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Looking for some good economic news? Look no further than US Manufacturing.  China's advantages in manufacturing have all but eroded  according to Business Week.    The US Trade Deficit sank to a ten year low.  And all sorts of indeces are pointing to an impending expansion in domestic manufacturing ahead of the rest of the economy.  This is such positive news I'm hesitant to even mention it.  At this point my grandma would chide me for begging the evil eye to come and knock my optimism down a peg, and attempt to ward it off with a medieval Yiddish spell ("kinna hurra").  What's happening and why?

Legislation Levels the Playing Field

Red state laborers will finally make as much as their blue state counterparts next month, when the Federal Minimum Wage is raised to $7.25. Most of the blue states, ours included, had already raised their legal minimums to that level years ago, but a map of the states still slumming it at the Federal Minimum Wage is basically identical to the 2008 map of states won by John McCain, proving once again that the more someone needed a change, the less likely they were to vote for it. What IS the matter with Kansas?

What a great image: nurses at Parkview Community Hospital in Riverside, California, signing their first union contract and proudly wearing union made and union printed t-shirts.

Congratulations to Parkview RNs and the UNAC/UHCP on this milestone, and thanks for extending your support to union printers and garment workers.

SweatFree Communities is the leading anti-sweatshop organization in the United States. Their Executive Director, Bjorn Claeson, answered some of our questions about the state of the movement, nearly halfway through 2009.

Ethix Merch: What has been the single most important development in the fight against sweatshops in the past year?

Bjorn Claeson:

Well, I would like to say it’s been the development of the Sweatfree Purchasing Consortium because it creates a substantial market for decent working conditions as well as an effective tool for workers to enforce their rights. But, the Consortium is not yet far enough along to qualify as “the most important development in the fight against sweatshops.” (Ten cities and states have committed to join so far and with a little bit of luck it will start doing monitoring work within the year).

Considering the question through U.S. lenses I would have to say that the campaign against Russell has broken new ground as scores of universities have cut their contracts with Russell in the face of overwhelming evidence that it shut down a factory in Honduras rather than recognizing workers’ choice to have a union represent them. This campaign has certainly been the most visible anti-sweatshop campaign in the United States over the past year. I am somewhat reluctant to say this protest campaign has been “the most important” because I think we ought to be able to implement positive solutions of equal magnitude. However, the Russell campaign has succeeded in something very important: building consensus that cutting and running from workers who are organizing a union is unacceptable behavior. We can build on that.

Ethix Merch: In recent years, the movement has focused on utilizing the leverage of large consumers like states, cities, universities, and school districts. While these projects develop, how can individuals help the cause?

In a related question, do you think it is realistic for consumers to buy only guaranteed sweatshop-free clothing for themselves and their children, or should they focus on supporting the movement in other ways?

Bjorn Claeson:

First of all, most of us – and I include myself here – should buy less of everything, period. When we do buy, we owe it to workers, to the earth, and to our future generations to pay a fair price so that others do not need to absorb the true cost of production by living in abject poverty, working when sick, and enduring unhealthy workplaces. Unfortunately, we have built a global economic system that requires producers to externalizing the cost of production to the weakest and most vulnerable among us, including our planet. So it is not easy to pay a fair price. We have to work against the system. Just as companies scour the globe for the cheapest possible labor, we have to scour the aisles—so to speak—for products that are union made or made by worker-owned cooperatives. We should buy organic-certified cotton as much as possible. We should consider buying products that are made locally and haven’t been transported half-way across the globe before we get them. We need to reduce the distance between consumer and producer both geographically and economically. Look at it that way and shopping is activism. We have a tool to promote shopping as activism—the Shop with a Conscience Consumer Guide. There are many other tools. The important step is to think when we buy. Is this purchase necessary? And if so, how does it impact the earth and the workers?
 

Beyond shopping? Yes, of course. There are many, many ways for people to get involved and strengthen the anti-sweatshop movement. I would suggest that people consider ways to build activism into their daily lives. How can you educate the members of your church or school? Can you get your company to buy logo-apparel made by union workers? Can you join or start a group for your city to buy only sweatshop-free apparel? There is no end of possibilities.

