Child labour in the US supply chains of large companies is a growing problem, say government officials, with a recent lawsuit against Hyundai highlighting such risks for manufacturing projects in states with weak labour standards.

On May 30, the US government filed a complaint against the South Korean group’s Alabama plant for its use of “oppressive” child labour, due to a 13 year-old girl working on a local supplier’s assembly line for up to 60 hours a week. 

While child labour is most prevalent in low-income countries, US government data shows that the number of minors illegally employed in the country hit 5792 in 2023, up 152% from 2018 and leading to $8m in fines issued throughout the year. Officials have also noticed a shift away from the small companies that historically dominated their investigations.  

“More and more, you have national and international companies involved … we are seeing those really large, well-known brand names,” one US Department of Labor official tells fDi. These firms are not necessarily being charged like Hyundai, “but we are finding violations of child labour within their supply chain”, he adds. 

As a general rule, children under 16 in the US can only work in a limited number of industries and for a maximum of 18 hours a week.

This lawsuit against Hyundai claims that a now-defunct staffing agency sent the 13 year-old to an auto body parts manufacturer that served the automaker’s Montgomery facility. The government concluded that all three entities, which are based in Alabama, jointly employed the minor, so they are all named as defendants. 

A Hyundai Motor America spokesperson said via email that it will “vigorously defend the company” against the claims that “would unfairly hold Hyundai accountable for the actions of its suppliers and set a concerning precedent for other automotive companies”. 

There is a history of similar transgressions in the state’s auto sector. In October 2022, the government ordered another parts manufacturer in Alabama, which supplied Hyundai and its South Korean peer Kia, to stop employing minors illegally. The former’s spokesperson says it “took immediate and extensive remedial measures” following the revelations. 

By holding Hyundai accountable for its business partners’ actions, this latest lawsuit aligns with the global trend of firms being increasingly held responsible for human rights standards in their supply chains. Kate Andrias, a Columbia Law School professor, says the US government is now “taking a more aggressive approach” when it comes to labour law breaches in local supply chains. 

“Companies cannot escape liability by blaming suppliers or staffing companies for child labour violations when they are in fact also [deemed to be] employers,” Seema Nanda, the US solicitor of labour, in a statement. 

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Southern vulnerabilities

The recent surge in US child labour statistics is partly due to tougher law enforcement, but also because the problem becoming more widespread. The Department of Labor official believes its prevalence is “exponentially greater” than case numbers suggest. 

Violations are being found nationwide, with the tight labour market and growing use of labour recruiting agencies, which are less scrupulous in vetting candidates, being major causes. Alongside agriculture, manufacturing is a major culprit and conditions in the southern states, which have been magnets for reshored and foreign manufacturing investment under successive governments’ made-in-America push. This makes it fertile ground for child labour risks.   

Reshoring and the push to grow US manufacturing are compounding the worker shortage, with Ms Andrias saying “some firms appear to be turning to children to help keep wages low”. These are often unaccompanied migrant children — a crisis at which southern states are at the coalface — whom employers can “potentially exploit with impunity”, says Economic Policy Institute analyst Nina Mast. 

Another factor is the south’s lack of unionisation. “Corporations are seeking out states that have a weaker labour rights environment, and now they’re paying the price,” says Reid Maki, director of child labour advocacy at the Child Labor Coalition. “Unions are a good watchdog against child labour … [and] key to solving this problem.” 

Recent research has found that states with lower minimum wages, and which do not require employers to obtain work permits that certify any minors meet federal minimum age requirements, have higher rates of illegal child labour. “These tend to be in southern or conservative states,” observes Terri Gerstein, director of New York University’s Wagner Labor Initiative. 

Experts expect the government to keep unearthing more violations. “The findings that we’re seeing are a bit of the tip of the iceberg,” says Mr Maki.

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