A recent survey by the Department of Labor’s Wage and Hour Division revealed that some Southern California garment workers are earning as little as $1.58 per hour in what officials call “sweatshops.” These workers make clothes for major retailers, often labeled as “Made in the USA.” Shockingly, 80% of the contractors surveyed were found to be violating the Fair Labor Standards Act, which sets rules for minimum wages, overtime pay, and employment standards for minors.
To put this $1.58 in perspective, the current minimum wage for all employers in California is $15.50!
In over 50% of cases, employers were found to be paying workers off the books, without proper records or using forged documents. Additionally, 32% of contractors were paying garment workers on a piece-rate basis, which has been illegal in California since last year. Governor Gavin Newsom signed a bill mandating hourly pay for garment workers to protect their rights.
Thankfully, the Wage and Hour Division’s investigations in Southern California have led to the recovery of over $892,000 in back wages and damages for 296 workers. They have also secured agreements with manufacturers to ensure compliance with federal laws, which include monitoring and reviewing time cards and payroll.
So, the next time you shop for clothes, consider the hidden costs behind that “Made in the USA” label.
THINK LIKE AN ECONOMIST!
Q1. Define minimum wage.
Q2. Explain one reason why wages differ between occupations.
Q3. Analyse, with the use of a diagram, why clothing factories are able to pay wages which are so much lower than the minimum wage.
Q4. Discuss the benefits and drawbacks of a national minimum wage.
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