Made in China

According to Jeff Ballinger, a labor studies professor at Webster University and an expert on sweatshops, Chinese workers only earn about one percent of the retail price of the clothing they produce. The Chinese workers who produce a Nike sneaker that costs $70 in American stores earn only 60 to 80 cents per sneaker, Ballinger said. He added that doubling that wage would bring Chinese workers up from that subsistence level to a “living wage” by Chinese standards. If Nike passed that wage increase on to U.S. consumers, the retail price of that sneaker would increase from $70 to no more than $71. Just like Obama said, a “little bit” more.

Ballinger calculates that Nike could afford to double the wages of the estimated 160,000 workers who produce its sneakers around the world — about 40% of them in China — without raising the consumer price at all. Nike sold about 280 million sneakers, cross-trainers and running shoes last year. Doubling manufacturing workers’ wages in China would cost Nike, which last year had revenues of almost $14 billion a year, only $210 million a year.

During the 1970’s, most Nike shoes were made in South Korea and Taiwan. When workers there gained new freedom to organize and wages began to rise, Nike moved most of its production to China, Indonesia, and Vietnam– countries with weak labor laws and where workers are easily abused.

Nike products are made in giant factories owned by contractors, who operate under standards set by Nike management in Oregon. Nike tells its contractors what designs and fabric to use, and how much they’ll pay for each sneaker. Nike knows in advance what Chinese workers will earn under that arrangement. Nike sets the rules.

If Chinese workers earn only 60 to 80 cents of a sneaker that sells for $70 in U.S. stores, who gets the rest of the money? The contractor in China pays for the materials, machines, overhead, and earns a profit. The U.S. retailers (dominated by large chains like Wal-Mart) pay for shipping, overhead, and advertising, and take a big slice in profits. Nike, of course, pays for designing the shoes, marketing and publicizing the brand so that every American recognizes the swoosh, and makes a huge profit. The Chinese workers get the scraps.

“Labor costs in the Third World are so small as a percentage of the retail price of products, and as a percentage of the revenues of US corporations, that the wages of overseas sweatshop workers could be doubled or tripled with little or no increase for American consumers,” explained Scott Nova, executive director of the Workers Rights Consortium, a nonprofit labor rights group. “The corporations have made it very clear, however, that they will not pay a living wage - unless consumer pressure or public regulation compels them to do so.”