Nike Factory Workers in Indonesia Illustrate Misleading Portrayal of Wages — ProPublica

By growth instances and, extra not too long ago, slumping gross sales, Nike Inc. has caught by a key declare about its abroad suppliers: They pay the typical manufacturing unit employee about twice the native minimal wage.

It’s a declare firm co-founder Phil Knight first made within the Nineties, when the corporate confronted accusations of sweatshop situations within the abroad factories employed to make Nike’s attire. And it’s one the sneaker large has reasserted since 2021.

However the experiences of employees in Indonesia, Nike’s second-largest manufacturing hub, illustrate how deceptive the declare might be for huge parts of its provide chain.

When a reporter for The Oregonian/OregonLive visited the nation and interviewed roughly 100 employees from greater than 10 factories that offer Nike, none mentioned they made anyplace close to twice the minimal wage.

“Bullshit,” a union official mentioned, in English, whereas sitting on a makeshift sofa on the porch of his workplace close to Jakarta, the Indonesian capital. (Like most employees at the moment employed by Nike suppliers, the official didn’t want to be named due to fears of retaliation, together with fines and termination.)

One employee from a manufacturing unit in West Java requested a reporter the place on the company’s website Nike makes the wage declare.

“No, no, no,” he mentioned, via a translator. “It’s not true.”

“Nike shouldn’t be paying double the minimal wage,” mentioned a union official in Central Java, a lower-wage space the place Nike’s contract factories have been increasing. “The actual fact is the other. Nike is searching for cheaper employees.”

Final yr, a ProPublica reporter visited Cambodia and found that only 1% of the 3,720 workers at a former Nike provider earned a minimum of 1.9 instances the minimal wage, based mostly on a manufacturing unit payroll ledger. Interviews and paystubs for different employees corroborated that earnings are usually nearer to the minimal wage than double that quantity.

A reporter for The Oregonian/OregonLive subsequently spent seven days in Indonesia, the place Nike’s contractors, together with its supplies suppliers, make use of about 280,000 folks.

All the employees interviewed mentioned they made round minimal wage, which is as little as $150 a month in some elements of the nation.

Sandra Cho, who oversees human rights for Nike, didn’t dispute that some manufacturing unit employees — together with in Indonesia and Cambodia — make lower than 1.9 instances the minimal wage, describing the determine as a “international common.”

“Some nations might be lower than 1.9, some nations might be increased,” she mentioned.

In Vietnam, Nike’s greatest manufacturing middle, two employees advised The Oregonian/OregonLive they made minimal wage — about $204 a month — however two mentioned they made twice as a lot. That’s in line with stories from Nike’s competitor, Puma, which says its greatest factories in Vietnam pay round double the minimal wage.

Nike pushed again when requested whether or not it’s deceptive for its disclosures to spotlight the determine of 1.9 instances the minimal wage.

“An organization attempting to mislead wouldn’t voluntarily publish wage information, overtly acknowledge its journey towards enchancment, or topic itself to third-party scrutiny,” Nike mentioned in a written assertion.

However the transparency that Nike gives is restricted.

The corporate’s international pay determine is predicated on information for 700,000 of its roughly 1.2 million employees in its practically 700 contract factories. In different phrases, practically half one million employees are omitted from the maths. Nike doesn’t disclose which factories, or which employees, are disregarded. It’s mentioned that the info covers its greatest companions, which account for an outsize share of manufacturing.

(A Nike spokesperson mentioned the wages of the roughly 500,000 employees not included within the calculation are audited to make sure they make a minimum of the minimal wage.)

Nike opponents Adidas and Puma equally produce wage estimates for under a subset of their suppliers, however they’ve printed information right down to the nation stage lately. Adidas stories wage variations inside nations. Advocates say the info helps employees decide whether or not they’re paid pretty and push for pay will increase if they aren’t.

Nike mentioned focusing solely on pay relative to the minimal wage is a mistake.

The corporate’s foremost focus with wages is whether or not they’re excessive sufficient to cowl primary bills and a bit of extra, Cho mentioned, an idea often known as a residing wage. Some nations have minimal wages that meet that threshold, some don’t. Nike has mentioned 66% of employees at its suppliers, a minimum of these for whom it has information, earn a residing wage. That’s up from 53% in 2021.

However living-wage calculations can differ extensively, they usually don’t at all times match the perceptions of individuals on the bottom. Staff interviewed close to Jakarta, the place the native minimal pay price is ostensibly greater than a residing wage, mentioned it’s not sufficient to dwell on.

One mentioned she wakes up seven days every week, earlier than the solar rises, to arrange a small store in entrance of her dwelling.

She sells groceries, gasoline canisters for cooking, water, cigarettes and snacks, largely to housewives shopping for each day requirements.

She opens the shop round 6 a.m.

A half hour later, on weekdays, she leaves for her job on the manufacturing unit. Over the following eight hours, whereas her husband minds the store, she works standing up, typically in sweltering situations, chopping material for 1,600 pairs of Nike sneakers — one each 18 seconds.

