The Moral Economy of Low-Wage Work

Chapter 5 considers the debate over ‘sweatshops’ in the clothing manufacturing industry, arguing that the moral economy of rival positions entails different understandings of the relationship between wages, profits, and employment. Many contemporary arguments reflect those made over a century earlier in Britain and the US. However, whereas the British Fabian socialists sought (and achieved) the simultaneous expansion of labour protection and welfare support for the unemployed, the contemporary anti-sweatshop movement focusses solely on wages. By the early twentieth century in Britain, those who lost their jobs because of rising minimum wages could expect support from the welfare system. In twenty-first-century surplus labour countries, the unemployed fall through what meagre welfare nets exist. In this context, the potential trade-off between wages and employment matters for poverty and inequality. Chapter 5 also reviews the evidence on the impact of rising minimum wages on employment both internationally and in South Africa. The impact is typically neutral or mildly negative, suggesting that policymakers are generally careful about not raising minimum wages excessively. There is, however, evidence that it is mostly unskilled workers who lose jobs when job losses occur.