Living-Wage Movement
Do laws requiring higher wages cause unemployment?
By Jane Tanner

Since Baltimore became the first U.S. city to adopt a so-called living-wage ordinance in 1994, nearly 100 cities and counties have mandated wage floors above the $5.15-an-hour federal minimum. Relatively few workers take home bigger paychecks — perhaps 100,000 of the nation's 134 million workers. Moreover, living-wage ordinances are banned in one state, and others may follow suit. While the living-wage. . . .

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Do living-wage laws help poor workers?

Maude Hurd President, Association of Community Organizations for Reform Now (ACORN). Written for The CQ Researcher, September 2002	Richard Berman Executive Director, Employment Policies Institute. Written for The CQ Researcher, September 2002

Can a Factory Pay Fairly — and Make a Profit?

Ben Cohen, the social-activist entrepreneur, has already proved that selling additive-free ice cream can turn a profit. Now he's taken on a tougher capitalistic challenge: He wants to prove that companies can provide garment workers — traditionally poorly paid — with a decent work environment and a livable wage and still generate profits.

The former co-owner of ice cream giant Ben & Jerry's threw down a gauntlet last spring in what could be called the “Sweatshop Challenge.” He and long-time friend Pierre Ferrari, an heir to the Ferrari car fortune, set up a clothing factory, SweatX, in the Los Angeles garment district, an area notorious for paltry wages and sweatshop conditions.

“What's needed is to add a social, spiritual dimension to the business,” Cohen said on “The Oprah Winfrey Show” last spring. “When you're shopping for your next T-shirt, try thinking about these two words: 50 cents. Fifty cents is the approximate price difference between a shirt made in a sweatshop and a T-shirt that isn't.”

Speed, not wages, determines profitability, Cohen said. To prove his point, he used $1.5 million from his venture-capital firm, Hot Fudge Social Venture Fund, to fill an old warehouse with high-tech, air-driven sewing machines and computerized material cutters. “Ultimately, this technology will result in fewer jobs,” Cohen said in a Labor Day radio commentary. “But ignoring [advanced technology] just to maintain more miserable jobs is no solution.”

SweatX expects to employ about 80 workers this year, with the lowest wages pegged at $8.50 an hour (average wages are $10.58), plus benefits, pension and profit sharing. Managers cannot take home more than eight times the salary of the lowest-paid worker.

The company currently only sells wholesale, mostly to unions, some colleges and faith-based nonprofits, said Ferrari, who is chairman. Optimistically, it expects to turn a profit during its first year. “There are people out there who believe in the message,” said Chief Financial Officer Doug Waterman, who left commercial banking and took a 50-percent pay cut to join SweatX. “Are there enough to make this a successful business venture? That's the big gamble.”

Ilse Metchek, director of the California Fashion Association, doubts that shoppers — including students — will pay more for a shirt because workers who made it are paid more. “Students protest,” she said. “But when push comes to shove, they go to Wal-Mart and buy clothing made in Saipan.”

Yet, others are betting on success. “Mr. Cohen has something of a track record in balancing what appear to be contradictory business dicta and coming out on top,” wrote Andrew Gumbel, a columnist with The Independent in London.

[1] Quoted on “The Oprah Winfrey Show,” May 23, 2002.

Footnote: 1. Quoted on “The Oprah Winfrey Show,” May 23, 2002.

[2] Ben Cohen, “Commentary: Taking the sweat out of sweatshop,” Marketplace, Minnesota Public Radio, Sept. 2, 2002.

Footnote: 2. Ben Cohen, “Commentary: Taking the sweat out of sweatshop,” Marketplace, Minnesota Public Radio, Sept. 2, 2002.

[3] Nancy Cleeland, “Clothing Firm Adopts Non-Sweatshop Concept: It hopes to stay competitive and turn a profit,” Los Angeles Times, April 9, 2002, p. C1.

Footnote: 3. Nancy Cleeland, “Clothing Firm Adopts Non-Sweatshop Concept: It hopes to stay competitive and turn a profit,” Los Angeles Times, April 9, 2002, p. C1.

[4] Winfrey, op.cit.

Footnote: 4. Winfrey, op.cit.

[5] Ibid.

Footnote: 5. Ibid.

[6] Ibid.

Footnote: 6. Ibid.

[7] Andrew Gumbel, “In Foreign Parts — Ice-cream tycoon turns to sweat-free clothes,” The Independent (London), April 13, 2002, p. 18.

Footnote: 7. Andrew Gumbel, “In Foreign Parts — Ice-cream tycoon turns to sweat-free clothes,” The Independent (London), April 13, 2002, p. 18.