She returns to her small condominium round 6:30 p.m., eats a fast dinner of on the spot noodles, then goes again to the store till 10 p.m.

She earns round $300 a month from making sneakers, nearly minimal wage. The shop brings in one other $60.

“I at all times come dwelling late, typically within the warmth and rain,” she mentioned via a translator, “however I nonetheless endure it to fulfill me and my youngster’s wants.”

A Historical past of Dueling Numbers

Nike’s beginnings have been rooted within the low labor prices that abroad manufacturing may provide.

In 1962, whereas working towards a grasp’s diploma in enterprise administration at Stanford College, Knight wrote an instructional paper that turned the corporate’s primary marketing strategy. A core pillar: the disruptive energy of low cost labor.

“Low Japanese labor prices make it doable for an thrilling new agency to supply these sneakers on the low low worth of $6.95,” Knight wrote in 1964 in his first advert, in accordance with his 2016 memoir, “Shoe Canine.”

In his guide, he additionally wrote concerning the crushing poverty he noticed on an around-the-world journey as a 24-year-old. Knight, who didn’t reply to detailed questions for this text, wrote within the guide that hiring low-wage employees in creating nations would spur financial growth.

The primary many years of Nike’s historical past backed up his perception. Because the economic system bloomed in Japan and wages rose, Nike shifted manufacturing from Japan to Korea and Taiwan and, later, Indonesia and Vietnam.

“Thirty years in the past, Nike shared that accountable participation in international manufacturing may speed up financial growth in rising economies,” Nike mentioned in its assertion. “Historical past has largely validated that.”

When Nike arrived in Indonesia in 1988, the nation provided an attractive financial carrot to firms looking for abroad factories: a minimal wage round $1 a day in Jakarta, in contrast with $8 in South Korea, $14 in Taiwan and $33 in Tokyo, in accordance with a 1988 U.S. State Division report.

However Indonesia additionally introduced new issues. The nation was a goal of activists due to its history of human rights abuses.

As firms ramped up manufacturing there, anti-sweatshop protests and detrimental press accounts multiplied, with some noting the nation’s minimal wage was so low that many manufacturing unit employees have been malnourished.

Quite a few tales took goal at Nike, whose hovering success, coupled with its common athletic endorsers and company aloofness, made it a wealthy goal.

The early protection included a memorable 1992 story in Harper’s Magazine that confirmed the paycheck of an Indonesian manufacturing unit employee who made $1.03 a day on the time and concluded she’d have to work greater than 44,000 years to match Nike endorser Michael Jordan’s annual Nike revenue.

Knight and Nike pushed again on the criticism. The place Knight as soon as sang the praises of low wages, he and the corporate now boasted the corporate’s suppliers paid generously.

In 1996, Nike distributed a reality sheet that mentioned the median wage in its Indonesian factories was $108.65 a month, or greater than double the minimal wage. In June of that yr, Knight wrote a letter to the editor of The New York Times saying Nike “has paid, on common, double the minimal wage” to manufacturing unit employees. A month later, he advised CNN Nike paid “over two instances” the minimal wage in Indonesia. He advised shareholders in 1996 that pay was “double the minimal wage all through Indonesia.”

The Associated Press, The Wall Avenue Journal, Time Journal and the editorial board of The Oregonian, the largest newspaper in Nike’s dwelling state, all repeated the declare.

However The Oregonian/OregonLive and ProPublica may discover no contemporaneous information that supported Nike’s assertion. Neither may Nike.

“These statements have been made practically 30 years in the past, based mostly on the info and understanding accessible on the time, and mirrored a broader perception that accountable participation in international commerce may increase incomes and increase alternative in rising economies,” Nike mentioned in its 2026 assertion. “Like most firms, we don’t retain granular factory-level payroll information from companions within the mid-Nineties.”

The Oregonian/OregonLive and ProPublica discovered a lot to problem the declare, together with statements by the corporate itself. In truth, between 1994 and 2001, 4 stories issued immediately by Nike, finished on the firm’s request or compiled by the U.S. authorities by no means put the typical wage in Indonesia increased than 37% above the minimal.

When requested to handle the contradictory numbers from the Nineties, Nike mentioned through electronic mail: “What’s related at the moment is how Nike operates now, together with the rigor of our present disclosures, the progress we’ve made, and the work nonetheless forward to advance wages and alternative throughout our provide chain.”

The accuracy of Nike’s previous wage claims didn’t go unchallenged.

In 1998, California labor activist Marc Kasky sued Nike, alleging a number of claims about its abroad factories have been “deceitful” and false promoting.

He submitted a pile of Nike statements as proof, together with Knight’s letter to the editor of The New York Occasions.

Nike mentioned in a court docket submitting, with out admitting any of its statements have been inaccurate, that these statements weren’t topic to a court docket’s opinion about their veracity. The corporate’s phrases have been protected by the First Modification, Nike wrote, as a result of they have been meant to not promote Nike merchandise however to reply Nike’s critics regarding “problems with public curiosity.”

