Is it immoral for US Corporations to use cheap overseas Labor?

Cheap overseas labor sourcing is a procurement strategy in which company sources materials from countries with lower labor and production costs in order to cut operating expenses. In this contemporary business world, using cheap labor is one of the most contentious issues as it is readily available in developing nations. A number of US corporations have embarked on this practice with the aim of maximizing profits, which increases shareholder satisfaction and guarantees the success of the corporation. Though using cheap overseas labor has become quite common for many US corporations, the practice has resulted in several questions regarding whether it is immoral or not with respect to the impact the practice has on the United States and the third world countries.

This does not revolve around the process of using cheap labor; rather, it involves around the ethical issues surrounding the process. YES: Business week points out that using cheap overseas labor is immoral, because many US corporations have been guilty of negligence in monitoring and controlling the quality of working conditions in their overseas workshop operations. The result is continued abuse and exploitations of workers by US firms. NO: Daniel Griswold argues that sweatshops are ethical because sweatshops improve economy by raising living standards and lead to better utilization of global resources. He further points out that anti-sweatshop legislations are unwise and will only hurt people they are trying to help. Sweatshops Abuse

Opponents of sweatshops argue that they are exploitative and inhumane because of unsafe and unfavorable working conditions, exhaustive workloads, excessively long work hours, below-subsistence level wages and physical and mental abuse. Several US corporations like Walmart, Nike and others have failed to follow labor codes of conduct and human rights, leading to dangerous accidents in their workplaces. Griswold, on the other hand, points out that using cheap labor has lifted millions of people out of poverty by creating more jobs and providing job security. The wages provided may be low but they are high as compared to other jobs in their country. Workers have a right to dispose of their labor in any manner they see fit. In most developing countries, where, very few work options are available, sweatshop jobs are better than no-jobs. Globalization and Trade Liberalization

Globalization has changed the game in production. Sweatshops are portrayed as an inevitable outcome of economic globalization. Multi-national corporations take advantage of the low wages and poor working conditions of third world countries. The developing countries must compete with each other to attract foreign firms; they do this by decreasing their labor standards. Thus, according to Business week, multi-national firms use the poverty and desperation of the developing countries to their advantage. Griswold, in contrast, argues that US corporations should compete in a global economy by hiring globally. Openness to trade and investment are raising labor standards and working conditions in developing countries. Rising levels of global trade is a major reason for decline in child labor in developing countries. As household incomes rise, fewer families face the economic necessity of sending their children to work. Sweatshop conditions persist today, not because of globalization, but because of previous decades of protectionism, inflation and economic mismanagement. Impact on Economy:

Business week argues that it’s not just sweatshop workers that are exploited-jobs in US are lost when firms decide to locate their operations overseas. Using cheap labor results in fewer jobs in US, which causes the economy to weaken. With more people working in US, more cash is accessible to spend on goods, which implies that more jobs can be created to meet the demand for those goods. Thus, using overseas labor damages this virtuous cycle in US economy. Furthermore, overseas workers do not contribute to US taxes and Social Security. Griswold notes that virtually every industrialized First World economy capitalized on cheap labor early in its economic development. Consider that the rapid growth of Hong Kong and Singapore over the last quarter of the 20th century was due in large measure to their willingness to use their comparative advantage of cheap labor early in their economic development. Thus, by using cheap overseas labor, US corporations are helping to improve the economy in developing nations by raising their standards of living and improving their working conditions. In my opinion, it is immoral for US corporations to use cheap overseas labor as sweatshops are abusive and they exploit human rights.

Few out of several examples to cite are FOXCONN, Disney and Walmart, where cheap labor relates to substandard working environment and violation of Human rights. Furthermore, there is loss of several job opportunities in US, which causes weakening of US economy. Substantial profits gained by using cheap overseas labor are retained only by the rich. Thus, the rich keep getting richer and the poor become poorer because of the global race to the bottom. Moreover, high tax revenue obtained from high corporate profits cannot account for the amount that US government loses on tax. It is apparent, from the afore-mentioned facts, that the use of cheap labor benefits firms and consumers at the expense of workers. A man cannot be used merely as a means by any man to achieve the end. Thus, using cheap labor is immoral, as workers are treated as a means to gain profit and development, and the end does not justify the means. Overall Business week’s point of view seems to be more impactful as it takes into consideration the moral perspective involving around sweatshops and human values. In this view, derived from Immanuel Kant’s words, which states that Humanity is a dignity and people are entitled to respect other people’s rights, using cheap overseas labor is immoral.