An impressive new report sheds
more light on this crisis. Broken Laws, Unprotected Workers: Violations
of Employment and Labor Laws in America’s Cities,
conducted by a coalition of labor research groups, has documented widespread
wage and hour violations in a number of low wage industries in New York City,
Los Angeles and Chicago. Based on a 2008
survey of 4,387 low-wage workers, the report finds that “many employment
and labor laws are regularly and systematically violated, impacting a
significant part of the low-wage labor force in the nation’s largest cities.” Some of the major findings include:
- 26% of surveyed workers were paid less than
the legally required minimum wage in the previous work week, with 60% of those
workers underpaid by more than $1 per hour. - Over a quarter of the workers worked more
than 40 hours during the previous week, with 76% of those workers not paid the
legally required overtime rate, and the average of those workers working 11
hours of overtime. - The average worker lost $2,634 out of total
earnings of $17,616, or 15% of their earnings, and an estimated over 1.1
million workers in these cities had at least one pay-based violation with a
total wage loss of more than $56 million per week.
Particularly
interesting, for those who have been engaged in anti-sweatshop work in the
apparel industry, is that the “apparel and textile manufacturing” sector was
one of the worst violators of wage and hour laws. The report found that almost 43% of surveyed
apparel and textile workers were paid less than the minimum wage, the highest
of all sectors that were studied.
Looking at occupations, “sewing and garment workers” had the third highest
rate of wage violations, also with about 43%.
The apparel and textile sector had a rate of overtime violations of 71%,
and the sewing and garment occupation had a similar overtime violation rate of
70%.
These
are astonishingly high rates of violations.
The report explains some of the factors that contribute these
numbers. Workers were much more likely
to be underpaid if they were compensated by some method other than the standard
hourly rate, rising from a 15% wage violation rate for hourly workers to 46%
for non-hourly, and 61% overtime violation rate for hourly workers to 92% for
non-hourly. Apparel is notorious for
operating on the piece rate system, where workers are paid according to the
number of garments they work on, and this allows for the easy manipulation and
abuse of pay rates and overtime hours.
The
wage and hour violation rate also increases wherever there are female and
immigrant workers. The wage violation
rate for male workers was 20% and for female 30%, and the overtime violation
rate was 75% and 79% respectively. The
wage violation rate among U.S.-born workers was 16%, rising to 31% for
foreign-born workers, and the overtime violation rate was 68% and 80%
respectively. The U.S. apparel industry
has for over 100 years primarily employed female immigrant workers, from the
Jewish and Italian workers at the beginning of the 20th century, to
the Asian and Latino immigrants today.
Employers in this industry have often felt that they can take advantage
of female workers, and immigrants often do not have a full understanding of
their labor rights and also have less power to complain about violations.
If
piece rates and an immigrant workforce partly explain how employers are able to
cheat workers, this doesn’t explain why they do so. Of course some employers are simply dishonest
and look for ways to exploit and steal from their workers. But the apparel industry, like many others,
also suffers from intense competition that drives down labor standards. The garment shops in the U.S. feel this
pressure very acutely since they have been competing for many years with
overseas apparel sweatshops that have labor costs that are a fraction of U.S.
levels. The U.S. apparel industry has
been undergoing a long and steady decline for the past several decades,
employing over one million workers in the 1970’s, and less than 200,000
today. In the 1960’s, less than 5% of
apparel bought in the U.S. was imported and today it’s over 90%.
This
globalization of apparel production has spread the work to dozens of developing
countries, with the largest share now located in China. And these contractors are under relentless
pressure to cut costs and deliver lower prices to their buyers, the major
apparel and retail corporations like Nike and Wal-Mart that own the brands that
are familiar to customers. In the
context of this brutal global competition, it is not surprising that many of
the apparel contractors that remain in the U.S. have resorted to cheating their
workers in order to stay in business.
If this kind of widespread wage theft can occur
in the U.S. with a relatively well developed labor law enforcement system
(though with many problems as shown by Bobo), what about the situation in
developing countries where the enforcement system is likely to be even
worse? Overall data on unpaid wages for
the global apparel industry is not easily available, but many factory
investigations from a number of countries have shown that this kind of wage
theft is unfortunately common, and a major reason why the global apparel
industry is considered a sweatshop industry.
Several years ago, an investigation of factories in China by Business
Week found that wage and hour violations with false recordkeeping were routine
in a number of industries including apparel.
According to their article Secrets, Lies,
and Sweatshops, “American companies continually demand lower prices from their Chinese
suppliers, allowing American consumers to enjoy inexpensive clothes, sneakers,
and electronics. But factory managers in China complain in interviews that U.S.
price pressure creates a powerful incentive to cheat on labor standards that
American companies promote as a badge of responsible capitalism.”
Furthermore, a new report this year by China Labor
Bulletin, Going it Alone: The
Workers’ Movement in China (2007-2008), reviewed the tremendous labor unrest occurring
throughout China and concluded in an analysis of 100 case studies that “more than a third of the cases…related to clear
violations of legal rights, such as the non-payment of wages, overtime or
social insurance contributions, or the failure to pay the compensation
prescribed by law after the termination of employment contracts.” This kind of wage theft in China is one of
the main reasons why the country is such an attractive environment for
international business. In fact, when China implemented a progressive new labor law last year, in recognition of the widespread labor
problems, multinational U.S. corporations lobbied against it and threatened to
take their business out of the country.
This global wage theft is a main characteristic of
the hyper-competitive “sweatshop globalization” that has developed in recent
years. Workers in nearly all countries
clearly need much better labor law enforcement, and they also need strong labor
movements to raise labor standards and hold employers accountable. Of course, in many countries the minimum wage
is not even sufficient to raise workers out of poverty. So to be systematically paid even less than
that represents a vast and illegal transfer of wealth from Global South workers
to largely Global North owners and investors, and it must be said, to
consumers. This issue of wage theft
and inadequate minimum wages should be important to all of us as buyers of
apparel and other consumer goods, especially those products that come from
overseas, since we benefit from the low wages that result in prices that are
lower than they should be. Global North
consumers should consider how we can work in solidarity with workers to ensure
that they are able to earn a decent living making the stuff we buy.
