Economic Effects Of Labor Abuse

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Economic Effects of Labor Abuse Many companies state that labor exploitation is necessary in order to increase corporate profits however; the amount of increased profits is small. According to David Barboza (2008), a writer for the New York Times and winner of the Pulitzer prize for international reporting, “In 2007, factories that supplied more than a dozen corporations, including Wal-Mart, Disney and Dell, were accused of unfair labor practices, including using child labor, forcing employees to work 16-hour days on fast-moving assembly lines, and paying workers less than minimum wage. (Minimum wage in this part of China is about 55 cents an hour.)” The amount of savings seems huge with minimum United States wage around eight dollars an hour; however, very little of the price increase makes it to the consumers. According to B. Powell and M. Zwolinski (2011), professors at the University of Boston and San Diego respectively, estimate that “for US and Mexican firms, a 100% wage increase would only require a 2–6% increase in the retail price of the garments. U.S. consumers were generally willing to pay between 15 and 25% more to ensure that products were not made under sweatshop conditions.” The small amount of price increase to the consumers illustrates how companies will not be significantly affected by the increase in labor cost, since the exploitation of laborers is only for a small personal gain the conditions in which people work need to be more strictly
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