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Lutgert College of Business in the News

This is the text and photo from an online story by the Fort Myers News-Press of March 20, 2011.

Sweatshops cast in another light

Written by
Yvonne Ayala McClellan
11:45 AM, Mar. 20, 2011

Sweatshops aren't all bad, some experts say.

Although they are associated with dirty, unsafe working conditions and long, unpredictable hours, they can often be a better choice to less savory alternatives, s aid Benjamin Powell, a professor and senior economist at the Boston-based Beacon Hill Institute at Suffolk University. Beacon Hill is a free-market think tank.

Professor Benjamin Powell, senior economist at Suffolk University,
talks about sweatshops on Thursday at FGCU.
Yvonne Ayala McClellan/

Research shows sweatshops in third-world countries, such as Bangladesh and Indonesia, oftentimes give workers an opportunity to earn more than two or three times what the average national wage of that country is.

But more importantly, workers choose to work there because they see it as the best alternative for them, Powell said.

A group of about 60 students and area residents listened to Powell's lecture at the Lutgert College of Business at Florida Gulf Coast University Thursday night.

"I thought it would be a good topic; you need a little controversy once in a while around FGCU," said Bradley Hobbs, a BB&T professor of free enterprise at the business college who invited Powell to speak.

In his research, Powell came across examples where people in Cambodia, who collected about 75 cents a day scavenging in the hot sun, saw work sewing garments in a factory for $2 a day under the shade of a building as an opportunity instead of a burden.

He explained concepts such as the upper bound and lower bound of pay for sweatshop workers, explaining the higher end as the most factory owners will pay, and the lower end as the minimum pay workers will accept to work at the factory.

In his research of sweatshops throughout Asia, Central and South America, Powell found that most wages hover towards the upper bound of compensation.

"The mix of compensation that we see is largely driven by employee preferences, not the evil multinational that's dictating, 'no, you must have bad working conditions,'" he said.

Powell surveyed workers in Guatemalan factories and found most workers would prefer higher pay to other benefits like health care or paid vacation, he said.

He also touched on the complications that can arise for workers and how their wages can suffer when those in the first-world, like celebrities, unions, and "sweat-free" organizations, try to lobby on behalf of third-world workers who may not want or need their help, he said.

Instead of helping, boycotting lowers the upper bound of pay for workers and as demand for the product drops, fewer workers are needed to make it, he said.

Powell said the solution to poor sweatshop conditions isn't easy.

Companies cannot be forced to improve conditions, but must do so on a voluntary basis and governments need to willingly establish and implement legislation to protect the workers so that it's enforced in the hearts and minds of citizens, he said.

Instead of boycotting and lobbying, trading more freely with those countries would help increase productivity and worker conditions, give them more options and spur on economic development, he said.

Luke Hanson, a 25-year-old finance major, found the lecture enlightening. Sweatshops can provide stability, he said.

"It puts everything together for the people there and actually starts creating a system that they can actually feel comfortable about every single day," Hanson said.

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