Going Beyond the Living Wage: Can Nobility Be Profitable?

Published on July 18th, 2010 | by

Michael Kamber for The New York Times

Knights Apparel CEO Joseph Bozich (pictured above in the firm’s Dominican Republic factory) doesn’t believe boosting market share and doing good are mutually exclusive.  In Sunday’s New York Times, business reporter Steven Greenhouse covers the firm’s newly acquired Dominican Republic apparel operation that makes t-shirts and sweats for American college and university bookstores.

In cooperation with the Worker Rights Consortium, an NGO that offers independent social monitoring of garment industry working conditions, Knights has sought to make its plant located in the DR’s free trade zone a model for fair trade in a field dominated by zero sum labor strategies.  The previous owner of the Knight plant, a Korean-owned company that made hats for Nike and Reebok, ironically fled DR in 2007 for lower wage countries in Asia. Not only did Mr. Bozich step into to acquire the plant and its workers at the pricey figure of $176 a month, he decided that the wage was unacceptable AND that unions should be encouraged.

Instead of providing workers with the $176 monthly “living” wage — a figure calculated in aggregate by the country for a family to be fed, clothed and housed — CEO Bozich pays his 120 employees about $500 a month or three times more than the minimum wage benchmark.

Knights t-shirts will retail for the same $18.00 as its premium brand competition in Addidas, Nike and Reebok. The conscious consumer angle hinges on the inspired market demand of the captive college and university market, which has been aggressively targeted by the Worker Rights Consortium. As UC Berkeley professor of CSR Kellie McElhaney explains: “A lot of college students would much rather pay for a brand that shows workers are treated well.”

So, the whole socially responsible gambit here comes back to effective and credible marketing. And of course, peer pressure; The NYT story reports that Nike “will watch with interest” the Knights initiative.

Why does Bozich want to consciously narrow his margins? Nobility is nice, but isn’t long term labor market security for his workforce more in their interest? Can virtue reverse the tide of capital flowing freely to safer harbors of lower costs?

While we do not know yet if Bozich’s strategy of decency and integrity will produce sustainable business returns and allow him to hire more workers in the DR, we do know his decision should be admired.

In the long run, perhaps Bozich should lead the charge to created an industry-funded “fair labor” standard for the garment industry. While there are myriad third party labor standards not to mention all the proprietary standards kicking around for labor conditions, one robust index could force a higher level of global compliance and consequently, an above poverty living standard for the world’s workers.


About the Author

A lifelong conservationist, angler, gardener and writer, Lane is a Corporate Responsibility strategy consultant based in Chicago, where he currently works a CR consultant for PricewaterhouseCoopers (PwC). Prior to joining PwC, Lane was a global sustainability performance and stakeholder engagement specialist for Sodexo North America. He has experience in microfinance program evaluation at Grameen Foundation. A former President of the Net Impact Chapter at the University of California, San Diego (UCSD), Lane has a master's in International Development Economics from the School of International Relations and Pacific Studies at UCSD (IR/PS) and a bachelor's in history and international studies from Kenyon College. Prior to working in the sustainable business sphere, Lane spent six years as a communications and marketing professional focusing on arts and culture in New York City, where his work included the creation of the jazz website gothamjazz.com and serving as the publicist for the New York Philharmonic.
  • Teed Rockwell

    "While we do not know yet if Bozich’s strategy of decency and integrity will produce sustainable business returns and allow him to hire more workers in the DR, we do know his decision should be admired."

    The difference between the new and old wages adds a cost of 80 cents a shirt. This is far less than NIKE spends to have Tiger Woods stand next to their products. For those of us who value human decency, giving the money to the laborers is worth more than Woods' imaginary street cred. This is intelligent marketing, as well as the right thing to do.

  • Teed Rockwell

    "While we do not know yet if Bozich’s strategy of decency and integrity will produce sustainable business returns and allow him to hire more workers in the DR, we do know his decision should be admired."

    The difference between the new and old wages adds a cost of 80 cents a shirt. This is far less than NIKE spends to have Tiger Woods stand next to their products. For those of us who value human decency, giving the money to the laborers is worth more than Woods' imaginary street cred. This is intelligent marketing, as well as the right thing to do.