WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap

Business Insider ^ | June 3, 2011 | Robert Johnson

[Pinkbell]

A Wikileaks post published on The Nation shows that the Obama Administration fought to keep Haitian wages at 31 cents an hour.

(This article was taken down by The Nation due to an embargo, but it was excerpted at Columbia Journalism Review.)

It started when Haiti passed a law two years ago raising its minimum wage to 61 cents an hour. According to an embassy cable:

This infuriated American corporations like Hanes and Levi Strauss that pay Haitians slave wages to sew their clothes. They said they would only fork over a seven-cent-an-hour increase, and they got the State Department involved. The U.S. ambassador put pressure on Haiti’s president, who duly carved out a $3 a day minimum wage for textile companies (the U.S. minimum wage, which itself is very low, works out to $58 a day).

Haiti has about 25,000 garment workers. If you paid each of them $2 a day more, it would cost their employers $50,000 per working day, or about $12.5 million a year ... As of last year Hanes had 3,200 Haitians making t-shirts for it. Paying each of them two bucks a day more would cost it about $1.6 million a year. Hanesbrands Incorporated made $211 million on $4.3 billion in sales last year.

[OnlyTurkeysHaveLeftWings]

Probably not enough for someone to save up his earnings and start up his own baseball-stitching factory.

[I still care]

Levis is a super lib corp. They are big on supporting gun grabbing.

[ApplegateRanch]

But a cut of 6-7% of their net profit is not miniscule.

Nice try, but 1.6 out of 211 is only about 0.75%. They probably pay more than that in bribes lobbying expenses annually.

[familyop]

Stock up on the cheapest brands of the toughest jeans that you can find. Do all that is necessary to prepare, then starve the tyrannical beast. Start a hobby of manufacturing your own jeans while living independently. Then, when the regulatory offices close (default ahead),...

[BfloGuy]

Raising the minimum wage (or having one at all for that matter) is the stupidest thing a poor country like Haiti can do. There's almost no capital and so labor will comprise a bigger percentage of business costs.

Minimum wages just price the low-skilled out of work.

[dfwgator]

Eventually the ChiComs will move into Haiti, and establish a base there. Say Buh-Bye to the Monroe Doctrine.

[Will88]

But a cut of 6-7% of their net profit is not miniscule.

There is no 6%-7% cut in their net profit. Depending on their tax rate (probably around 30%), their pretax profit would drop by $1.6 million of $211 million, and their after tax profit would drop by only about $1.2 million. That's just over 1/2 of 1% drop in net profit (.57).

And with Hanes' volume in various undergarments, it would amount to practically nothing per garment. They could adjust prices to make that up and no customer would ever know it.

[slowhandluke]

No, it is not ‘plenty profitable’. It is now ‘less profitable’ to do the work there (in Polynesia) than elsewhere. Some of the value of the lowered minimum wage was a subsidy just to have any work at all available way out there. One of the canning companies actually moved some work back to the USA. Labor might be more here, but the other costs of running a factory are lower.