Ethix Merch: In a recent column, Nicholas Kristof of the New York Times defended sweatshops, writing:

"Among people who work in development, many strongly believe (but few dare say very loudly) that one of the best hopes for the poorest countries would be to build their manufacturing industries. But global campaigns against sweatshops make that less likely."

How would you respond to this particular argument?

Bjorn Claeson: 

Kristof assumes that industrial development ineluctably leads to a better standard of living, that second generation factory workers will be better off than first generation workers. But he ignores the economic system within which industry develops, a system based on low-cost production requiring factories to operate as sweatshops in order to be successful. Garment factories in Central America or Asia are every bit as oppressive today as two decades ago. The anti-sweatshop movement is not trying to deny the opportunity of industrial development to certain countries—it has never been a boycott movement. Instead, it is working to change the system of production so that factories that pay workers a living wage and respect workers’ right to organize are favored rather than disfavored, so that industrial development can actually produce a middle class.

Ethix Merch: How would you rate the Obama administration’s first few months, when it comes to sweatshops? Going forward, are you optimistic about the role of the U.S. government in combating sweatshops here and abroad?

Bjorn Claeson: 

I am not in a position to rate Obama’s actions on sweatshops just yet, but here is at least a beginning of an agenda I would propose to the administration: 1) Speak out in support of unions and the Employee Free Choice Act. With EFCA workers have a better chance to turn U.S. sweatshops into decent places to work. 2) Fully fund the U.S. Department of Labor workplace investigations to discover and remedy violations of the Fair Labor Standards Act. 3) Turn the ship of trade around. No more WTO and NAFTA model trade agreements in which labor standards are at best unenforceable and at worst seen as a hidden obstacle to trade. Advocate for the T.R.A.D.E. Act. 4) Enforce and then expand Clinton’s Executive Order banning federal purchases of products made by forced and indentured child labor. First, add transparency requirements and add investigatory capacity. Then expand the purchasing ban to products not made in accordance with international core labor standards. 5) Fund the Sweatfree Purchasing Consortium to help all government agencies end purchasing from sweatshops.

Let’s check back in a year from now.

Ethix Merch: As challenging as it has been to pass sweat-free procurement ordinances in states and cities around the country, it seems that enforcement of these ordinances has been inconsistent. Why aren’t more of these ordinances enforced, and what is being done about it?

Bjorn Claeson: 

Enforcement is a tremendous challenge because there is hardly any supply of sweatfree uniforms and other apparel for government agencies to buy. Buying sweatfree is not the same as buying recycled paper, fair trade coffee, or organic cotton shirts when you can just check the label and buy accordingly. Buying sweatfree is a process of transformation where government agencies use their purchasing power to create transparency, investigate working conditions, demand change, and, eventually, designate sweatfree suppliers. It’s a lot of hard work in the early stages especially. The only way forward is collaborative. That is why we are focusing on creating the Sweatfree Purchasing Consortium to give governments real monitoring and investigative capacity. We also encourage companies like Ethix that truly seek to comply with sweatfree standards to get into the government procurement market. It’s not going to be easy in the beginning, but we need to show government purchasers that they do have options.

Ethix Merch: During the sweatfree communities conference in 2007, a link was drawn between sweatshops in the garment industry and "sweatshops in the field." Are partnerships continuing between SFC and organizations like the Coalition of Immokalee Workers?

Bjorn Claeson: 

You know, not as much as I would like. We learned a lot from the CIW and their demands for supply chain transparency and fair pricing—their penny more per pound campaign. The solutions for sweatshop workers in the field and in the factories are similar. But whether it is because of lack of resources or other reasons we have not maintained more than occasional contact.

Some things just aren’t done, and when they are, you just have to cringe. Like putting ketchup on a Chicago hot dog, or wearing socks with sandals. Fortunately, most of our fair fellow citizens have figured these out by now, and violators are quickly shamed into compliance by the aforementioned cringing.

Other things should be faux pas, but for some reason haven’t yet become so, and people get away with them all the time. One example of such a “future faux pas” is taking a call on your cell phone, thus leaving your lunch partner to play with coffee creamers while pretending not to listen to one side of your boring conversation.

Another overlooked faux pas is when quintessential American institutions get besmirched through an association with imported, unethically made merchandise. When I walk into a gift shop at Yellowstone National Park, I want to buy a t-shirt. (No, I don’t care that it looks like this. I want it anyway.) But I want my Yellowstone shirt to be made in America, dammit! I’m sorry but a shirt with a cowboy, an American bison, and a Native American in full headdress on it just can’t be made in China.

