Finally, there’s something to cheer for the garment workers of California. Following the US state’s recent move to pass the Senate Bill 62, California becomes the first American state to assure apparel workers an hourly wage.
For every apparel worker, whichever part of the globe they are residing, making a minimum wage has been a big struggle. It’s been the same story in California too, but things may change now. The new bill will, importantly, forbid piecework wherein a garment worker is paid according to every garment that he/she produces. More often than not, the workers end up getting just US $ 3 every hour – sometimes even less than that.
The new landmark bill will now impose compensatory damages of US $ 200 per employee against an apparel manufacturer or contractor, payable to the worker, for each pay period in which every worker is paid by the piece rate.
Importantly, Senate Bill 62 distinctly states that if garment workers (based in California) are not paid legal minimum wage (US $ 14 per hour), then both manufacturers and the brands will be accountable. That’s enough to please garment workers working in apparel factories of Los Angeles (LA), the largest city in the state of California, which has been the biggest fashion manufacturing hub in the US.
And why not! The pandemic-induced lockdowns, over the last 18 months, had seen many apparel workers in the city go jobless, while many were refused salaries by their employers following order cancellations by brands. LA has over 200 fashion companies including the likes of Fashion Nova, Who What Wear, Princess Polly, Shop Hers, My Bridal Ring and many more and so one can very well understand how much relevance the bill holds for the garment workers of the city. This bill has, thus, come as a blessing for around 40,000 workers in California, who have been employed by around 2,000 manufacturers.
What else! The bill strictly punishes any garment manufacturer or a brand involved in any illegal pay practice in any way. And not just manufacturers or brands, even for designers there will be now some kind of accountability with the sole intent of cleansing the process. Notably, the passing of the bill further expands the definition of garment manufacturing so as to include dyeing, altering a garment’s design and affixing a label to a garment.
But could this be a beginning of some unrest in other states…
Now that the bill has been passed in California, there is a fear if other US states may also demand passing a similar bill for their respective garment workers. At 341,300 jobs, the US industry is a globally competitive manufacturer of textile raw materials, yarns, fabrics, apparel, home furnishings and other textile finished products, and they all have the right to demand for a wage hike. Most of the states still have low minimum wages, with some like Indiana and Iowa having as low wages as US $ 7.25. The two states with the lowest minimum wage are Georgia (US $ 5.15) and Wyoming (US $ 5.15). It will not be a surprise if one sees some unrest or strikes in other American states over the wage issue.
In fact, last year, 300 garment workers, mostly African American women, walked out of a north Mississippi pillow factory after a co-worker tested COVID-positive and management tried to cover up the whole issue. Notwithstanding the never-ending wage issue, the walkout also reflected the displeasure over the working conditions inside the factory, which overlooked workers’ safety.
American Apparel plant in Selma, Alabama, reportedly, pays miserable wages to keep costs down for the Government, which also contracts military uniforms to Federal Prison Industries, a Government-run company that uses prison labour in Alabama and other US states. Some garment workers say that the company uses a piece-work system with hourly wages varying from US $ 9 to US $ 15 an hour, depending on achieving production targets – targets that are almost always impossible to meet.
The unrest over wage hike is going to grow gradually, but it will be interesting to see how much impact the California Senate Bill will have on other US states. And if at all wages rise or are made uniform, then it might, worryingly, halt the whole reshoring progress that US has been talking about for some years now.
Reshoring may get hit if wages increase across the US
Increasing the wages across the US is not going to be an easy task. While many experts believe that wage hike may cause a rise in inflation, on a broader perspective, it may impact US efforts of reshoring. Many argue that raising the minimum wage would, in all likelihood, result in wages and salaries rising across the board, thereby increasing operating expenses for companies that would then increase the prices of products and services to cover their increased labour costs. This brings us to the point why should jobs come back to US, when garments can be sourced from a low-wage destination.
Some experts believe there is no real justification for the minimum wage. In fact, they say hike in minimum wage will hinder the free market. There are many companies on the margin paying the minimum wage, and some of these may even go out of business if their labour costs escalate. The only two options then left would be to outsource jobs to countries where wages are low or hire illegal immigrants, who have no say in wages. In such a scenario, it actually puts a big question mark on reshoring – a process of bringing back production and manufacturing of products back to the country of origin – in this case US.
In fact, The 2019 Congressional Budget Office (CBO) report estimates that raising the minimum wage to US $ 15 an hour by 2025 would result in the loss of approximately 1.3 million jobs. That’s some number! These numbers can go up if companies decide to outsource more jobs to less expensive labour markets outside the US.
It will be now interesting to see how the US Government under Joe Biden handles this situation as the President has by now made it clear that he wants more garment manufacturing in the US, and he knows raising minimum wages across the US will come with their own set of political and economic challenges. The Government now needs to move forward carefully making in-depth analysis of the long-term implications that wage hike might have on its economy and the country.