Nike shoes are a bargain at $220 a pair. They must be, else why would hundreds of people have showed up Thursday at a Greenwood, Indiana, mall, according to the police report, “panicking to get to the front of the line” for the limited release of the $220 Foamposite Galaxy. The next day in Orlando it took a hundred deputies in riot gear to subdue a crowd waiting for the new Galaxy.
Similar riots attended Nike’s December release of the latest in the Air Jordan line, the $180 Air Jordan XI Concord.
The Air Jordans cost Nike about $16 to produce, giving Nike a gross profit of $164 a pair, or about 90 per cent, before marketing expenses. Shareholders have done well, as the stock price has increased over one hundred times in the last 25 years—in contrast, the Dow Jones average has gone up a factor of seven in that period.
The workers in Indonesia who make Nike shoes haven’t done nearly as well: they earn $4 a day—not enough to provide food, shelter, transportation, and health care. And they can only dream of someday being able to buy a pair of Nikes for themselves.
Nike could easily afford to pay a living wage—labor costs account for only $2.50 a pair. If Nike doubled the average pay their per-pair profit would drop only from $164 a pair to $161.50.
Is Nike’s practice ethical or unethical? The answer is a slam-dunk: unethical. Nike could afford to pay a living wage with no significant effect of their bottom line. That they don’t is shameful.
What about Apple? My friend Jim Keady charges, “Apple is following Nike’s playbook of CSR [corporate social responsibility] bullshit to the letter.” I’m not so sure.
Two things make me more sympathetic toward Apple than toward Nike: first, Apple workers in China make more than four times what Nike workers make; and second, labor costs are a much bigger part of Apple’s costs than of Nike’s.: they’ve been estimated at 5%-10% of the cost of an iPhone, compared to about 2% of the cost of a pair of Nikes. So a proportional pay raise would be much more costly to Apple than to Nike.
For now I’ll give Apple a pass on ethics, pending more information from Jim Keady.