Does US Manufacturing Have a Child Labor Problem?

The talent gap has been a problem for manufacturers for at least 30 years now. More recently, it has become a problem for those concerned about children’s welfare: Driven by demand for workers, low labor participation rates, untrustworthy temp agencies and failures of due diligence, child labor law violations are on the rise in the United States, including in manufacturing.

The Department of Labor’s Wage and Hour Division in fiscal year 2023 recorded 955 investigations that uncovered child labor violations, 14% more than 2022. Their findings included 5,800 minors illegally employed in 2023, itself an increase of 88% since the same number in 2019.

In an interview with IndustryWeek, Jennifer Sherer of the Economic Policy Institute said that while the restaurant industry is “by far” the biggest violator of child labor laws, a number of incidents in recent years involve manufacturing companies employing minors to do dangerous work, with tragic consequences.

“Violations in industries where I think a lot of folks in the U.S. have come to assume we did not have children working in recent decades are also increasing,” Sherer said. “That includes manufacturing, meat and poultry processing, really hazardous operations. … In places, we’re seeing teen violations of child labor laws, but also teen injuries. In some cases, fatalities.”

In 2022, a Department of Labor investigation found Packers Sanitation Services Inc. had employed more than 100 employees between 13 to 17 years old in hazardous work, and that three had suffered injuries on the job from working with harsh chemicals. In 2023, Reuters broke a series of stories on Hyundai and Kia suppliers in Alabama that used a network of temp agencies to hire children to work in parts factories with hazardous equipment. Also in 2023, a 16-year-old boy died from injuries sustained at his job in a Florence Hardwoods sawmill in Wisconsin.

Sherer, who tracks “worker power” at the Institute, says federal child-labor standards have changed little since the Fair Labor Standards Act was originally passed in 1938. As a consequence, federal child-labor laws are usually more permissive than state laws: Where work permits for minor workers exist, for example, they’re governed by state laws and may differ from state to state, industry to industry.

For manufacturers, federal law is mostly relevant for their restrictions on “hazardous” operations. It’s illegal for any company in the U.S. to employ minors to perform work related to 17 conditions that legally constitute “hazardous” work, including work with sawmill operations, power-driven metal forming machines and meat-packing equipment.

US Department of Labor Sues Hyundai, Supplier, and Staffing Company for Child Labor Profits

Following an investigation by its Wage and Hour Division, the U.S. Department of Labor sued Hyundai Motor Manufacturing Alabama, LLC; Smart Alabama, LLC; and Best Practice Service, LLC for illegally employing and profiting from children working in a hazardous occupation.

The plaintiffs say they are seeking a judge’s orders for all three companies to cease using child labor immediately, and for each company to disgorge any profits made from doing so.

“A 13-year-old working on an assembly line in the United States of America shocks the conscience,” said Wage and Hour Division Administrator Jessica Looman. The lawsuit alleges SMART employed a 13-year old girl to stamp sheet metal into body parts for 50-60 hours a week.

The lawsuit says all three companies were complicit.

“During the relevant period, SMART’s operations were so integrated with the business needs of HMMA that the two companies were a single employer for purposes of liability under [the Fair Labor Standards Act],” the lawsuit says. “Alternatively, because HMMA had such extensive control over and responsibility for SMART’s business operations, HMMA and SMART jointly employed the minor(s), along with BPS.”

In a statement, Solicitor of Labor Seema Nanda said the Department wants to “hold all three employers” in Hyundai Alabama’s supply chain accountable.

“Companies cannot escape liability by blaming suppliers or staffing companies for child labor violations when they are in fact also employers themselves,” she said.

Although Hyundai’s name appeared in Reuters’ headlines, the Hyundai Motor Group had an excuse: The implicated suppliers may have supplied parts to Hyundai, but their employees are not Hyundai employees. (Hyundai Motor Group did announce February 2023 it would divest its controlling stake from SMART Alabama LLC., one of the companies found to have employed children.) The suppliers had their own excuse: They had relied on temp agencies to vet and hire employees.

