How “Everyday Low Prices” Hurt Us All

June 4, 2013 By David Griesing 2 Comments

Our expectation that we’ll always pay less for consumer products has an impact on the people in the supply chain who bring us those products—and it’s not a good one.

I’m talking about those who mine the metals in your cell phone, pick the cotton in your socks, process the rubber in your running shoes. It’s the workers in places like Indonesia or Peru who put your toaster together, stick the pins in your dress shirt so it looks good in its package, or pack the parts you’ll assemble into an IKEA bookcase. Finally, it’s the American sales clerks, service managers, stock boys and checkout girls who get the final product into your hands.

To bring you “everyday low prices,” the people in these supply chains are paid “as little as their labor markets will bear” so that the factory owners, shippers and ultimately the stores you shop in can make a profit when you open up your wallet. With fewer dollars to go around and cutthroat competition between the on-line and bricks&mortar stores, every link in the consumer product supply chain is squeezed. This includes workers along the arc of production—including those in America.

How is our addiction to cheap stuff making the work that many of our neighbors do everyday a losing proposition—and why should we care?

At one level, this is how capitalism is supposed to operate. Workers trade their labor for wages, and the owners figure out how to make a profit after the labor and other costs of doing business are covered. In competitive markets, this means that there is constant pressure to produce as cheaply as possible. Manufacturers flee the US for cheaper labor in Mexico or Bangladesh, and as wages rise in those places, to even poorer countries with “surplus workers” for hire. American factories close because it costs so much less to make your shirt or toaster somewhere else.

But millions of Americans still staff the big box stores where you’ll likely buy that shirt or toaster this year. Over the years, we have grown accustomed to “the cheap foreign labor dividend” that enables us to pay less and less when we go shopping for consumer products. But there are only so many savings to be realized from cheap labor abroad. At some point, full-time American workers in this supply chain also get squeezed, often to the point where they can no longer live on the money they earn.

There are “acceptable” and “unacceptable” efficiencies in capitalism.

For example, you can’t make shoddy merchandise because it won’t sell in most markets. Child labor, sweatshops, safety and health risks, damage to the environment are also unacceptable (at least when it comes to making something in the U.S.). But what happens when all of the “acceptable” efficiencies have been obtained, and only “unacceptable” ones remain?

When it comes to many of our consumer products, we have already crossed that divide today—and our expectations as consumers have a lot to do with it.

Wal-Mart was a revolutionary company because it mastered the art of selling products to consumers more efficiently than they had ever been sold before. As discussed in a recent Atlantic article by Jordan Weissmann, it paid its workers so little that they had no alternative but to shop at discount stores. . . like Wal-Mart. However, it didn’t end there. Many full-time jobs at Wal-Mart and other big box stores barely take a family of three over the federal poverty line. These retailers are simply not paying most of their workers enough to live on, what we call “a living wage.”

Ultimately, this all comes back to consumers. We are the ones who choose where to take our business. And for the most part, Americans have chosen cheap.

It’s hard to blame middle class families for making that decision—not a lot of people have the extra cash to make a political statement out of where they buy paper towels and diapers. But it’s led to cycle of [worker] impoverishment….

Economists have considered what it would cost to break this cycle, and it turns out that the cost to us would come pretty cheap. Weissmann cites a study by UC-Berkeley’s Center for Labor Research and Education suggesting that it would cost the average shopper only $12.49 more a year if Wal-Mart paid its workers a living wage.

So the questions remain: what’s to be done about the human cost of everyday low prices? And why should any of us care?

Most of us will voice our opposition to merchants paying full-time American workers less than a living wage, but our abstract moral concerns are trumped—almost every single time—by the consumer product we want and the low price we want to pay for it. So even if a wave of the wand could make it happen, would our behavior change if the trade offs were more explicit to us as consumers?

Such as a sign you see before entering the big box store that says: “Be willing to pay a little more so that the workers here can get a paycheck they can live on.”
The checkout girl wearing a badge that says: “Your addiction to everyday low prices means I can’t support my family.”
Would realizing that the person harmed is standing in front of you be enough to get you to shop at the mom & pop store that charges more so it can pay its employees fairly?
Would coming face-to-face with the social cost of consumer economics lead you to add a few bucks to your checkout bill, like a “tip,” for the “Big Box Employee Living Wage Fund”?

At the very least, the realities of our addiction to low prices and its human costs need to become more personal as close to the point of purchase as possible. That said, while there is always hope that the situation could change someday, there’s hardly cause for optimism if the consciousness raising goes no further than this.

What’s also needed is an understanding of why changing this value proposition in our consumer driven economy is important to you and the value of your work?

When some workers in your community are treated like property, it is easier for your employer to treat you that way—an economic instead of a human resource, little more than a cog in a wheel. As more and more full time, middle class jobs are lost to “the knowledge economy,” and more work is assigned on a part-time, piecemeal basis, it will become harder for any of us to make a living wage. Self-interest may lead us to start demanding that every single full time worker in America is making enough to live on.

It is also about community. The consumer product workforce is comprised of your family members and neighbors and people you see all the time. They don’t or can’t “move on” to better jobs, because increasingly those “better” jobs are unavailable. As an increasingly permanent part of our way of life, they are connected to you and to me, and have a face.

As we put our economy back together, there is an opportunity to rebuild our communities around the work that each and every person in it does. But communities where every worker is appropriately valued will never be possible until we confront our addiction to consumer prices that are lower than they have to be.

A version of this post also appeared on Marc Gunther’s Business & Sustainability Blog, where it provoked a range of comments.

What We Don’t Know Can’t Change Us

May 15, 2013 By David Griesing 3 Comments

Even with a death toll that now exceeds 1100 from the clothing factory collapse in Bangladesh, it is far from clear that consumers of “fast fashion” are pausing before they make a beeline for the cash registers. Sure they feel bad about what happened and don’t want to support sweatshops in unsafe factories—at least in theory. But when the trade-off is foregoing the trendy jeans or sweater that will make them look good, desire overwhelms hesitation every time for most shoppers. Two studies seem to prove it.

At least some of it is because the concrete trumps the abstract nearly every time. What does this shirt or those shorts that I’m holding in my hands have to do with a thousand deaths I can’t even imagine in someplace called Bangladesh? What we don’t know simply doesn’t “hurt us enough” to make us change our behavior.

Thinking about how work can be more fulfilling starts with your own work. Are you proud of how it’s done, of what it accomplishes? It’s thinking that gets us wondering about whether our own consumption of energy or food or “fast fashion” has a dehumanizing impact on other’s people’s work. (“Do unto others. . . .”) But our wondering will never be enough as long as the “dehumanizing effects” are just platitudes or abstractions at odds with our convenience, our vanity, or the thrill of a bargain. In other words, it takes more information.

It’s a fact that women are literally dying to make “fast fashion” in one place so that women in another place can enjoy it. Women comprise 90% of the workers making clothes in Bangladesh. No other industry in that country (or in many others) absorbs as many female workers with little education or skill. Poor women make, rich women take.

Walmart label “Made in Bangladesh”/Photo: International Labor Rights Forum

Per capita income in Bangladesh is currently $850, while in the clothing sector it is almost half that: $456 a year or $38 a month. Not surprisingly, the Rana Plaza factory collapse has prompted talk about raising the minimum wage in this sector, but even without better pay Bangladeshi women will continue to make these clothes for the simple fact that no other jobs are available. Most of these women left male-dominated villages, where they had few opportunities to support themselves, for seven days of work, 8 to 12 hours a day, at clothing factories in the cities. Still, they barely make enough to live.

This week, a Wall Street Journal article quotes one woman who was injured in the factory collapse:

Sometimes I have to borrow to get to the next payday. But in the village I’d have to starve.

No alternative, no living wage, but she went on to say:

I’ll go back to work as soon as I get better. Not all buildings will collapse.

The “fast fashion” industry is built on indentured servitude, not so different than slavery. That is what it is: with outlets at a mall near you.

There have been some changes this week, like Western retailers signing on to finance safety audits and to pull their work from factories that don’t pass them. However, real progress will only come when we (as consumers) are more aware of the harmful effects of our consumption. Like the drug trade, as long as there is unfettered demand the supply will continue, much as it is today.

