The Bangladesh factory tragedies: Is this the end of cheap labor?

Bangladesh has been beset by industrial tragedy. The factory complex Rana Plaza in Dhaka collapsed two weeks ago, killing more than 1,000 workers. And this week, a fire at a Dhaka knitwear factory killed eight more people. It was the fourth fatal disaster involving Bangladesh's garment industry since November. The collapse at Rana Plaza was the world's deadliest industrial disaster since a horrifying gas leak at a factory in Bhopal, India, nearly three decades ago.

Because the factories involved in Bangladesh's recent tragedies made inexpensive clothing for large Western retailers, including Target, Walmart and JC Penney, some labor activists have put the onus on the apparel industry and Western consumers who expect clothing to be made quickly and inexpensively. And Dov Charney, the controversial founder and CEO of American Apparel is going a step farther. He told Daniel Gross at The Daily Beast that "the era of cheap labor is coming to an end."

Does Charney, whose vertically integrated, sweatshop-free clothing company operates 269 clothing stores worldwide, have a point? Here's Gross:

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The idea is essentially this: As developing countries' economies grow stronger, they push cheap labor to other developing countries —which in turn grow stronger as well. And sooner or later, you run out of developing countries to push these low-wage jobs to.

Indeed, despite the recent tragedies in Bangladesh, the garment industry has arguably had positive effects on the country, said Fazle Hasan Abed in the New York Times.

This is the sort of philosophy that Jeffrey Sachs advocated in his 2005 book The End of Poverty. "My concern is not that there are too many sweatshops, but that there are too few," he wrote, arguing that these sorts of factories help lift populations out of poverty over time.

So what happens if Bangladesh's economy grows as China's did, and workers start demanding better wages and working conditions? What would stop the garment industry from moving manufacturing to other struggling regions? How long would it take, realistically, before workers in every country are demanding higher wages?

Charney argues that there's more to it than just these economic effects. He believes business ethics will play a role in ending cheap labor, too.

Kate Heartfield in the Ottowa Citizen seems to agree that "conditions can improve when employers, and their international partners, are embarrassed into it" — which seems to be happening in Bangladesh. On Wednesday, the government said it had shut down 18 garment factories that weren't up to code, reports the Guardian. Heartfield also argues that "once an industrial cluster springs up in an emerging country, the region can remain attractive to companies for other reasons, such as expertise or the regulatory and taxation environment."

That said, what works for Charney and American Apparel won't necessarily work for Walmart and Target. "American Apparel is a small firm, with a market capitalization of about $210 million," writes Gross. "While American Apparel's vertically integrated approach may prove more morally satisfying, it hasn't necessarily proven to be a better business model."