Similar stories played out at other manufacturers implicated in child-labor law violations, including at Packers Sanitation Solutions and Deere & Co. supplier Tuff Torq Corp.

Sherer says this pattern of using clients and recruitment firms to shield against liability is known to federal regulators as a “fissured workplace:” A former Department of Labor official in the Wages and Hours Division, David Weil, named the concept in a book of the same name.

One new penalty federal regulators have brought to bear on such cases as a punishment for child labor violations includes a work stoppage on goods produced with child labor: Regardless of who employed whom, Sherer says, the Labor Department can “prohibit a company from shipping goods that were made during the period of time … when violations were known to occur.”

Patricia Todd, a former Alabama state senator and Southern policy manager at Jobs to Move America, said temp agencies faced with the same talent shortage as their clients can cut corners.

“What these companies do is, they contract with the temp agency — which, there are a lot of them in Alabama — and say, ‘We need X amount of production workers,’” Todd explained. “And if they can’t fill it with legitimate workers, then they look at other ways to fill those spots, and they’re using child labor. And the manufacturer can say, ‘Well, we didn’t hire them. It was the temp agency that hired them.’”

How are state laws around child labor changing?

The increase in child-labor law violations in the U.S. coincides with a movement to cut back on state-level child-labor protections. In several of these cases, rollbacks are explicitly tied by advocates as a way to fill jobs under current low unemployment, as well as a way to boost teens’ lifetime earnings.

Similarly to the rise in labor violations, Sherer notes, most of the effort to cut regulations against teen labor come from non-manufacturing sectors like restaurants. But some do include reduced requirements for manufacturers looking to hire teens: Sherer specified Iowa as an “extreme example” that involved the manufacturing industry, noting that it allows teens to work in fireworks factories.

The bill, passed by the Iowa state legislature in May 2023, allows teens under eighteen to work “in or about plants or establishments manufacturing or storing explosives or articles containing explosive components,” but only if they are engaged in “light assembly work” away from machines or selling the fireworks to consumers.

The Foundation for Government Accountability, a policy thinktank that advocates for less government intervention in youth employment, among other issues, also singled out Iowa’s 2023 law, but praised it for “making it easier for teenagers to work.”

“While limiting involvement in hazardous occupations like mining is common sense, teenagers should not be prohibited from being paid to do tasks they likely already do in their own homes,” the foundation said, noting the bill also lets teen employees load vehicles, run microwave ovens, and do laundry.

While the FGA calls for less red tape around teen employment, and the EPI objects, some states are trying to chart a bipartisan path to stem the tide of child labor violations. In her interview, Patricia Todd said that her group was working with Alabama’s pro-business state legislature to craft a bill that would “claw back” state economic incentives given to companies later implicated in child labor violations.

Todd said the bill so far has proved popular enough to pass the state Senate unanimously, but must gain the approval of the state’s Department of Commerce for it to survive the state’s House and become law. “If the Department of Commerce comes out in opposition to a bill, it’s not going to pass Alabama,” Todd said.

Despite the legislative action to relax standards around minors at work, it’s not clear that manufacturers are intentionally employing more teens and minors as a strategy: In terms of SMART Alabama LLC, many manufacturers use temp companies for staffing purposes who do not find themselves employing minors. But teens working legally or illegally in manufacturing plants poses a greater safety risk than working in other industries.

In April, the American Society of Safety Professionals published its formal position on child labor. In it, the ASSP acknowledged the “associated benefits and responsibilities of having a job,” it strongly condemned “exploitative child labor practices” and called for its prohibition in global safety standards, including ISO 45001.

“Safety, health and well-being are inherent rights of every worker,” said ASSP President Jim Thornton, in a statement. “This isn’t an issue we can solve alone, but entities working together can begin to turn the tide.”