In virtually every case you can imagine, logo gear for our beloved American institutions is manufactured overseas, using foreign components and foreign labor. How about Major League Baseball? You think they support solid, American middle class manufacturing jobs? Think again. Apparently our garment workers don't get to participate in our national pasttime. What about the Samuel Adams E-store? Mount Rushmore? The St. Louis Arch? Nope. (Although I was told by the people at the Mount Rushmore store that they have one Made in USA apparel item - out of 25 total options - but it is not yet available on their website.) 

What gives?

Look, I don’t have blinders on, and I understand that the vast majority of merchandise is now made outside this country. And, of course, imports are not inherently bad. But there are certain times and certain places to make a statement…and logo gear that literally promotes America is the place, if there ever was one, to proudly show that we – the workers of America - can make t-shirts, mugs, and tote bags right here, and furthermore that we can do so while paying a living wage and respecting the right of our workers to organize into a union.

That statement would show that we are serious about protecting workers and the American dream. Eventually, no product made under sweatshop conditions should be sold within our borders. That day is a long way off, but long journeys are nothing more than a bunch of little steps.

Please contact the above locations (or any others you know of), point out their fashion faux pas, and encourage them to source from guaranteed sweatshop-free sources like those that are available at Ethix Merch.

Note: In my perusal of various e-stores selling Americana, I did come across one garment that was proudly labeled "Made in USA" (though most likely not union made). Here it is: 

Central Park Ladies Tee

Before the break up of Ma Bell in 1986, long distance phone calls used to cost a fortune.  Then competition like Sprint and MCI drove down the cost of long distance, and by the 1990s long distance calls were less expensive than local calls.  But that is still news to my grandmother, who to this day will not talk on the phone to another area code for more than 59 seconds.

Our former plant manager was similarly phobic towards overtime pay, prohibiting it under any circumstances. And I never questioned him--after all, with our labor costs so high to begin with, how could we possibly make any money paying 50% more for the same work?  A year after he retired, we faced a tremendous temporary surge in business--providing both 2008 presidential candidates with hats and bags.  We had to make a quick decision--do we hire 20 more sewing operators, or give 80 of our operators the chance to (voluntarily) work an extra 10 hours a week at time and a half?  I don't know what drove me to "do the math"--on the surface it seemed that hiring the cheaper new operators would be a no brainer--but the answer actually astonished me.

The first thing I noticed was that our regular time was actually costing us more than time and a half.  Besides the 11% federal employer portion of taxes, we had 3% for workers comp, 3% on our pension contribution, and 1% on city taxes--an 18% vig to the system.  Then there was 25 days of unworked pay: 10 holidays, 10 vacation days, and 5 personal and sick days, all subject to the 18% vig. When amortized over the other 236 weekdays in the year it meant 12.5% of every dollar of regular pay went to fund unworked pay. Finally, our health insurance costs worked out to $2.22 per regular hour worked, or 22% of a $10.00 wage. We also gave production bonuses averaging $.75 per hour, or 7.5%.

So regular pay was costing us 60% more than the gross wage. How does that compare to overtime?  The health insurance, unworked pay, and pension were all paid for by regular time--they don't increase with overtime. We don't give production bonuses on overtime hours, and in our state workers comp is not charged to overtime hours. That just leaves the 12% in payroll taxes, plus the "and a half" premium (also subject to 12%)--a total of 68%.  

So all things being equal, overtime was costing just 5% more (168%/160%) than regular time per hour for the same employee.  But all things are not equal--because when overtime is necessary, the alternative is hiring a new employee, training them, replacing them, training their replacement, then letting them go when demand goes back down before they reach their full potential. They may be a couple of dollars cheaper, but for the first few months they add so much less value and require so much more high labor cost supervision.

Another argument against overtime is that it fatigues the workers. What we discovered was that a number of our workers had second jobs that they gave up because they were making more in ten hours of overtime than they were in twenty hours of their part time second jobs.  One of the great benefits of voluntary overtime pay is that so much more of the payroll costs ends up the employees pockets. If an employee is making a just over a living wage, overtime can multiply their discretionary income many times over.

