“Workers are paid poorly, only 15-25 cents per hour, and are expected to work 60 hours per week, often in unsafe and dangerous conditions. Sweat shops can be found in every major city across the country. There are no worker fringe benefits, no paid holidays, etc., and unions are nonexistent. Child labor is common, especially providing long hours of grueling manual labor on farms, and farms are so dependent on child labor that schools are not even in session during the peak growing and harvest months of the year. There are no environmental, safety or labor standards to speak of, and dirty black clouds of smoke are a common sight. City streets and sidewalks are often covered with rotting animal waste. People burn garbage everywhere without restriction, and the foul smells and thick smoke from burning garbage are a daily nuisance.”Now, you should probably read the whole post to follow everything he is saying. He does us the great favor of summing up the key takeaway at the end:
Sounds like China today? Actually the description above is of the United States in 1900, when it could accurately be described as a “developing economy” by today’s standards.
Bottom Line: Advanced labor, health, safety, and environmental standards are luxuries that only advanced economies can afford. The U.S. couldn't afford these luxuries in 1900 and China can't afford some of them today. But just like the U.S. eventually created enough wealth to afford a clean environment, end child labor, regulate safety, and improve working conditions, so will China. Just give it time.Then this comment makes another key point:
They seriously believe America is wealthy with comfortable working conditions because of labor laws, minimum wage laws, and other regulations.As economies develop and workers get more productive, they will prefer to take some of their compensation in non monetary form: cleaner safer working conditions, limited work hours, a cleaner natural environment, etc. Employers will usually go along with this both for competitive reasons and because as workers get more productive it is worth doing things that enhance the health and happiness of employees. First comes enough of an increase in productivity, then comes the improvement in conditions. That's what it means for a society to become wealthier.
How workers become more productive and raise their standard of living further and further above a subsistence level is the subject of a future post. That's how workers compete with low wage workers : be much more productive or find a new area of comparative advantage.
ps Say I was in the car business and adopted this innovative way of organizing the work in my factory so my workers became much more productive. I could make more cars at a lower unit labor cost allowing me to undersell the competition and pay my workers more. The really fun part is that I could tell everyone how wonderful I was for paying such a generous wage. Really all I would be doing was following good business practices. Ford had a better idea.