Lyncy Nyandoche, Bryn Mawr ’21
In the first six months of office the Trump administration repealed the Obama workplace rule which required companies to disclose any labor violations that they have committed when applying for federal contracts. Furthermore, it removed the obligation of employers to accurately record their worker’s injuries and illness and thus reduced workplace safety record-keeping requirements. We would assume that taking care of the conditions under which workers work should be obvious. But then, the debate still lies. Why then are we still talking about labor standards?
Enforcing new labor standards often comes at a cost to firms. These costs could directly increase production costs or indirectly increase employees’ bargaining power. If complying with higher labor standards causes significant increases in their costs, then producers do not have an incentive to adopt these standards. In standard economic theory, higher costs result in higher prices which can cause a price advantage, where the price of your products is higher than the price of your competitors’ products. Thus, the demand for your products decreases. You would not want to be driven out of business in lieu of complying with higher labor standards. This is one particular reason that pushes some producers to fight for the weakening of labor unions, or against policies that might give workers power that directly increases production costs.
The unionization of workers has substantially increased the bargaining power of employees. Increased bargaining power enables workers to influence the actions of employers in providing higher wages. This is a direct increase in the cost of production. In unions, workers can demand for better working conditions. The very existence of unions can enable the enactment of higher labor standards due to the increased bargaining power.
For those of us wondering why someone would take away the right to compensate overtime work, or why we should even be debating on whether private companies should disclose their history of violation of laws when applying for federal tenders; we are following the moral clause. Apart from costs, the moral clause is another mover of the labor standards conversation. It is an argument that mostly comes from consumers whose feel that the price they pay includes the way the product was made. Jadgish Bagwati, an economics and law professor at Columbia University, says that people feel a moral obligation to others whom they do not necessarily have a personal connection to, for example the public cry against child labor.
There are neither clear laws for determining labor standards, nor a clear line that draws which mover of this debate is the most important. However, keep in mind the core labor standards: prohibition of forced labor, prohibition of discrimination, freedom of association and right to collective bargaining. These standards are based on fundamental human rights and they happen to indirectly affect costs. Therefore, for further discussion on labor standards, the question is where do we draw the line and find support from both the moral proponents and the cost opponents?
Bhagwati, Jagdish. “Trade Liberalisation and Fair Trade Demands: Addressing the Environmental and Labour Standards Issue.” The World Economy 18.6 (1995): 249
Freeman, Richard. “International labor standards and world trade: Friends or Foes.” The World Trading System: Challenges Ahead 87 (1996): 99