The “fettering” of our demand begins with knowledge about the consequences of our actions. In one of the studies referenced above, it is not surprising that shoppers interested in more expensive items (better educated, with better jobs themselves?) were also better at imagining the consequences of their purchases, and willing to pay more for a “sweatshop free” label.

As Jedediah Purdy noted in For Common Things, it is essential for us to grasp the often complex interconnections between what we buy here and what happens over there. To do so, we need:

an educated imagination, able not only to understand general principles through local efforts, but also to perceive local events as they are caught up in much larger schemes of production, exchange, and political and economic power.

It’s not just simply “getting as much as possible of a good thing” like low prices, “when in fact we are choosing where and whom to sacrifice for it.”

If understanding requires education, then maybe what the “fast fashion” retailers need to be doing is educating, both in their advertising (why I mentioned Benetton’s ads in my last post), and at the point of purchase. It could be pictures of women making clothes for other women. It could be pictures of women who died in 2013 making clothes like these. It could be asking shoppers: would you be willing to pay 10 cents more so that these women who are making your clothes could take home “a living wage”?

“Fast fashion” retailers need to start believing, as Sy Syms once said, that “an educated customer is our best customer.” Change in this industry will only come with improved customer knowledge.

Almost everyone can learn, when someone steps up to teach.

Who Bears the Cost of Low Prices?

May 9, 2013 By David Griesing 1 Comment

Our work impacts the world around us. It’s what we take from it, such as the raw materials or energy needed to produce our products or services. The work we do can benefit or burden our suppliers, our business partners, the community at large and the environment.

Our consumption of other people’s products and services also affects the world around us—although these impacts are harder to appreciate or take responsibility for. By buying their cotton shirts or bananas, sneakers or iPads, we sanction (tacitly and often unwittingly) what providers of our consumer products and services are taking or giving back in the course of providing us with the things we want.

Part of finding fulfillment in the work we do is being conscious of its various impacts, even proud of them. When our work is bringing the world closer to the way we think it should be, it accomplishes something important to us. What we do at work becomes part of a web of interconnections that is fitting, “as it should be,” from our vantage point.

When we’re thoughtful about the consequences of our own work, it becomes harder to ignore the impacts of the work that produces the things that we buy everyday. The recent factory collapse in Bangladesh that killed more than a 1000 people is a case in point. In the global marketplace where we shop today, we could all be wearing articles of clothing produced under dangerous conditions like this.

What responsibility do any of us have for the consequences of work that we support with our purchases—particularly when it all goes so terribly wrong?

Benetton is one retailer that kept their prices low in a highly competitive clothing market by making some of its garments in that devastated factory outside Dacca.

benetton-sentenced-to-death-small-20143 — Benetton ad opposing the death penalty

The factory Benetton used was a deathtrap like the Triangle Shirtwaist Factory in New York was a deathtrap. But when the Triangle Shirtwaist fire killed 146 garment workers in 1911, Americans responded to the carnage more out of kinship with the workers than because of anything they gained from the products that were being made there. It was empathy that fueled the rallying cry for worker safety a century ago.

Our forebears were “close enough” to see what this tragedy had to do with them and to understand what had gone so terribly wrong. It was their proximity, the smell of death and familiarity with faces that drove the efforts at reform that followed.

Half a world and a cultural divide away in Bangladesh, it is not so much the abstraction of their shared humanity that ties us to the victims in this collapsed factory, but the fact that the clothes they made were ending up on shelves at a mall near you. This is the overlap of their lives on ours that helps us to internalize the impact of their deaths. Wendell Berry describes the emotional calculus this way:

To hear of a thousand deaths in war is terrible, and we ‘know’ that it is. But as it registers on our hearts, it is not more terrible than one death fully imagined.

These clothes that we know and could have purchased are what tie our imaginations to those who died producing them. If ours (and Benetton’s) endless pursuit of “lower prices” contributed to the tragedy, what should any of us do about it?

It is often difficult enough to comprehend the impacts of our own work, let alone the far-flung impacts of the work that others do to produce all the things we consume. (Did slave laborers pick your bananas? Did children make your sneakers? Is your diamond ring financing brutality in a conflict zone?) The drive for more localized supply chains and to consume more local products comes, in part, from wanting to be close enough to their various impacts so that we are can “imagine” the consequences and make the responsible decisions that need to be made about them. Local is more comprehensible and manageable than global.

