NEW YORK — At a press conference on Friday, New York Sen. Kirsten Gillibrand introduced the pro-labor federal ‘‘Fashioning Accountability and Building Real Institutional Change Act,’’ or the “Fabric Act,” to a crowd of hopefuls.
In one fell swoop, the bill tackles reshoring tax incentives, the piece-rate pay system, joint liability and more.
The press conference was held at Ferrara Manufacturing in New York’s Garment District with many supporters in attendance. Labor and advocacy groups such as Workers United, Remake, Garment Worker Center (GWC), The Model Alliance, Custom Collaborative, Sustainable Brooklyn, Fashion Revolution, The Slow Factory and New Standard Institute have publicly supported the act, as well as brands like Mara Hoffman and Another Tomorrow and numerous manufacturers in the Garment District.
“There is no one brand that can make these changes alone, and if you’re a brand still questioning where you stand. I ask you, without garment workers – would you still even be standing?,” probed Mara Hoffman, at the press conference.
“The perception is that the fashion industry is glamorous, but the reality is often very different,” Sara Ziff, the founding director of the Model Alliance, told WWD in a previous interview, on the obstacles in getting legislation passed. Ziff is behind the “Fashion Workers Act,” which hit a major milestone in the New York State Senate earlier this week and aims to establish greater labor protections for models and creatives in the fashion capital.
The Fabric Act trails not only the Fashion Workers Act but also the “Fashion Act” in recent regulatory efforts to shape up fashion. Many factors led to the current state of industry affairs, as anyone with a passing interest in fashion or economics can recount the decline in domestic apparel manufacturing.
Before the offshoring trend, some 1.4 million domestic garment manufacturing workers were employed at the industry’s peak in 1973. But that number is now – per the Bureau of Labor Statistics’ data for May 2022 – 116,220 sewing machine operators across the U.S. This is just a small sliver of the roughly 40 million garment workers worldwide, according to International Labor Organization statistics, the majority of whom are women in the Asia-Pacific region.
Fabric Act: What It Is
First off, the bill would secure basic protections for thousands of garment workers.
Among the features in store, the bill would create a $40 million domestic garment manufacturing support program with incentives like a 30 percent tax credit for reshoring garment manufacturing as well as a handsome grant program included in the package.
“Now’s the time for factories and colleagues from both sides of the aisle to support this timely bill that captures the demand for reshoring to do right by American workers,” commented Remake’s chief executive officer Ayesha Barenblat, applauding the incentives.
The bill would extend protections under the Fair Labor Standards Act of 1938 to prohibit employers from paying employees in the garment industry by piece rate (guaranteeing minimum wage as the floor to build upon incentives) — a loophole Gov. Gavin Newsom closed in California by signing the Garment Worker Protection Act, or SB 62, into law last year after a crusade by the GWC.
“The introduction of the Fabric Act is a leap toward an accountable fashion industry in the U.S. It is a leap toward closing the wage gap for thousands of women currently making less than a minimum wage at their garment jobs. It is a leap toward the fashion industry’s overall health — the industry which we are proud to be part of, and determined to improve,” said Custom Collaborative’s executive director Ngozi Okaro. Custom Collaborative, as with spearheading organizations like Sustainable Brooklyn, assisted on the legislation over several months and fought for the bill to include grant funding access for nonprofits (instead of just manufacturers) to train people.
In its current draft, manufacturers and contractors in the garment industry would also be required to register with the Department of Labor. Registration fees to the Labor Department will help stoke the revitalization of the domestic manufacturing landscape. Meanwhile, manufacturer information gathered will aid recordkeeping and transparency measures.
In a major attempt to curb fashion’s power imbalances and instill a sense of alignment — amid instances of ongoing late payments within fashion — the bill writers included a clause on joint liability. Thus, brands (including licensors) as well as subcontractors will share joint liability for any violations, including the payback of lost wages and additional damages, where applicable.
If passed, the amendments would go into effect six months after enactment. Enforcement and recordkeeping would be done by the Secretary of Labor, acting through a garment industry-appointed undersecretary, or the Undersecretary of Labor of the Garment Industry. Individual violators could face fines of up to $50 million, depending on the severity of the situation.
Let’s Talk Incentives
Any registered manufacturer or nonprofit entity supplying workforce development opportunities within the industry is eligible for up to a $5 million grant as included in the broader package, applying under the Labor Secretary. Applicants displaying priority status will be top of the pile. For example, this includes minority-, veteran- or women-owned businesses, workplaces with collective bargaining units or businesses with tenures longer than five years (as the average life of a garment shop is a mere 13 months).
Eligible grant projects can span upgraded tools and equipment for manufacturers which improves safety, as well as garment worker training and education.
For tax credits for near-shoring, the 30 percent tax credit can be claimed in the first full taxable year following the guidelines for relocation or increased full-time domestic employment. For clarity purposes, the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands are included in the redeemable reshoring hubs for the United States.
What It Isn’t
While it is a pro-labor bill, the legislation carries bipartisan elements Gillibrand says both parties can get behind (the creation of jobs and tax breaks, for starters). “The bill is quite simple. It just mandates a fair work environment and fair worker treatment, and it authorizes some resources to do this,” said Gillibrand, to WWD. “The combination of that investment plus the fact that it’s asking for broader, better treatment of workers [is] a combination that has appeal, and so we’re going to ask for a vote between now and end of the year.”
Sole operators of a garment business without any employees, like a tailor or a seamstress, do not fall under the definition of a “garment manufacturer” and thus are omitted from the language of the bill.
While the bill alludes to a process to “resolve disputes concerning nonpayment of wages,” it does not clarify timelines, procedures or cross-reference existing fair trading practices, as do similar regulations like the Unfair Trading Practices directive in the European Union, which exists for food and agriculture and limits payment terms to a matter of 30 or 60 days.