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DOL Looks into California Sweatshops

“Retailers set clothing prices at rates they know must result in contractors breaking the law,” said one expert.

An article in the Orange County Register is taking several retailers to task over their roles in what the news source is calling American sweatshops.

Despite seeing a drop-off as many businesses have moved their production work to lower cost countries, apparel still remains the second biggest manufacturing employer in the region of Southern California. Why – you ask? Well, it seems Americans want the latest styles ASAP – we’re talking weeks after they’ve been knocked off from runway styles, rather than the months a global supply chain might take.

But there’s a reason most textile manufacturing has moved overseas. Many retailers set prices that are so low that manufacturers are unable to produce them domestically because of the wage rates demanded in the U.S. So how are these Southern California workers being utilized in this not-USA-friendly system? They’re being exploited, of course.

Local contractors hiring mostly illegal immigrants often pay their workers by the item – 8 cents to attach a sleeve, for example, or 14 cents to affix that made-in-the-USA label – leaving most well under the minimum wage threshold. The contractors then sell the products to above board manufacturers, who send them down their retail avenues, and both are typically insulated from any backlash that might result from the sweatshops that supply them.

Well, the U.S. Labor Department has launched a new strategy to combat this – one where they analyze supply chain pricing to trace wage theft back to the stores that sell the clothes. The reason, recent analysis has revealed, is that the retailers are actually the ones with the power to change it. Businesses that were implicated as the worst offenders included discount powerhouses like TJ Maxx, Ross and Forever 21. Apparently, they set the unattainable prices first, and many of the contractors find they have little leverage to negotiate higher rates for their work.

In a February case, federal investigators found Ross paid supplier YN Apparel about half the amount sufficient for garment workers to earn the minimum wage, and YN then paid 13 contractors in Los Angeles and Garden Grove a third of the amount needed.

According to Jessie Kornberg, president and CEO of a Los Angeles public interest law firm, “Retailers set clothing prices at rates they know must result in contractors breaking the law.”

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