Improving the conditions of workers? Minimum wage legilsation and anit-sweatshop activism

During the 1990s, anti-sweatshop activists increased their efforts to improve working conditions and raise wages for workers in developing countries. Indonesia, home to dozens of Nike, Reebok, and Adidas subcontractors, was a primary target for these activists. At the same time, the Indonesian government (prompted by the U.S. government) greatly increased the minimum wage throughout Indonesia. This article analyzed the impact of these two different types of interventions on labor market outcomes in Indonesian manufacturing. The results suggest that the more than doubling of the real value of the minimum wage resulted in a 35 percent increase in real wages for unskilled workers between 1990 and 1996. The anti-sweatshop campaigns also had a significant impact on wages. Our research suggests that unskilled real wages increased by an additional 20 percent for exporters and multinational plants in sweatshop industries, defined as textiles, footwear, and apparel. The combined effects of the minimum wage legislation and the antisweatshop campaigns led to more than a 50 percent increase in real wages and a doubling of nominal wages for unskilled workers at targeted exporting plants. One question that naturally arises is how this could possibly be achieved without adverse consequences for employment.'"^ In our research, we tested whether these higher wages led firms to cut employment or shut down operations. The minimum wage increases led to employment losses of as much as 10 percentage points for unskilled workers across all sectors in manufacturing. Surprisingly, however, anti-sweatshop activism did not have significant adverse effects on employment in the TFA sectors. The fact that wages soared and employment remained steady in textiles and apparel suggests that the anti-sweatshop movement had a positive impact on workers in these factories. This is a surprising and unintuitive result that suggests that anti-sweatshop activism in Indonesia was a "win-win" situation. Despite the rising labor costs during this period, increased market demand for textile, footwear, and apparel products led to net employment increases in foreign and exporting firms.corporate social responsibility; minimum wages; employment; Indonesia; anti-sweatshop campaigns

Globalization's impact on compliance with labor standards

In an effort to shed some light on the larger question of labor standardsvand globalization, we seek to examine compliance with minimum wage legislation in Indonesia. Indonesia is an ideal case study because the govern ment made minimum wages a central component of its labor market policies in the 1990s. During this time, minimum wages quadrupled in nominal terms and doubled in real terms. In this paper we estimate the relationship between international competition and compliance with the statutory minimum wage in Indonesia. We identify firms facing international competition with two plant-level indica tors. First, we use the plant's export orientation as one measure of international competition. Second, we use the plant's foreign ownership as another measure of international competition. Critics claim that foreign firms are exploiting foreign workers, although our research on developing countries has shown that foreign enterprises are more likely to pay higher wages. This framework provides a direct test of the relationship between meas ures of globalization and labor standards, as defined by compliance with the regional minimum wage.globalization; minimum wages; foreign investment; corporate social responsibility

Moving Up or Moving Out? Anti-Sweatshop Activists and Labor Market Outcomes

During the 1990s, human rights and anti-sweatshop activists increased their efforts to improve working conditions and raise wages for workers in developing countries. These campaigns took many different forms: direct pressure to change legislation in developing countries, pressure on firms, newspaper campaigns, and grassroots organizing. This paper analyzes the impact of two different types of interventions on labor market outcomes in Indonesian manufacturing: (1) direct US government pressure, which contributed to a doubling of the minimum wage and (2) anti-sweatshop campaigns. The combined effects of the minimum wage legislation and the anti-sweatshop campaigns led to a 50 percent increase in real wages and a 100 percent increase in nominal wages for unskilled workers at targeted plants. We then examine whether higher wages led firms to cut employment or relocate elsewhere. Although the higher minimum wage reduced employment for unskilled workers, anti-sweatshop activism targeted at textiles, apparel, and footwear plants did not. Plants targeted by activists were more likely to close, but those losses were offset by employment gains at surviving plants. The message is a mixed one: activism significantly improved wages for unskilled workers in sweatshop industries, but probably encouraged some plants to leave Indonesia.

