WASHINGTON — At a news conference Friday, Labor Secretary Robert Reich is scheduled to give the U.S. garment industry a report card on working conditions at sewing contractors, where federal officials say sweatshop conditions are still common.
Reich will focus on a two-year agency effort to pressure the nation’s apparel manufacturers to monitor their contractors, a national strategy that has been primarily focused on California as a testing ground.
Meanwhile, California’s apparel manufacturers, including retailers who source their own private label, are giving Labor’s efforts mixed grades, seeing the program as putting an excessive burden on vendors. The enforcement policy has already cost industry there more than $2million — according to Labor Department figures — to bail out contractors who haven’t paid workers the federal minimum $4.25 wage or overtime.
Furthermore, vendors termed the strategy as only a short-term remedy for a problem that will need long-term working out.
“In general terms, we are supportive of efforts to make sure wage and hour laws are upheld,” said Warren Hashagen, senior vice president at The Gap, San Francisco, which last year paid $80,000 in back wages for workers at a contractor that went bankrupt.
However, he added, “I think it is a very complicated issue, and it has certainly made doing business in California factories a lot more complicated.”
Manufacturers have essentially become Big Brother to the sewing shops they hire.
Their incentive: potential seizure of apparel if Labor investigators find their contractors aren’t paying workers according to wage and hour laws. The result: manufacturers, who don’t want their time-sensitive shipments delayed, end up footing the contractor’s bill — when the money can’t be squeezed out of the contractor — even though manufacturers aren’t legally responsible for sewing shop violations.
While manufacturers say they also deplore the idea of sweatshop conditions at contractors and in general support the enforcement efforts, they question whether government pressing them into service really attacks underlying problems at sewing shops.
Contractors are typically small businesses that employ unskilled labor, many of them recent immigrants. As a result, manufacturers cite a need for extensive contractor education not only about wage laws but how to efficiently produce quality garments so as to avoid cost overruns that lead to underpaying workers.
“In a certain regard, I would say the enforcement has had a positive effect. But in reality, I don’t think it will have the lasting change they hope for. Their solution has been very short-term,” said Bernard Lax, president of the Coalition of Apparel Industries of California.
The garment industry, employing 136,600 workers, is the third largest manufacturing sector in the state, next to food and publishing. Garment industry wage enforcement in California, which has taken the form of a federal-state garment industry team staking out the estimated 6,000 contractors, has sparked controversy, catching the attention of CBS television producers at “60 Minutes,” which in a program this fall will focus on manufacturer-contractor relationships and the enforcement effort.
In San Francisco, the issue has become a springboard for union and worker rights activists.
There, Jessica McClintock Inc., maker of bridal apparel and evening dresses, has been targeted by an Asian workers’ rights groups for refusing to pay back wages in 1992 for a contractor’s sub-contractor, who no longer produced apparel for the company. Although labor officials have determined McClintock isn’t liable for the wages, the workers’ group has nevertheless called for a boycott of the company, saying it promotes sweatshop conditions.
McClintock officials didn’t grant interview requests. But in a March 5 letter to the San Francisco Chronicle, company owner/designer Jessica McClintock defended her position for not paying the back wages since they weren’t working for her company. She also stated her commitment to insuring her contractors operate legitimately and pay their workers.
“There is no controversy,” said Paul Gill, president of the San Francisco Fashion Council, in defense of McClintock. “What there is, is an advocacy group interested in advocating for immigrant women, and what they’ve done is take on Jessica McClintock as a case of this exploitation where there is no truth to it. They have muddied the issue.”
Gill said his group, representing some 150 manufacturers, including McClintock, have tried to rally support for a model contract the council and contractor groups authored as a guide in drawing up order specifications.
“It addresses in a contractual manner each step of the process and what might lead to a wage and hour violation,” said Gill, who is also chief financial officer at children’s wear maker Mousefeathers Inc.
For example, provisions deal with the costing of a garment, an industry expression for determining in advance how much time it will take to sew each part of a garment. The contract also addresses negotiating payment for last-minute manufacturer requests, such as early deadlines and changes in design.
“There is now no way for people to ignore what happens at their contractors’ anymore,” said Gill, calling compliance with wage and hour laws a “mom-and-apple-pie” issue.
Despite such proclamations, labor activists remain incredulous. They argue manufacturers will always be motivated to seek low-bidding contractors, since retailers are seeking low-priced apparel from manufacturers. Contractors, hungry for business, in turn won’t turn it away, they say.
“It’s the only way they can get work. If the choice is paying a sub-minimum wage or not getting the job, they will pay the sub-minimum wage,” said Dominic Chan, an ILGWU organizer in San Francisco, who supports a recently passed California bill that would make manufacturers directly responsible for paying missed contractor wages. That bill, on Gov. Pete Wilson’s desk, has been vetoed by Wilson previously.
The Joint Liability Bill is loathed by manufacturers.
“I don’t want to be responsible for someone I can’t completely control,” said Stan Levy, general counsel at Guess, Los Angeles, regarding the prospect of the Joint Liability Bill becoming law and the pressure placed currently on manufacturers to police contractors.
After one of its contractors was cited by Labor investigators in 1992 for owing $500,000 in back wages, Guess picked up the tab and embarked on a contractor compliance program. Subsequently, the 1,500-employee company has added three full-time workers, canvassing its 70 contractors that sew Guess apparel, 90 percent of which is made in Southern California.
Levy figures it costs $100,000 to provide this service, which includes requiring contractors to make their personnel and payroll records open for inspection and offering technical assistance to help sewing shops comply with the wage laws. The company also has a telephone number to field worker complaints and provides technical assistance.
As a result of its efforts, Levy said, Guess dropped about 20 percent of its sewing shops for noncompliance. While Guess’s contractor program has established a core group of conscientious sewing shops, Levy said he still views contractor monitoring by manufacturers as being only a band-aid approach to a huge problem that is the government’s job to help fix. He notes that no other industry has been saddled with the job of being a legal watchdog for its suppliers.
In a move to help shift this burden, Guess and other members of an Apparel Roundtable established six months ago, in conjunction with state, Los Angeles and academic officials, are about to launch a contractor education program beginning Oct. 31.
“What really sparked this was meetings with companies that said, ‘We need help or we’re going to leave,”‘ said Laurel Shockley, deputy director of the California Trade and Commerce Agency, noting the state can’t afford to lose the largest employer in Southern California. “The idea is to elevate this industry in terms of technical training and wages, which will then rid the perception of it as a sweatshop industry.”
For Joseph Rodriguez, executive director of the Garment Contractors Association of Southern California, the growing attention over the last two years toward contractors has already made a difference. He said enforcement efforts have driven a lot of what he calls “cheater contractors” out of business, or those who will low-ball contract bids at the expense of worker wages.
“Many of the legitimate contractors have said they are in the driver’s seat for the first time in memory,” said Rodriguez, whose association is about to form an alliance with three other state contractor associations to help keep the industry’s interests in the forefront. “Now they can go to a manufacturer and say, ‘These are my prices,’ and for the first time not be laughed at.”
For the Labor Department’s part, it plans to continue honing its enforcement strategy, focusing on manufacturers as the key to insuring contractors pay their workers, said Maria Echaveste, the agency’s Wage and Hour Division administrator. She has also recently added retailers to enlist in the cause.
Echaveste said the industry and government need to work closer, suggesting that manufacturers allow Labor investigators to look at their lists of contractors.
“Manufacturers can’t do it alone, but neither can the federal government,” she said. “This is an industry problem that requires some real partnership and some real cooperative efforts.”