|U.S. apparel companies attempt to justify the starvation
wages they pay around the world by stating that they adhere to all locally
established minimum and prevailing wage rates.
Columbia University graduate students have documented that the “legal”
minimum wage in El Salvador was arbitrarily set. In an in-depth case study
of El Salvador, they show that the legal minimum wage provides less than
one-third of the basic living costs for the averaged-sized family of 4.3
Salvadoran law stipulates that the minimum wage is to be established and
adjusted for inflation based on market cost for a basket of five necessities:
food, housing, health care, education and clothing. However, the
Salvadoran government uses only the food basket to set the minimum wage,
ignoring all other family needs.
The minimum wage in El Salvador, of $4.79 day, or 60 cents an hour, meets
solely the daily food costs for a family, based on a 2,200 calorie diet.
(This diet falls short of the U.S. Department of Agriculture nutrition
standards, lacking in dairy, fruit, and vegetables.)
In fact, El Salvador’s definition of “extreme poverty” is 42 colones a
day, or $4.79. which is exactly the “legal” minimum wage.
A living wage for El Salvador’s garment workers, supporting 4.3 people,
would be between $1.73 to $2.14 an hour, according to the Columbia University
“Relative poverty” is crudely defined by the Salvadoran government by simply
doubling the $4.79 daily wage to $9.59, or $1.20 an hour.
The average apparel wage in the U.S. is $8.43 an hour. This would
mean that the living wage in El Salvador would still amount to only one-quarter
of the U.S. wage, maintaining El Salvador’s low wage competitive advantage.
Standards: El Salvador
Extreme poverty/ "Legal" Minimum Wage:
$ .60 hour
"Relative Poverty"/ Double the Minimum Wage:
$ 66.39 week
$ 4.79 day
$ .60 hour
Columbia University: Lowest Minimum Living Wage Estimate:
$ 421.00 month
$ 97.16 week
$ 13.91 day
$ 1.73 hour
Salvadorian Workers' Estimate of a Sustainable Wage:
$ 456.62 month
$ 105.37 week
$ 15.05 day
$ 1.88 hour
Columbia University Living Wage Estimate:
$ 520.09 month
$ 120.02 week
$ 17.15 day
$ 2.14 hour
would happen to the price of a garment if U.S. apparel companies paid a
living wage- $2.14 an hour in El Salvador? Very little.
At the 60 cents an hour wage, the direct labor cost to sew an Anvil T-shirt
carrying the Yale University logo is just 3 cents. The wage paid
to the Salvadoran women amounts to just 2/10th of one percent of the $14.99
retail price. If the living wage was paid, there would now be 11cents
of direct labor cost to sew the T-shirt, which means that the wages would
still remain insignificant, amounting to only 7/10 of one percent of the
retail price. Payment of a living wage would add just 8 cents to
the cost of the T-shirt, or one half of one percent of the sales price.
(There is approximately $1.44 in total material costs in a basic
T-shirt. What happens to all of the rest of the money?)
At the current 60 cents an hour “legal” minimum wage there is just 74 cents
of direct labor cost to sew a $198 Liz Claiborne jacket. Payment
of a living wage would raise the labor cost in such a jacket to $2.64,
which is still only a little over one percent of the retail price.
Paying a living wage would add $1.90 to the $198 jacket; a mere one percent
U.S. consumers have repeatedly responded that they would pay 5-to-10 percent
more if they could be assured that the product they were purchasing was
made under humane conditions. If a living wage was instituted in El Salvador,
and even if the additional cost was passed on to the consumer, the price
increase would come to less than one percent of the price of a garment.
There is 20 cents of direct labor cost to sew a $75 NIKE shirt in
El Salvador. If Nike and its contractor paid a living wage of $2.64 an
hour, there would be just 71 cents of labor to sew the shirt, or
less than 1% of the retail price. This would add 51 cents to the
cost of a $75 shirt.
would a living wage provide for a 4.3 member family in El Salvador? Would
it be extravagant?
$6.17 daily food costs, or 48 cents per person per meal:
$79.91 a month for two small rooms:
and Energy Costs: $23.63 a month, or
78 cents a day:
Local Transportation: $2.22 a day:
Care: $1.13 a day:
Education: $1.68 a week, or 24 cents
Health Care: $23.50 a month:
Articles/Hygiene: 56 cents cents a
$7.14 each person per month
$13.04 a week
The U.S. the legal minimum wage meets 58 percent of the cost of living.
For a family of four people, the U.S. government defines the poverty rate
at $16,655 annual income, or $7.12 an hour.
There are 34.5 million people in the U.S. living below the poverty line,
or 12.7% of the population. 18.9% of all children live in poverty.
U.S. government agencies establish 125 percent
of the poverty level as the qualification for federal subsidies, such as
A family of four would qualify for food stamps if their annual income was
lower than $20,818.74, or $8.90 an hour.
A 73 percent increase would be needed to make the “legal” minimum wage
a subsistence level wage for a family of four.