Ethan Arpi

Low-Wage Jobs Alleviate Poverty

Maybe.In this Sunday’s Business section of the New York Times, Daniel Gross from Slate Magazine writes about the latest trend in international development: the $2 a day job. He begins his article discussing A to Z Manufacturing, a mosquito bed-netting business from Tanzania that pays its 2,000 female employees $1.80 a day. (At Nextbillion we have blogged about A to Z here and here.) Gross explains that many of the women who have low-paying jobs at this Tanzanian manufacturer earn almost twice as much as they did as street vendors and domestic employees.

By American standards, a $1.80 a day job would be outright exploitation. But in a country where 80% of the population earns less than $2 a day, A to Z’s wages actually place their workers in the top quartile of earners. In his article, Gross quotes the New York University economist Willliam Easterly, who explains somewhat rhetorically that, ?To put it in the baldest possible terms, the more sweatshops the better. As you increase the number of factories demanding labor, wages will be driven up.?You can check out Mark Thoma’s post at the Economist’s View for commentary on Gross’s article.? The Acumen Fund, which has invested in A to Z, also has a blog worth checking out.