Is it ethical for Nike to pay people who make its shoes $4.00 per day?

Athletic shoes used to be made in Massachusetts. Now they’re all made overseas; Nike’s come largely from Indonesia, where its workers* earn $4.00 per day, barely enough to pay rent, transportation, water, and two small bowls of rice and vegetables..

In the courses I teach on business ethics we wrestle with this question: is Nike’s behavior ethical? In Nike’s corner are those who believe what Milton Friedman wrote fifty years ago: that business’s only social responsibility is to increase profits while staying within the rules of the game. Their argument is buttressed by the fact that the workers take the jobs voluntarily, so they must think they’re better off than if they weren’t making Nikes.

On the other side of the argument are those who believe that it’s just not fair for Nike to sell a pair of shoes for $80 that cost roughly $16.25 to produce, including just $2.43 for labor. Were Nike to pay a decent wage to its Indonesian workers, say double the current rate, it would reduce its profit margin by only three per cent, from $63.75 per pair to $61.32.

One man, Jim Keady, has been hard at work for thirteen years selflessly trying to get Nike to treat its Indonesian workers decently. Jim has even lived in Indonesia on $4.00 per day to see if it’s really a “living wage.” It’s not.

Jim came by his passion to change Nike while studying theology at Saint John’s University, where he was fired from his job as assistant soccer coach for refusing to wear uniforms and shoes with the Nike swoosh. He was struck by the dichotomy between Saint John’s teachings of Christian charity and their contract to promote a company that was making millions from exploiting its workers. When a friend of Jim’s called him a communist, Jim responded, “I’m worse than a communist: I’m a Christian.”

Jim is heading back to Indonesia next month to train and organize Nike workers. He posted this notice on his Facebook page: CAN YOU SHARE $10 TO SPONSOR A NIKE WORKER?

Click on the link above if you want to donate; or if you want to learn more about Jim’s work, check him out at http://www.teamsweat.org/

In answer to my business ethics question, I let the students figure it out. I gave away my Nikes, and now wear Timberland athletic shoes.

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*Nike argues that the people who make its shoes are not its workers, but employees of its contractor. Technically this may be true, but the plant proudly sports a huge Nike sign and its products go to Nike

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7 Responses to “Is it ethical for Nike to pay people who make its shoes $4.00 per day?”

  1. Tom Stern Says:

    I think it’s time for Nike to put the sneaker on the other foot and stop hiding behind rationalizations driven by greed. Someone should document the way these folks live who are working on slave wages and ask Nike’s c suite to honestly answer the question, ” Is this the way you would want your own child to live?”
    Juluis Rosenwald, who Im proud to say was my great grandfather, built homes and communities for his workers near the corporate offices of Sears Roebuck in Chicago in the 1920’s, reinvesting much of the company’s profit into upgrading the quality of life of his employees. It was enlightened self-interest, because doing the right thing made him feel so good( It also built a very positive company culture that improved productivity.) What a novel equation-Business+Ethics= more profits.
    Maybe the folks at Nike don’t care about “feeling good” about what they do. In fact maybe they don’t feel anything. One thing is for sure;the only souls they have are on their footwear, made from the sweat and toil of exploited workers who could never afford a pair.

  2. Ethics Bob Opens An Ethics Can of Worms, All Named “Nike” | Ethics Alarms Says:

    […] can, and should, read Bob’s post here, and then we can argue about the above questions for the rest of our lives. Share […]

  3. tlevier Says:

    Thanks for pointing this out Bob.

  4. Comment of the Day on “Ethics Bob Opens An Ethics Can of Worms…” | Ethics Alarms Says:

    […] Martinez enters the debate on the ethics of Nike’s labor practices abroad, raised by a post by Bob Stone on his blog, and explicated here with some business ethics questions that have long perplexed both critics and […]

  5. Nike’s unethical; Apple maybe not so much « Ethics Bob Says:

    […] 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 […]

  6. Justice Says:

    It should be noted that nike sells that shoe to retailers for $40, not $80. Nike does sell some shoes directly to customers but it’s a small amount

    • Ethics Bob Says:

      Yes, they sell some to retailers for $40, some for a lot more, some for less, and they sell a lot for lots more at Niketown stores. The point remains, that it wouldn’t change their business model appreciably if they insisted that their suppliers paid their workers a decent wage..

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