A labor department investigation raises questions about working conditions in US factories

A US Labor Department survey from March is raising concerns about how clothes are made in the US.

The report surveyed more than 50 garment-sewing contractors and manufacturers—which make garments for retailers like Nordstrom, Bombshell Sportswear, Neiman Marcus, and Dillard’s—in Southern California and found that the Fair Labor Standards Act was potentially violated in 80% of the investigations, including how and how much workers are paid.

In one instance, a contractor was paying wages as low as $1.58 an hour. Other instances of violations included paying workers off the book and paying them based on the number of garments they worked on.

The report follows the California Garment Worker Protection Act enacted last year that required companies to pay a minimum hourly wage to workers and made them more accountable for wage theft.

Susan Scafidi, founder and director at the Fashion Law Institute at Fordham College, said that while early labor laws in the US were passed to improve labor conditions across garment factories, some manufacturers have continued to “live down” to the reputation for exploiting workers.

“The US Department of Labor investigation indicates that more needs to be done with regard to enforcement of minimum-wage laws in this sector,” she told Retail Brew.

While Scafidi said it is unlikely the retailers themselves engaged in any alleged wage theft since they often don’t hire workers directly, “having their names in a DOL report and potentially in media headlines will put pressure on retailers to increase oversight of their supply chains—or risk both consumer and investor backlash,” she said.

Dillard’s has yet to comment on the findings from the report, while the other companies haven’t commented on the report’s findings nor responded to Retail Brew's requests for comment. Meanwhile, Nordstrom said in a statement to Bloomberg it was taking steps to address the issues: “We expect all Nordstrom suppliers to adhere to the standards outlined in our partner code of conduct in addition to the applicable laws and regulations.”

Bringing it home: Less than 5% of clothing sold in the US is in fact made there—a major contrast to the 1960s, when more than 95% of clothing was made in the country.

It is also why the “Made in USA” label has increasingly resonated with consumers over the past few years. According to a 2020 survey of 500 Americans by the Reshoring Institute, 70% of respondents said they prefer US-made products. More than 80% responded that they would pay up to 20% more for domestic-made products.

Will the report tarnish that image and make the label less restrictive? Scafidi says it’s possible. “Learning that California sweatshops may be little better than their international counterparts in terms of paying workers a legal wage may undercut the kind of marketing that could otherwise appeal to both patriotic consumers and ethics-oriented Gen Z shoppers,” she said.—JS