Monday, April 29, 2013

The Bangladeshi guilt trip; paying one cent more for that five dollar t-shirt will more than double the wage of Bangladeshi garment workers

There is a lot of faux outrage over the deaths of hundreds of garment workers in the collapse of that Dhaka factory.

They die because we're too cheap to pay a proper price for a shirt.


Here's a look at the economics of t-shirt production. The Bangladeshi garment worker produces 250 t-shirts per hour. In a 60 hour week, that's 15,000 shirts. She gets paid in the range of $50 per month; as low as $37 by some estimates.

If the Western consumer were to pay one cent more for every t-shirt from Bangladesh, and the entirety of that one cent increase went to the sewing machine operator making the shirt, her wage would triple.

Nobody among the consumers would notice an increase of one cent on a t-shirt. They wouldn't notice an increase of 10 cents, and I don't believe an increase of a dollar would cause much notice.

The problem is not with the niggardly spending habits of the Western consumer. The problem lies with a supply chain that is dedicated to driving costs as low as possible while maximizing profits at every level of that chain.

If we were to double the cost of that t-shirt without legislating a forced feed-through of those cost increases to the workers who actually make the shirt, the only result would be that the players in the supply chain would be massively enriched.

The workers would continue to toil in squalid poverty.

That's why the blandishments of the "consumers are too cheap" crowd need to be ignored.

Without proper regulation of the supply chain nothing will change for the garment workers in Bangladesh.

After all, Haiti beckons...

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