Welfare Reform on the Web (April 2005): Minimum Wage - Overseas

PUBLIC ENFORCEMENT/PRIVATE MONITORING: EVALUATING A NEW APPROACH TO REGULATING THE MINIMUM WAGE

D. Weil

Industrial and Labor Relations Review, vol. 58, 2005, p.238-257

Article examines the determinants of compliance with the minimum wage laws by analysing recent (year 2000) microdata from the US apparel industry. Many features of the apparel labour market lead to widespread problems of non-compliance with minimum wage regulations among the network of small contractors by whom most workers are employed. Article focuses on the impact of a new strategy that attempts to increase compliance by creating agreements between government and larger manufacturers requiring the latter to monitor the pay practices of their contractors. This system uses government pressure on the higher levels of the supply chain to change the behaviour of lower level contractors that would otherwise have strong incentives to violate labour standards.