I m not exaggerating, Sid Spindler, former Democratic Senator, claimed that garment manufacturers and retailers were using their superior power to exploit outworkers. There are actually two problems here, not one. But let us first deal with the hourly wage rate. At this point a lefty with any serious knowledge of economics will see where I m coming from and turn away in embarrassment. But then Spindler, along with his supporters at The Age, is a genuine economic illiterate.
Profits are maladjustments between supply and demand.
Put simply, this means that demand exceeds the supply of the product which means workers are underpaid in relation to the value of the same product. Therefore two forces are at work here to eliminate the maladjustment, so long as the market is free. But this means an increase in the demand for labour which in turns exerts an upward pressure on wage rates. These two forces eventually squeeze the profits out of the industry. There is also the possibility that profits could be squeezed out without any rise in wages rates.