There are no easy answers here. But the difficulty of understanding the harsh realities around much of our consumption does not mean that we have no responsibility for them. This tragedy allows us to pause and consider what they should be.

As for Benetton, it has announced that it will make funds available to aid the victims of this factory collapse. For a company that has long used provocative advertising to promote its views on conscience-tugging issues like racism and the death penalty, this is hardly surprising. What I’m waiting for is the Benetton ad that helps us to calculate the terrible costs that are being incurred so that consumers like us–a half a world away–can keep paying the lowest possible price.

It’s Time to Be Proud of Your Work

November 8, 2012 By David Griesing 3 Comments

Part of deciding whether to stay or leave your job should include thinking about the quality of the products or services your company provides. When your productivity is aimed at meeting “real customer needs,” you are likely to feel you’re working at something worthwhile, giving you a powerful motivation to keep on doing it. The case for staying becomes even stronger when what you’re making or doing is aimed at actually improving your customers’ lives.

Unfortunately, we rarely think about the value of what we’re doing at our jobs. Big mistake. When your time and effort is going into producing something that’s worthwhile, you feel a sense of personal accomplishment that’s missing when you’re just “pushing it out.” On the other hand, feeling ownership and being proud of the fruits of your labor is a key ingredient in fulfilling work.

Being a part of the hamster wheel of our consumer society doesn’t give you a sense of fulfillment. Endless consumption has one goal: convincing people that they have needs they never thought they had, and then selling them something to fill the manufactured void. It’s Mad Men advertising of “the new and improved” because it will somehow make your life cleaner, brighter, faster, better. The goal is to get you to “I want it” without ever pausing to consider “whether you truly need it at all.”

It’s the same when it comes to services. Do you really need an accountant every time you’re facing a column of numbers, an attorney every time you have a disagreement, or a doctor every time you have some discomfort? The answer is: probably not.

Whether you really “need” something is a question you should be asking before every purchase that you make, but the parallel question about work is also worth asking. Is what you’re making or doing at your job merely fueling the consumption wheel, or are you producing something people truly need to make their lives better? In other words, is your work about something you’re convinced is worthwhile?

Start by considering whether YOUactually need whatever product you’re making or service you’re providing: that’s perhaps the most revealing Q&A of all. Is your company actively striving to delight its customers—by always improving basic quality and how service is delivered—or is its commitment to innovation less apparent? What real value is it adding to what’s out there already?

How does your company conduct its business? Do your co-workers, your company’s suppliers, and the local community benefit from the way your business operates? Is the smiling face your company presents to the world part of its public relations campaign or part of its DNA? Given these and similar factors, are you proud of being a part of your company or not?

Many of us assume that having a critical perspective about our jobs begins and ends with answers to the following questions? Is the job helping me pay my bills? Is it convenient to get to? Are they nice to me when I’m there? What I’m saying is that you should be getting far more from your work than a paycheck, a convenient commute and a non-threatening work environment. To settle for so little is like being a frog in water that’s slowly coming to a boil—all the life will be cooked out of you before you realize it.

A fellow blogger recently began his discussion about employee engagement in the following way:

Every day the spirits of millions of people die at the front door of their workplace. There is an epidemic of workers who are uninterested and disengaged from the work they do, and the cost to the U.S. economy has been pegged at over $300 billion annually. According to a recent survey from Deloitte, only 20% of people say they are truly passionate about their work, and Gallup surveys show the vast majority of workers are disengaged, with an estimated 23 million ‘actively disengaged.’

He goes on to make several useful observations about what managers can do to improve workplace morale. But as I’ve agued here and in prior posts, the most fundamental remedies for being disengaged from your work have to do with what you can do for yourself instead of what a manager or boss can do for you.

You can and should bring new knowledge and expertise into your work at regular intervals—whatever your work is—so that what you’re accomplishing makes you feel continuously energized. (Work That Produces Continuous Reward). And you should ensure that you’re proud of, and therefore empowered by the work you’re doing, even if that means leaving the job you have now and finding the right one.

Energized. Proud. Empowered: this is how you’ll feel when your work provides added value.