Sweatshop Activists Follow the Money

New legislation attempts to make garment manufacturers responsible for workers' pay.

Barry Wong’s small garment business on 14th Street in downtown Oakland is squeezed into a narrow storefront. The one-room shop is filled with drafting tables, paper patterns, a rack of clothing, and a few computers. This is Wong’s “marking room,” where patterns for clothes are designed and created; Wong also owns a small factory where clothes are actually sewn. Though those small factories are frequently called sweatshops, Wong insists that they’re not, “except for the owners.” He does admit, however, that life is hard for the mostly female Asian immigrant factory workers, who work long hours at low pay in his factory. “In the garment industry, the benefit for the worker may not be so good compared to other industries,” he concedes readily. “But that’s because we are not able to afford that.”

Like many of the approximately ninety garment-factory owners in Oakland, Wong decided to invest his savings in a sewing shop after immigrating from Hong Kong. “It’s very easy for a Chinese to run a garment factory,” he explains. “Every Chinese family has at least one person who knows how to do it.”

Within a month, Wong’s marking shop will be all that’s left of his business; the factory itself will be shut down, leaving Wong’s handful of workers out of a job. “I make no profit,” he explains. “I work day and night, losing money, credit card bills this high. So why do I work so hard?”

Wong argues that contractors like himself have traditionally been caught in the middle between labor activists who want better pay and protections for workers, and garment retailers and manufacturers, who demand lower and lower costs for their orders. Wong and other factory owners say pressure from cheap imports is making it harder and harder for family-owned businesses here at home to abide by strict wage laws.

Surprisingly enough, the contractors recently found unlikely allies among labor activists like Hina Shaw, staff attorney at the Asian Law Caucus. “The way the garment industry is structured, it creates a pyramid of abuse,” Shaw says. “Let’s not blame the contractors; let’s really root out the problem, which is the manufacturers. Contractors are caught in the middle, in the tough position of staying afloat and in business, but still paying minimum wage.”

In an attempt to deal with the problem and to place responsibility for labor abuse on those they felt were ultimately responsible, labor activists concerned with the sweatshop issue banded together to pass legislation in Sacramento. The bill they passed, Assembly Bill 633, empowers the state to name large clothing manufacturers as guarantors for wage claims made by workers who were not paid adequately. But although AB 633 went into effect last year, advocates and small factory owners are now worried that rather than improving the situation, the legislation may have inadvertently made the problem worse, making things even harder for contractors, and doing nothing to help workers get paid.

Oakland’s Asian Immigrant Women Advocates, a member of the national Sweatshop Watch coalition, was a major force in getting AB 633 on the books. An agency that offers health clinics, literacy and leadership training, and youth internships to the garment worker community, AIWA encouraged many of its members to testify before the legislator during hearings on AB 633. “I work ten to twelve hours a day, six to seven days a week, no overtime pay, no benefits,” one worker testified. “My wage was never enough money for our family to live on. We always worried about our daughter getting sick because we had no health insurance. In 1992, my coworkers and I tried to cash our paychecks and learned that they bounced. When we asked the boss to pay us our wages, we discovered that his business had gone under. Our situation was not uncommon because retailers and manufacturers are responsible for our working conditions, but there are no laws to hold retailers and manufacturers accountable for violations in the contract shops.”

Activists acknowledge that factory conditions in Oakland are not as dire as those affecting workers in Southern California. Here, activists were able to strike deals with three major Bay Area manufacturers — Jessica McClintock, Byer, and Esprit — that established hotlines for workers to report workplace violations directly to manufacturers. But working conditions are not perfect, either; an informal AIWA survey found that nearly eighty percent of Oakland’s shops — including factories that sew for brand names such as Travelsmith, We Be Bop, Byer, Tommy Hilfiger, Bebe, and Raiders/49ers Wear — received ratings of “very poor” or “extremely poor” on government compliance exams for deficiencies such as poor lighting, no ventilation, or inadequate emergency exits. “Most of the women work on metal folding chairs,” says AIWA’s Nan Lashuay, “but they’re afraid to speak up; they’re afraid to lose their jobs. Even industry advocates concur that garment workers have a rough life: “By and large it’s a crappy job, there’s no question,” says Paul Gill, executive director of industry support group Made by the Bay. “Those individuals who develop language skills very rapidly get off the sewing machine.”

