NPR logo Would A $5-A-Day Minimum Wage Make Life Better In Haiti?

Developing Economies


Inside a Haitian factory. August, 2007. Claude Richard/AFP/Getty Images hide caption

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Claude Richard/AFP/Getty Images


In 2009, before the earthquake, Haiti's parliament passed a new minimum wage law mandating that people working in Haiti's apparel factories — mostly cutting and sewing t-shirts — must make a minimum of $5 a day.

Now, of course, to an American audience this seems so minor, so unbelievably reasonable, it's hard to see how there can be any opposition: Five bucks a day? As a minimum? It's easy to be outraged that the U.S. government wouldn't push for a minimum of more. Who can live on five bucks a day?

I've been covering Haiti's apparel industry for the last year and a half, and I'd like to place this in some context.

Decent statistics are hard to come by in Haiti, but most studies show that more than half of Haitians live on less than $1 a day. Around 80 percent live on less than $2 a day. So, making three bucks per day puts a person into a small elite of high earners. Life in Haiti is still pretty tough on three bucks a day, but those workers are less likely to be hungry or have hungry kids, they're more likely to send their kids to Haiti's schools (most of which charge amounts out of the reach of the very poor).


Here's how I think that question through.

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T-shirt producers have the steps down to a science: you have a line of 14 or so workers, each one doing one tiny operation — sew the sleeve onto the shirt, sew the hem, sew the neck band. A decent, experienced manager can take just about any illiterate farmer anywhere in the world and have them sewing T-shirts right away. T-shirt fabric is fairly cheap, so it doesn't matter that much if a worker messes up a few shirts. And T-shirt fabric is quite forgiving — the sewer doesn't need to be all that precise.

Since it's so easy and cheap to move production from one country to another, and since the work requires no prior skill, commodity T-shirt production is highly competitive. If Haiti doesn't work out, it's not so hard to pick up stakes and move to Honduras or Nicaragua or Madagascar.



Haiti has been desperately trying to seduce apparel manufacturers to build plants, but they've found it tough going. Haiti has a few benefits: The U.S. has given duty-free access for certain Haitian-sewn apparel, Haiti is awfully close to the U.S., and Haitians demand much lower wages than anybody nearby.

Honduras and Nicaragua are also pretty close to the U.S., and they also get duty-free access to the U.S. But workers in those countries get slightly higher wages. So, move the Haitian minimum wage up to $5 per day and it's hard to see why any company would choose Haiti over Central America.




But years of political instability, misrule, and a U.S.-led embargo during Haiti's post-Aristide dictatorship all but destroyed the local industry. By the time Haiti was ready to develop its industry again in the past five years, global manufacturing technology and trade had been so thoroughly transformed that Haiti had to, basically, start all over.

Haiti was never a truly industrial nation. Even at Haiti's industrial peak, only a couple percent of Haitians worked in manufacturing. It's one of the world's poorest countries, where most people subsist on minimal calories grown on meager plots of land.


The U.S. is certainly not blameless in Haiti's current straits. Inspired by slave-holding Southerners, we refused to recognize or trade with the state after it overthrew its French slave-owning overseers in 1804. We occupied the country, to disastrous results, from 1915 to 1934. We supported the horrible Duvalier regimes from the late 1950s to 1986. Haiti watchers will, surely, forever debate the pros and cons of US intervention during President Aristide's two aborted terms. And there's that devastating embargo in the mid-1990s (which President Clinton now says he "hated" but had to do). Anybody who has spent time researching the various international efforts to help Haiti has a long list of grievances against USAID.



In short, Dominican textile workers have real bargaining power because they have real, globally competitive skills. I'm sure manufacturers would love to pay them $3 a day, but they can't because the Dominicans know how to do stuff that commands a higher wage.

I have no idea what would happen if Haiti did have a $5-a-day minimum wage. But I do think it's reasonable to assume that some factories would close and far fewer new ones would be built. Far fewer Haitians would be allowed to take that first tentative step on to the ladder of industrial development.

See more Haiti coverage from Planet Money.