Shall Atlas shrug or workers unite?

My Marx vs. Smith post generated a hitherto unprecedented flurry of emails and comments from political theorists. I’ve been getting lessons in Marx from left and right (pun intended) all week.

What is abundantly clear: I’m going to have to read my classics more closely these holidays.

I’ll take cover in the fact that the Marx vs. Smith angle was more an attempt to write a cute blog post, rather than the actual frame of the project. But this discussion has given me ideas.

I’m still processing the week of factory visits. I fluctuate between wanting to become a labor union organizer and thinking that Ayn Rand’s Atlas Shrugged was right all along. (Let loose the titans of industry!) I’ve met incredible entrepreneurs this week who do more for development in a year than I may accomplish in a lifetime.

Even so, I was unprepared for the lowness of unskilled wages in Ethiopian factories and farms—sometimes starting at less than a dollar a day (though that rises to about $2.50 when we account for purchasing power).

In a meeting with the general manager, the personnel manager expressed his belief that workers were exploited. The personnel manager!

I couldn’t let that comment slip without asking what he meant. I think his real meaning is close to my own opinion: factory jobs are better than the alternatives, but by no means do they pay a wage that pushes people out of poverty. At least not right away.

Skilled trades and small businesses pay two or three times the unskilled wage, but the work is irregular and unpredictable. A factory job, for all its challenges, is relatively secure.

I should not have been so surprised. With excess supply of labor, why would a factory pay an unskilled laborer any more than she can earn outside? In fact, because the wage is (in expectation) fairly steady and long term, factories can pay a lower wage and people will still line up for the stability.

The interesting dynamic I’ve observed (after a grand total of one week, mind you) is that new hires often receive lots of informal training, and enterprising workers learn how to do the job of the people one or two steps up on the ladder. Their pay rises as a result, if only to stop them from going to the competitor down the street. (This seems to happen a lot.) Within a few years their wage may have doubled or tripled. Others use their earnings to pay school fees, and attain a degree or diploma.

Do I expect a factory job to relieve poverty in one year? I don’t think so. But over a two or three year horizon, gains seem possible. Over a generation, it could be transformative, especially as unskilled labor gets scarce.

Now, off to Liberia for an opposite project: small businesses for ex-combatant street youth.