Is clothing “made in USA” more ethical? How “ethical” should be defined?

It has become a commonly held view that apparel workers in many developing countries are unfairly treated because they are much lower paid compared with their counterparts in the developed countries.  For example, American Apparel, a company that insists all of its products made in USA, claims itself to be sweatshop-free on the basis that it pays workers an hourly wage of $12.  However, does an hourly wage of $12 in the USA necessarily mean more “ethical” than an hourly wage of several cents in a poor developing country like Bangladesh?  

An often ignored fact is that in many developing countries, jobs in the apparel sector are better paid than positions in other sectors. For example, according to a recent study conducted by the World Bank, in Bangladesh, wage level in its apparel sector is 17.7% higher than the average level of all sectors, 72.2% higher than the wage level in the agriculture sector and 4.5% higher than the wage level in the service sector. This is not surprising, because in many developing countries, “moving from agriculture and low-end services into apparel jobs is a channel for social upgrading” (Lopez-Acevedo & Robertson, 2012).

Then, what does an hourly wage of $12 mean in a developed country like the United States? Data from the Bureau of Labor Statistics show that, in 2012, average wage level in the U.S. apparel manufacturing sector (NAICS 315) is 26.2% below the average wage level of all sectors. More specifically, the average wage level for the production occupations is 47.3% below the national average level and 53.6% below the national average level for sewing machine operators, the exact type of job that the hourly wage of $12 refers to. 

The point to make here after the comparison is that it is misleading to define “ethical” or comment on “corporate social responsibility” without putting the matter in the context of the stage of development and the nature of the economy.  Wage level is not determined by good will, but by the principle of economics 101.

By Sheng Lu

apparel payment