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11/17/2014

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A living wage is a local social and political issue, larger than competitive employer practices which can vary between nations. Bangladesh is an excellent example, because they have very few minimum wage requirements. The few that do exist are imposed by national legislation and apply to only narrowly defined industries: i.e. ~$68/month for garment industry workers, about 40% of a "living wage" there. Those rules are therefore subject to intense lobbying pressure.

When the minimum wages are raised, costs increase and jobs move to other nations, as from Japan to India to China to VN to Bangladesh. Any solution is difficult.

I agree with Jim. It is very complex as we see in the US. Labor issues are no longer local. Everyone is competing in a global labor market.

What happens to the low end of the labor force when it becomes cheaper to automate than employee people? Is the additional money from a "living wage" better spent on supplying a wide range of educational opportunities an assistance to addend such programs a more efficient use of the funds? If everyone establishes a "living wage" policy how much on the increase goes away with inflation impacts? Is a "living wage" well intended but ultimately just "kicking the can down the road"?

What other alternatives are there? Could these countries try to build a higher skilled workforce? What if Bangladesh said for every 100 garment workers a company had supporting them they also needed to have one STEM role in country? Can they create a demand for a higher skilled roles and supply the talent to create a long term solution? Do they have some of this higher talent leaving the country for opportunity that would go back if the opportunity was there?

It may be a crazy idea but I think a "living wage" is a short term solution that does not address the underlying issues in the long run.

Guys ---- we are talking about subsistence wages and we are not talking about the U.S. We are talking about the people working in factories/sweatshops.

Minimum wages, if these countries even have them, are not enforced ---- people charged with enforcement willing take bribes.

These countries aren't interested in providing skills training or anything to upgrade these employees. You are mixing up thinking about the U.S. and the possibilities here. They don't exist in these very poor countries. There is no automation there that can replace employees unlike the U.S.

I wish Warren Heaps would chime in here as he knows a lot about the subject. Over time this issue may be resolved but for now at least some companies think it is important enough to do something about it.

So, what part of the discussions directly referring to Bangladesh imply circumstances like work in the US? Since you admit that these countries are not interested in providing skill training, what can American employers do besides setting a positive example and making their facilities the preferred employer of first resort? I thought that was already happening.

What does the ILO recommend? That's the international authority for this. If foreign nations choose to permit their citizens to be exploited (which I condemn), how can the U.S. "intervene" appropriately without being out of line? Don't we have enough countries mad at us already?

It's not like these people are working in urban sweatshops as an alternative to being premed/predent... they're working in urban sweatshops as an alternative to patriarchal peasant subsistence farming.

Could we please allow them some agency.

Hi Jacque,
I’m not talking about the US. If these countries are not interested in developing their workforce and most companies are focused on chasing the bottom from a cost standpoint then a company would have to ask what the benefit is to pay a living wage. Do they get to pick from the best workers and get more loyalty and higher production? Do they attract more customers that are willing to pay more for their products because they pay a living wage? If not does their Board and Shareholders agree with the approach and lower margins? Are they a Tom’s Shoes that is going after a specific small market and this approach would be a part of their appeal?

What happens when wages continue to increase and there is a shift to the next lower cost country? Does the “living wage” company stay loyal to their current workforce and become less competitive or abandon this workforce and move to the lower wage country? I know my example is very simplistic compared to reality but you get the point, one company can make a difference but it has to have a financial benefit before it will become a trend. If it were to become more of a trend would it speed up wage inflation and lead to a bigger crash when companies move to the next country?

Seemingly simple solutions often have unintended consequences.

Thanks,

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