Nike settled the lawsuit in 2003, for $1.5 million, with out admitting fault. The cash was earmarked for manufacturing unit monitoring and packages for employees, together with financial ones.

Taking over Second Jobs

For the reason that Kasky settlement, Nike has printed practically 2,000 pages of stories on its work to turn into a greater company citizen. The closest it got here to shedding new gentle on wages was in 2021, when the corporate reported on new efforts to grasp what manufacturing unit employees earn.

The 184-page report mentioned that employees had “common gross pay of 1.9 instances the minimal wage” — nearly similar to the assertion the corporate made again within the ’90s.

The corporate mentioned it based mostly the declare on info from 103 “strategic suppliers” in 13 nations that employed over 700,000 employees. The report didn’t determine the suppliers or disclose the wages paid to employees.

Nike reiterates the declare in a disclosure at the moment posted on its website, which has been up to date with 2022 information. It’s now based mostly on information from 111 factories.

Staff in Indonesia reported broad deviations from the corporate’s said common pay for the provision chain as a complete.

The employees’ accounts of incomes minimal wage or a bit of bit extra are according to 63 paystubs from three Indonesian factories, which The Oregonian/OregonLive and ProPublica obtained from a labor group. At two factories, employees averaged 1.1 instances the minimal wage. On the different manufacturing unit, employees averaged 1.4 instances the minimal.

These numbers align with disclosures of Adidas and Puma, which have launched extra details about manufacturing unit wages than Nike.

In its 2024 annual report, Adidas mentioned practically 100,000 of its manufacturing unit employees in Indonesia made between 1.1 and 1.4 instances the minimal wage. Information from Puma’s 2024 sustainability report indicated that employees at 4 Indonesian suppliers averaged $208 in month-to-month wages, 17% above the typical minimal wage the place the factories have been situated.

Offered with detailed questions on pay practices, Nike mentioned pay relative to the minimal in isolation “misses the broader image of actual wage development and financial growth” in nations the place Nike sources its items.

In Vietnam, Nike’s contract factories account for two.5% of the nation’s gross home product, in accordance with a 2019 diplomatic cable obtained by The Oregonian/OregonLive.

“We’re happy with the function Nike and our trade have performed in constructing employment, expertise, and alternative in lots of nations, together with Vietnam at the moment, the place the trade contributes meaningfully to nationwide GDP,” the corporate mentioned, including that it remained “dedicated to pushing for continued enchancment.”

Nike’s Cho mentioned the corporate’s work to elevate wages features a program that’s helped feminine employees advance into higher-paid positions. Roughly 80% of manufacturing unit staff are ladies, Cho mentioned, however males are 2.5 instances extra prone to get promoted off the manufacturing line. She mentioned 21% of members in this system received a promotion inside three months.

The corporate mentioned what issues greater than what persons are paid relative to the minimal wage is whether or not they make sufficient to cowl primary bills. Some areas of Indonesia, together with Jakarta, have minimal wages increased than native residing wage estimates by the WageIndicator Basis, an impartial Dutch nonprofit.

The residing wage “is the place we focus our power and work,” mentioned Nike’s Cho.

However an revenue that meets the residing wage benchmark on paper doesn’t at all times match what employees say they want, a minimum of in Indonesia.

Standing in an overgrown lot exterior Jakarta, 30 employees broke into laughter when requested in the event that they received paid sufficient to cowl their primary bills.

One mentioned manufacturing unit wages weren’t sufficient to pay for brand spanking new uniforms, books and sneakers for school-aged youngsters.

One other employee estimated as a lot as 70% of her coworkers had second jobs, a remark that drew approving nods. That work contains working motorcycle taxis, fish farming, gathering scrap steel and cleansing fruit, employees mentioned. Some employees promote items contained in the manufacturing unit, together with espresso, snacks and cosmetics, which they mentioned comes with the chance of disciplinary motion, together with termination.

Knight as soon as advised documentary filmmaker Michael Moore that manufacturing unit jobs have been such a highway to upward mobility that somebody working in an Indonesian manufacturing unit making Nike items may sometime be Moore’s landlord.

Two employees who invited a reporter into their houses in a neighborhood close to Jakarta final summer season weren’t landlords.

They lived in 150-square-foot barracks-style flats with nearly no furnishings besides for skinny mattresses, which had been propped in opposition to the wall to create residing house. Small electrical followers cooled the flats, which value round $30 a month to lease.

Staff largely agreed Nike contract factories are preferable to native options. Nike factories are clear and pay on time, they mentioned. Many have exhaust followers that may present some reduction from the tropical warmth. Compelled extra time is not an issue. Authorities laws are usually adopted.

However the employees mentioned wages stay chronically low, describing the standard pay as solely sufficient to help one particular person.

“It’s as if the corporate desires us to remain single endlessly,” a employee close to Jakarta mentioned.

One other employee mentioned she began stitching Nike sneakers 25 years in the past, concerning the time Knight spoke to Moore about employees changing into landlords.

She mentioned in spite of everything these years, she makes $300 a month — roughly the native minimal wage.