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What Does “Fair Trade” Mean, Anyway?

May 11, 2018

The term “Fair Trade” is thrown around a lot, but do you really know what it means?

Since it’s where most Good Companies get started (and an important social movement!), we put together a little primer for you — and highlight what sets Good Companies apart. First up, you’ll need to understand the different types of wages:

What is minimum wage?

In the U.S., it’s $7.25 an hour — at least, that’s what it’s been at the federal level since 2009. In some states and cities that rate is higher; in 2017, a nationwide push for higher pay prompted 18 states to boost their minimum wages.

The reason for the demand is obvious: the federal standard doesn’t take into account relative costs of living from state to state, or even city to city — let alone across industries or jobs.

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That can’t be enough to really live on right?

Right; that’s where living wages come in. A
living wage is an hourly rate of pay that allows someone to go through their day without constantly worrying about how they’ll make it to the next month. It allows them to cover the basics: food, housing, childcare, medication, insurance, etc.

While some states and cities have tried to regulate living wages, it’s been difficult to enforce. A living wage is more subjective than a minimum wage and heavily depends on the city you call home.

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If it’s so subjective, isn’t there a better alternative?

Luckily, there is! Fair wages combine the concepts of the minimum wage and living wage and then go a step further to create “balanced” wages. They take into account inflation, profit sharing, structural disparity (a term that represents unequal statuses between groups of people), and more.

Alright, but weren’t we talking about Fair Trade?

Now that we’ve walked through the evolution of fair wages, understanding Fair Trade is an easy logical jump.

As the U.S. continues to strengthen wage standards domestically, many businesses go overseas to produce their goods, where the definition of a fair or living wage is unclear or nonexistent, and where even minimum wages can be abysmally low.

The Fair Trade movement was borne out of the need to address this problem. Definitionally, it’s a trading partnership “based on dialogue, transparency, and respect.” Functionally, it requires certification and was created to help workers in developing countries earn fair wages for the work they export to developed countries.

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So how can I help?

By supporting Good Companies! For example, some — like Patagonia — have partnered with the Fair Labor Association to improve workers’ lives. Others strive to level the playing field: UncommonGoods has set its seasonal workers’ wage floor at 100% above the federal minimum, while Guatemala-based Hiptipico lets artisans set their own prices to ensure fair earnings.

Hiptipico’s workers set their own prices

Remember, Fair Trade is a strong step toward building a more just and equitable world… but it’s also just one piece of a big, complex puzzle.

Looking for more Good Companies going above and beyond? These Good Companies provide fair wages and offer a combination of professional training, family healthcare, educational support, and much more: