Dataset for: Factory Benefits to Paying Workers More: The Critical Role of Compensation Systems in Apparel Manufacturing

While many stakeholders believe worker wages in global supply chains are
too low, there is disagreement about what, if anything, can be done to
raise wages. Through a two-year quasi-experiment in an operating apparel
factory, we assess the effects on productivity and profits of raising
worker wages with a re-designed compensation system. We show that, even
within current factory margins and constraints, important wage gains
(4.2–9.7%) are possible and profitable. Productivity increased
8–10%-points while turnover decreased markedly. Workers were motivated by
the potential for increased wages from an accelerating group rate as well
as increased engagement and sense of fair compensation. Workers focused
their increased effort on reducing quality defects and tardiness, two
behaviors which individual workers largely control. Additional
productivity-increasing behaviors were constrained by skill, position, and
conflicts arising from free riders. Advanced apparel manufacturing demands
a more engaged workforce; this research provides early evidence that
compensation systems can be a critical tool to meet multiple needs.