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Inequality and the Global Race to the Bottom

Research & Commentary
April 28, 2014

by Robert Ross

The chase after ever cheaper sites for manufacturing is causing rising inequality, low-wage misery, and unsafe workplaces in many parts of the world, the United States included.

On 24 April 2013, Rana Plaza, an eight-story commercial building, collapsed in Bangladesh, killing 1,138 and injuring 2,500.

The Rana Plaza, an eight-story commercial building in Bangladesh, collapsed a year ago and killed 1,138.

By Robert J.S. Ross

On April 24 — the  first anniversary of the 2013 Rana Plaza disaster in Bangladesh — labor rights advocates seeking justice for the survivors demonstrated the world over. Advocates are demanding “pay up” compensation to the families of the 1,138 workers killed and the 2,500 injured in the notorious building collapse.

In the United States, the International Labor Rights Forum wants the major purchasers of clothing from the factories of Rana Plaza — apparel brands and retailers ranging from The Children’s Place to Walmart — to pay fully and fairly into a compensation fund for the victims’ families. The Children’s Place and Walmart have announced they will make payments. But advocates are criticizing the small amounts and secrecy involved.

The entire matter has once again called into question the voluntary nature of today’s mainstream corporate social responsibility, or “CSR” as the business press calls it. Many “nonprofits” that cling to corporate skirts also advocate voluntary adherence to ethical standards. The International Labor Rights Forum, by contrast, rejects this voluntarism in favor of more substantive contracts such as the Accord on Fire and Building Safety in Bangladesh.

The International Labor Rights Forum is going down on the right path. My research on fires and disasters in Bangladesh shows that the voluntaristic approach favored by the American retail giants — Gap, Walmart, Target, and J.C. Penney, for example — has been futile. [pullquote] The voluntaristic approach to ‘corporate social responsibility’ has been futile. [/pullquote]

From 1990 to 2012, at least 1,000 people perished in fires and other building disasters in Bangladesh. One ILRF report, Deadly Secrets, describes the details of these disasters. In November 2012, for instance, the Tazreen fire took 112 lives when workers were trapped by locked exits. Many leaped to their deaths from nine floors above the street.

The Rana Plaza building disaster last year added to this sorry toll the largest manufacturing loss of life in history. Yet in every one of these major industrial disasters, the European and American companies implicated had voluntary “Codes of Conduct” in place that pledged safe and healthy working conditions in their supply chains. These vaguely aspirational statements have had little concrete effect. In this deep chasm of fires and building collapses, pious statements turn to ashes — and the gulf widens between the global rich and the rest of us.

The voluntary codes we see from the brands and retailers often proclaim a commitment to worker rights of association — that is, the right to form unions — but major clothing corporations tend to choose locations for their supply operations where these rights rate as either nonexistent (China) or extremely weak (Bangladesh).

Corporate clothing giants also claim a commitment to legal and even sometimes to “adequate” wages, but they locate their supply contracts in ever poorer countries. Even as Bangladesh’s record of safety became notoriously bad, that country became the second largest exporter of clothing in the world.

This chase after ever cheaper and more lax places for manufacturing — sometimes called the “global race to the bottom” — has left us with rising inequality, low-wage misery, and unsafe labor conditions in many parts of the world, including here in the United States.[pullquote]The global race to the bottom has had serious consequences for labor and safety here at home. [/pullquote]

By pressing their overseas suppliers, my research shows, clothing importers in the United States have lowered the prices they pay for clothing over the last 25 years. This development has had serious domestic consequences for American labor and workplace safety. In the 1980s and 1990s, U.S. garment shops violated labor laws to stay competitive with rivals in the Caribbean and Asia.

Sweatshops in these years actually began reappearing in places like Manhattan, where unions found themselves too weak to prevent them. Once again immigrant workers toiled in despicable conditions.

Today, with one million fewer American apparel industry jobs than a quarter century ago, auto workers are now feeling the pressure of the race to the bottom. Once an industry that made American manufacturing workers the model of what a democratic country could achieve, the auto industry now uses global competition as an excuse to hammer new employees into mediocre-to-poor wages and much reduced medical and pension benefits.

Globalization contributes to inequality, numerous studies show, when the workers of trading partner nations have less than full rights to share in the growth of their national economies. And just as many studies show that declining union strength contributes significantly to inequality as well. Moreover, global outsourcing appears greatest among unionized jobs and industries.

In the last century, workers had a phrase that summed up this reality. On the anniversary of the Rana Plaza tragedy, this wisdom bears repeating:  An injury to one is an injury to all.

Clark University sociologist Robert Ross is a member of the Board of Directors of the Sweatfree Purchasing Consortium.  He is the author of Slaves to Fashion: Poverty and Abuse in the New Sweatshops.

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