Putting the Blue in the Green New Deal

The Green New Deal (GND) is a U.S. resolution that aims to address economic inequality and global warming through a set of proposed economic stimulus projects. As nearly half of the U.S. populace lives in or near coastal areas, the GND needs to prioritize the sustainable use and preservation of the marine environment – called the “blue economy.” David Helvarg of Blue Frontier and Jason Scorse of the International Environmental Policy Program and the Middlebury Institute of International Studies suggest a series of policy and investment priorities for incorporation of the blue economy into the GND

Improving the Condition of Workers? Minimum Wage Legislation and Anti-Sweatshop Activism

For many concerned citizens and consumers, international labor standards have a strong intuitive appeal as a remedy to address poor working conditions and low wages in developing countries. The underlying rationale is straight-forward: if we could pressure multinational corporations to significantly improve the working conditions and wages for unskilled workers in the developing world, we would not only improve the lives of hundreds of millions of the poorest workers, but companies operating in developed countries would no longer be forced to compete “unfairly” with developing country manufacturers who can draw on unlimited pools of cheap labor

The Ocean Climate Action Plan

Climate change and ocean health are often thought about as separate silos, when the two are interconnected. Climate change is warming the oceans and changing their chemistry. Without ocean health, the entire planetary water cycle and oxygen cycle are in danger. The oceans sequester huge amounts of carbon dioxide helping to cool the planet, but that may not continue with “business as usual.” Climate change affects even those far from any coastline. We must solve the ocean climate challenge together, and we have a short window of time to take action. The Center for the Blue Economy has partnered with Blue Frontier to bring together thought leaders from across industry, government, academia, and the conservation community to craft the Ocean Climate Action Plan or OCAP. Key elements of the plan were passed as part of the infrastructure bill (a down payment on clean ports and clean energy) and many OCAP recommendations were included in the (now stalled) Build Back Better bill. Historic levels of funding for climate adaptation and mitigation are on the line (400+ billion over ten years). Is climate change important to you? If so, now is the time to speak up. More info: Ocean Climate Action Pla

Do foreign-owned firms pay more?

This paper uses Indonesian data to analyze the impact of foreign ownership on wages. After controlling for worker and firm characteristics, we find that foreign firms pay a wage premium, which is larger for skilled relative to unskilled workers.wages; foreign investment; multinational corporations; Indonesia

The Potential Economic Impacts of the Proposed Central Coast National Marine Sanctuary

The U.S. National Marine Sanctuary designation process is being reopened after 20 years, and coastal communities across the country are being encouraged to submit nominations. In response, there is a proposal for a new California Central Coast Marine Sanctuary, stretching from the Channel Islands to the northern tip of San Luis Obispo County. This report provides our best estimates from available and extrapolated information, of the potential economic impact on San Luis Obispo County, if this proposed National Marine Sanctuary becomes a reality. Communities seek Sanctuary designation for many reasons, including the preservation of unique cultural and natural resources, permanent prevention of offshore oil and gas development, or improving their local economies. This report focuses on the economic impacts possible from such a designation. Our results show that overall, the proposed Central Coast National Marine Sanctuary could add, at minimum 23 million dollars per year to the local economy and create almost 600 new jobs. Our estimates draw from four channels of revenue and job generation we investigated: 1. Government expenditures on Sanctuary offices, staff, and infrastructure, as well as additional research money raised by Sanctuary staff 2. Money raised by local NGOs and academics to conduct Sanctuary-related research 3. Increased coastal tourism and the increases in relevant business revenues from it (due to both market signaling and improved ocean and coastal resource stewardship) 4. Increased property values, property taxes, and business, local, state and federal tax revenues due to Sanctuary proximity It is important to note that these totals are conservative estimates and depend on the extent to which a) the Sanctuary staff aggressively market the unique natural, cultural, and historic resources as a focal point for preservation and education, b) the local tourist industry markets the Sanctuary, c) academics and NGOs seek to leverage the Sanctuary for research funding, d) the amounts of funding forthcoming from the Federal Government, and e) the extent to which Sanctuary policies lead to tangible improvements in coastal ecosystems. A byproduct of this work is an appendix with an extensive bibliography of relevant literature, which we compiled to ensure we used all available information for this report. We hope our report will serve to better inform the local community and help to determine whether the major effort required to submit a nomination for a new Sanctuary designation is in the region’s best interests

The Impact of Surf Breaks on Home Prices in Santa Cruz, CA

The growing field of “surfonomics” attempts to document surfing’s economic contribution to local and regional communities, as well the consumer surplus surf breaks provide to millions of surfers. To date, no research has examined the extent to which the value of surf breaks is capitalized into home prices. This study uses the hedonic price method with data from three distinct beach-adjacent neighborhoods in Santa Cruz, CA to estimate whether proximity to surf breaks leads to higher home values. We find that after controlling for proximity to the beach, ocean views, the specific characteristics of the homes, and neighborhood effects, that proximity to surf breaks is a statistically significant contributor to overall home value. A home that is right next to a surf break is valued at approximately $106,000 more than an equivalent home a mile away