must pay union dues. The company responds that employees should not be forced to pay dues against their will and claims a majority of workers oppose a closed shop.

But legislation, not collective bargaining, is UNITE's top anti-sweatshop priority. Last year it helped pass a "joint liability" law in New York State which holds manufacturers in civil and criminal liability for labor law violations at factories where they have contracts. The law also allows workers to go after the manufacturer for back wages. A similar bill, pushed by unions as well as the group Sweatshop Watch, recently passed the California State Assembly but has yet to reach the governor's desk. (Candidate Gray Davis assured apparel manufacturers that he would not sign such a bill into law were he elected governor.) UNITE is also lobbying for federal passage of a joint liability law which it calls the "Stop Sweatshops Act." Manufacturers and retailers respond that they have no way of knowing whether their contractors are breaking labor laws, and that it is unfair to make them responsible for such violations.

UNITE is also a major plaintiff in a $1 billion lawsuit which accuses 18 major clothing companies of profiting from sweatshop labor on the island of Saipan, an American territory. UNITE is joined by Global Exchange, Sweatshop Watch and the Asian Law Caucus. The suit followed an expose on the television magazine show "20/20" which was based on Global Survival Network allegations that Saipan shelters sweatshop conditions, pervasive organized crime, debt bondage, and sexual slavery. Saipan is free of duties and its products may be labelled "Made in the U.S.A." because it is an American territory. But it is not subject to federal immigration and minimum wage laws. As a result unions have never been able to organize there successfully and they resent the huge amount of business the island has taken from unionized factories in the continental U.S. UNITE has dropped its suit against several of the companies with which it previously had union contracts, saying that it believed the matter could be resolved "privately." With some justification the manufacturers claim UNITE is bringing a "harassment suit" meant to induce them to settle out of court.

Arguments against the Anti-Sweatshop Campaign

The activism of the unions, students and human rights groups ignores the economic benefits of so-called "sweatshops." Economists, even liberal economists, say factory work benefits overseas workers and does more than anything else to promote foreign economic development. MIT's Paul Krugman, no conservative, has said "the overwhelming mainstream view among economists is that the growth of this kind of employment is tremendous good news for the world's poor," a view that he shares. Although foreign wages are low by American standards, observers reason that workers are better off working in factories than in agricultural labor where hours are longer and pay is less. Factories give workers something essential for themselves and for economic development: a steady income.

Some activists assert that U.S. companies can afford to pay foreign workers a "living wage." They say corporate overseas labor costs are so low that any wage increases still represent a pittance of the final price for a product. They scoff at company claims that higher wages will price them out of the market.

There are several reasons why wages which seem very low can still be too high if set artificially. Most importantly, labor productivity is much lower in developing nations, because of a combination of less developed infrastructure, lower levels of education, and lower rates of capitalization. The nature of a labor-intensive economy is that a single individual's labor is of relatively little value to the employer, so that if the the company is forced to pay workers more than they are worth, the company will simply employ fewer workers in those economies. Thus for some companies it may be less expensive to manufacture in the home market even if labor costs are higher.

In addition, manufacturers point to a much longer "turnaround time"—the time it takes between when an order is placed with a contractor and when it is received—with overseas production. They say it can take as much as twelve weeks to produce apparel overseas as opposed to two weeks to produce apparel domestically. This makes changes and reorders more difficult. Manufacturers must also pay tariffs, taxes, duties, and freight charges on imported goods; and their quality control over contract factories is more difficult and expensive.

Unions and their allies are well aware of the price differentials that manufacturers must calculate, as well as the advantages to be gained from producing in the home market. In trying to reassure those who were concerned that a joint liability bill might drive clothing manufacturers out of California, Sweatshop Watch proudly proclaimed that "the Los Angeles fashion industry is a vital industry with a surge in start-up designer companies and a large local market, making extremely quick turnaround of small batch production a necessity. Only a local industry can handle such quick turnaround times."

However, the premise that "sweatshop" labor is not exploitation rests on two assumptions. First, it assumes that workers are free to walk away from a job they do not like. But this is not always the case. For example, in China prison labor makes some products for export. Second, it assumes that employers can compete in an open labor market for workers. But many foreign governments are corrupt, and they may give business advantages to preferred companies. Under "crony capitalism" workers cannot receive the full value of their labor. However, to solve this problem the U.S. government should not encourage boycotts of foreign labor. Instead, it must push for full and equal access to foreign labor markets. If Americans are concerned for the welfare of foreign workers, denying them the opportunity to work in factories is the worst thing they can do.

The anti-sweatshop movement is motivated by a mixture of perceived self-interest and misguided idealism. Many activists do not understand that their actions may reduce the living standards of workers in developing nations. But their union allies use this concern to bolster their own interest in promoting foreign labor policies that will help keep domestic union wages high.

The movement is building momentum. Government officials, college administrators and nervous corporations all say they want to put an end to "sweatshops." They watch anxiously as college age activists make plans for the campuses this fall, but they are not paying attention to the economic and social costs of the anti-sweatshop campaign.

Printed with the permission of the Capitol Research Center.

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