American Apparel is a company that has gotten a lot of flak for its lewd ad campaigns, lack of transparency, and its controversial CEO Dov Charney, who received a number of employee complaints against him for sexual harassment, among other things. But for once, I’m inclined to take Dov Charney’s side on his stance regarding failing labor practices that led to the devastating factory collapse in Bangladesh in April, which killed more than 1,000 people.
Charney tore into the retailer for its unwillingness to pay workers overseas the same wages it pays within its home country, calling for the company to match the Swedish wage in its manufacturing zones abroad. Citing an H&M advertisement that promoted a $4.99 bikini, Charney argued that it’s impossible to sell bikinis for that price unless someone is getting squeezed. He said that such a product cannot exist unless the company is “screwing someone.”
“H&M is a $22 billion corporation — they’ve amassed an enormous amount of wealth. They don’t have to have their hands dirty to the extent that they do,” said Charney.
As many problems as American Apparel has with its company image and as many problems Dov Charney has himself, I don’t think that his message lacks legitimacy. Charney is calling for an international minimum wage, which just makes good sense.
Many fashion companies are outsourcing their labor away from American factories do so for the very fact that they can avoid paying America’s minimum wages to laborers in developing manufacturing nations like Bangladesh, Vietnam, and others. Large retailers can only manage to sell fast fashion at insanely cheap prices because cuts are coming from labor costs. These companies are not losing profit, and business is still booming: H&M’s net profit was approximately $830 million last year, and Zara’s owner Inditex made $1.23 billion of profit. These giant retailers are diverting their resources to increase the number of storefronts across the globe, and to buff up their e-commerce efforts, yet they’re unable to pay more than a paltry wage to workers who are basically propping up their businesses?
There have also been numerous cases that prove that well-paid workers are happier, more productive, and earn companies more money. It helps companies retain their workers and improve commitment and loyalty to the company’s brand and product.
American Apparel’s clothes are all made with U.S. labor, at $12 an hour wages for workers, and understandably, the costs of their clothes are much higher than those available at fast fashion chains. A plain T-shirt can cost anywhere in the $20-$30 range as opposed to H&M’s shirts that cost less than $10, but this is the reality of what a product would cost if it was made in a U.S. factory. Consumers truly mindful of labor practices can’t have their cake and eat it too: a T-shirt made on American wages can’t possibly cost the same as a shirt made by a laborer being paid $2 a day in a factory in Southern Asia.
There has to be more regulation from the government, because capitalism is as capitalism does: minimum cost for maximum profit. If it were left to the companies, there would be no reason for them to discontinue what they’ve been doing to source their apparel. Manufacturing plants in developing countries are going to continue do the bare minimum in order to adhere to safety practices because there’s no incentive for them to do otherwise either. Most of their contracts with fashion chains are seasonal and if they need to raise wages or use more of their resources to maintain consistently high safety practices, they lose their competitiveness, and that can mean losing business to other manufacturers willing to do the job for less.
This issue also ultimately requires government involvement because there are still many families that depend on cheap clothing from cheap fashion chains, which speaks to a much bigger problem of poverty in the country. As long as there’s going to be high demand for cheap, quickly disposable fashion, there will be companies that will decrease production time, and increase production output, almost all at the expense laborers.