Globalization has opened up new opportunities for trade, and many companies have taken advantage of this to reduce production costs. American companies such as Nike, Apple, and many others have shifted their factories to developing countries, widely referred to as sweatshops. The debate around these sweatshops is a polarizing one, with supporters arguing that the factories offer poor people employment opportunities as a way out of poverty. On the other hand, opponents of the idea explain that sweatshops are exploitative mainly due to the low wages paid to workers, and therefore companies should raise wages or close shop in such developing countries. The main reason why companies choose to outsource production is because of lower costs. Developed countries such as the United States have high minimum wages, while developed countries do not have such laws. This means that companies can pay workers very little money in developing countries, which cuts the cost of production.
Outsourcing may be profitable for companies, but they have a negative impact on American workers. Low skill laborers stand to lose the most with outsourcing. Many of the outsourced jobs require very little training and skill, therefore having such factories in the country would offer employment opportunities for low-skilled workers. Because the majority of companies choose to outsource for economic reasons, such workers lose out on job opportunities. Outsourcing serves to lower the domestic prices of goods. The main reason for this is that lower costs of production allow companies to set prices lower. Other factors, such as lower taxes with outsourcing, further reduces the domestic prices of outsourced goods.
For the US government to reduce outsourcing, some policy changes required would be tax breaks and lowering the minimum wage (Sollars & Englander 19). Wages are the most significant impediment when it comes to setting up factories in the United States. Domestic law requires companies to pay employees a minimum wage that is comparatively much higher than those paid in developing countries. Most developing countries have no minimum wage laws, which allows companies to set their own wages for workers. Tax breaks would also be an incentive to reduce outsourcing, as companies would not have to pay as much taxes that further eat into their profit margins. Tax breaks involve lowering taxes that a company has to pay to reduce production costs.
From the two videos, the idea of sweatshops is quite different for different people. For example, the John Stossel video includes interviews from students protesting against sweatshops in developing countries. These students explain that sweatshops are exploitative, and take advantage of poor populations by paying them very low wages. On the other hand, people from these developing countries see sweatshops as beneficial to their lives, because the wages help them meet their basic needs every day. The video on the Apple factory in China presents the same idea. One point of criticism for the factory is that it employs teenagers, and workers live in a dorm as they cannot afford other accommodations (SocProf Jordan). Most workers have never even seen a working iPad, the item they work so hard to create every single day. The factory has also reported several suicides over the years. Despite this, people in the villages that the factory workers come from appreciate the employment opportunities brought by the sweatshops, and they believe that the factories have made their lives better. The conclusion from the two videos is that sweatshops are a good thing for foreign workers. Without these factories, the impoverished workers would have no other source of income.
SocProf Jordan. “Inside Look At Apple’s Chinese Sweatshops!” YouTube. 29 September 2013. https://www.youtube.com/watch?v=unrZw5qZzwsSollars, Gordon G., and Fred Englander. “Sweatshops: Economic analysis and exploitation as unfairness.” Journal of Business Ethics 149.1 (2018): 15-29.