Globalization: An Analysis of Multinational Corporations and Wages in Developing Countries

Running head: GLOBALIZATION AND WAGES

Globalization: An Analysis of Multinational Corporations and Wages in Developing Countries

James Andrews

CTU Online

PHL210-04 Ethics Phase 5 IP

Globalization: An Analysis of Multinational Corporations and Wages in Developing Countries

The issue of globalization and the effect that it has on the wages, employment and working conditions of workers in developing countries is a very hotly debated issue. This paper will attempt to offer and information and an explanation on three issues related to this topic. First, we will look at the differences in the minimum wages between the U.S. and two developing countries. We will look at why there is a difference between the wages in these countries. Lastly, I will offer some ideas as to what a justified wage may be in the countries that we have studied.

Nearly every country has established some kind of minimum wage laws that govern their work force. In the U.S. our minimum wage is set by the federal government. Currently our minimum wage is $5.85 per hour. Some states have set higher minimum wages for their citizens. For example, California's minimum wage is currently set at $8.00 per hour. In comparison, India's minimum wage varies from $.90 to $4.62 per day is U.S. dollars. The Philippine's minimum wage is a little higher at $3.18 to $5.90 per day (ILO, 2008). If an average worker in the U.S works 8 hours per day that would make his minimum wage $46.40 or $64.00 per day in California. That is nearly 8 times higher than the highest daily wages in the Philippines.

The next logical question would be to ask, why there is such a difference in the wages between the U.S. and these other countries. The main reason for such a difference in wages between the U.S., India, and the Philippines is the difference in the standard of living between our countries. The cost of living for instance in the Philippines was $.22 for every dollar of the cost of living in the U.S. in 2005 (World Salaries Group, 2008). A U.S. worker making the minimum wage and working 40 hours per week averages $1014 per month. A similar worker in the Philippines making $5.90 per day will make $177 per month. It is interesting to note that the minimum wage in the U.S. does not put a full time worker at even 50% of the poverty level. When you factor the cost of living difference in the Philippines, their minimum wage is only slightly lower than that of the U.S.

So, what is a justified wage? How do we determine if a corporation or country is paying their workers a justified wage? How do the actual wages of workers in developing countries compare to the minimum