Advocates say that nonpayment of overtime pay is the most frequent grievance of workers in Oakland — up to eighty percent of contract shops violate overtime pay rules, Shaw says. But the real culprit behind this complaint doesn’t seem to be the factory owners themselves — it’s the manufacturers who set the pay rate and schedule. “[Contractors] have very little control over the timing of the work they get,” explains Gill. “They’re at the mercy of the manufacturers who are giving them the work, and the manufacturer is at the mercy of the retailer. The retailer frequently delays placing the order, so the contractor will find himself having to get a job out by Monday, and they can’t alter the price they were quoted, so they find themselves in a situation where paying overtime isn’t possible.”

“Even if you have good relationship with manufacturers, it’s no good, they close up, send their job to overseas,” explains Wong. “We keep paying workers more and more, because minimum wage keeps going up, but the manufacturers, they keep lowering their cost. The manufacturers keep wanting to pay less and less, because they can get it cheaper in Mexico, or the Caribbean.”

Wong is the president of the Northern California Chinese Garment Contractors Association, which advocates for factory owners as well as offering services such as group insurance. “It’s very hard to organize the contractors,” says NCCGCA chairman Patrick Cheung. “Everybody has their own economic burden.” Wong and Cheung say that garment sewing was for years a good business for Chinese immigrants. “Before, the factories were always hiring, so if an immigrant came over to America, on the first day they could find a job,” says Wong. “And because the minimum wage was not so high, we had time to train them.” Since 1990, though, factory owners say they’ve seen a major slowdown in their business. Client after client pulled up shop and moved elsewhere, minimum wage increased, and clients kept asking for lower and lower bids. Recently, rent prices also skyrocketed, and high-tech factories began siphoning off workers.

“Most of the employers I know are not disinterested in their workers’ health,” Gill says, “but they’re reluctant to make any investment in their business because they don’t know whether they’re going to be there next week,” he explains. “They’re always living on their last contract, and so many other shops have had to close.”

“I think the labor groups realized we are also the victim,” Cheung says. “That’s why you see AB 633 pass, because they want to make the retailer and manufacturer responsible. They know we are the victim also.” Under the new legislation, if a worker brings a wage complaint to the Department of Industrial Relations, and if that claim isn’t settled by the employer, DIR can sniff out the manufacturer that commissioned that work and hold that manufacturer responsible for the missed payment. “Under AB 633 there’s an expedited timeline,” explains Sweatshop Watch’s Nicky Bas. “Sometimes the labor process can take years, but under AB 633 the whole process should be finished within 120 days.”

Although it’s been a year since the law went into effect, new regulations still have not been officially issued, and labor advocates suspect that pressure from big-name retailers is holding up the process. Sweatshop Watch targets the Gap as a major player in the battle. “The question is whether a large retailer should have to register as a manufacturer,” Gill explains. “If you’re a Macy’s, you’re not responsible for how Liz Claiborne does business.” But retailers like Gap carry only their own label — and, argue activists, they are therefore their own manufacturers and should guarantee the wages of their contractors’ employees. “To tell you the truth, the retailers may not ever have an issue with the wage guarantee because they may not do business with these shops,” says Gill. “But for them it’s the principle. They don’t want to get classified as manufacturers.” The Gap did not return phone calls.

Susan Gard of the Department of Industrial Relations says that her department will issue its much-awaited regulations by the end of the month, and she says that the decision whether or not to designate private-label retailers as manufacturers will be made on a case-by-case basis.

In any case, someone will always be liable for the wages, Gard says. But back in the Oakland marking room, Wong and Cheung worry that the liability will ultimately fall right back on their shoulders. “This law wanted to make the retailers responsible,” Cheung says, “but the retailer is off the hook — that already defeats the purpose,” Cheung says. “And then because the retailer was able to get off the hook, that translated into a lot of manufacturers taking that loophole. The retailer says, ‘I’m just a buyer, I buy everything’; well, the manufacturer can do the same. Before, the manufacturer supplied the fabric, the trim, and the contractor just supply the labor. But they want to learn from the retailer and say, ‘I don’t have the fabric and trim, but I want this design made by you and you get the fabric and trim from this factory,’ so then they become a buyer. Then they don’t have to register as a manufacturer. Once AB 633 goes into effect, I think a lot of manufacturers will become retailers, or not register. Then the contractor will have to get a loan from the bank to afford to buy fabric, buy trim, make a whole package, and that brings them a greater risk. When you pay all those things, and finish product, then if manufacturer says, ‘Well, I don’t want it anymore’ — that happens a lot — then you have to find a buyer with a deep discount, and you lose a lot of money.”

“I think this will be the end of many garment shops in Oakland,” Cheung says, looking around at his near-empty marking room, where only he and his brother still work. “It’s a feeling of relief, to stop doing all this hard work, but actually we feel very sad, because we had to work very hard for industry and for this association, but eventually we can’t do anything. We can’t help; it’s still dying out, just dying out.”

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