In this recession I regularly read about companies who cut back hours to save labor costs. In the scenario above, a $10 worker costs the company around $16 per hour whether they are working regular time or undertime.  However, if their hours are cut back to 32 hours per week, that means that health insurance and unworked pay are amortized over 20% fewer hours--so labor costs per hour increase significantly.  Employees may be sacrificing to share the pain, but both companies and employees always lose out when workers don't work at least 40 hours.

So the bottom line--don't fear overtime--it doesn't cost a company any more than regular time, and it may cost a lot less.

There’s really no point in trying to hide it. The difference is just too stark. On any given t-shirt order, you’ll pay anywhere from 15 to 200 percent more (depending on how sophisticated your design is) for a union made shirt.

This hurts, and there’s no getting around it. It is no wonder that the majority of orders for custom-printed union made t-shirts are from unions themselves. Even within the union world, many won’t bite the bullet, and end up going with imports or (only slightly less expensive) USA made, non-union T's.

We find ourselves in a situation where a win-win lies just around the bend, yet we can’t quite catch up to it. If all the vocal supporters of unions made a commitment to purchasing union made merchandise for their organizations, the cost difference between union goods and imports would shrink, and shrink dramatically.

Foreign t-shirt factories overcome their inherent disadvantage (i.e. being really far away from the customer) by shipping hundreds of thousands of shirts at a time, to be stored in regional warehouses. So when you call up and ask your merchandiser for a royal blue union-made t-shirt, they might have to make a few calls and get back to you. But if you want a royal blue t-shirt from China, you can rest assured that there’s an impressive pile of them sitting around somewhere close by. Ironic? Decidedly.

We need better paying jobs in this country. We need to reduce the absurd gap between rich and poor in order to thrive. The current economic crisis, born from unchecked greed, should have driven this point home for everyday Americans, many of whom lost their jobs, their homes, and/or their savings.

It doesn’t have to be this way. Doing the right thing may be difficult at first, but in the long run makes everything easier. Investing in solar technology may increase our deficit at first, but the long term dividends of energy independence and a cleaner environment make the choice a no-brainer. It’s the same with investing in good jobs. Good jobs mean more people are creating wealth rather than depending on the government for handouts and services. The resulting growth in GDP will lead to greater spending, and the opportunity for our dollars to support thriving manufacturing sectors here AND in foreign countries, where such jobs are also sorely needed.

Progressives understand this on a theoretical level. It is time to start walking the walk. Ethix Ventures and our allies in the anti-sweatshop movement are here to start the dialog, and apply the gentle pressure needed to move our economy toward justice (and prosperity) for all. Please help us spread the word.
 

If you’ve ever driven eighty on the highway, fudged a bit on your tax returns, or created a mixed CD for a friend, then you’ve learned a valuable lesson about democracy in the United States of America: sometimes the law doesn’t amount to a hill of beans. Without enforcement, laws are just a paper tiger. And as it happens, our country has neither the will nor the resources to enforce every law.

We won’t stand for having Big Brother watching our every move, so we tolerate lawbreaking quite frequently. Sometimes, of course, this tolerated lawbreaking means we are just using common sense. For example, it might make sense for a highway patrol officer to look the other way when you’re driving eighty, if she knows full well that two minutes later she’s bound to run into some maniac going ninety, who poses a much greater risk to the public safety. This, however, doesn’t negate the fact that your butt is breaking the law.

But sometimes lawbreaking is tolerated for less justifiable reasons, the most common of which is probably “Enforcing this law is hard!”

This is what’s happening with sweatshop-free procurement ordinances around the country. Certain municipalities (including Los Angeles and San Francisco) have taken it upon themselves to ban sweatshop-made goods in government purchasing. Since those ordinances were passed, however, enforcement has been sparse to non-existent. City uniforms are as sweaty as ever.

And, to be quite fair, enforcing this law is hard. Very hard…especially when you consider the intense pressure put on city officials and administrators to protect the public purse by awarding contracts – for things like uniforms for police officers -- to the lowest bidder. Even when vendors are shown by independent monitoring groups to be in non-compliance, it is difficult to take corrective action because of the relatively small leverage any one city has with the large corporations that supply their uniforms.

Cities that have passed sweatfree ordinances should be applauded for taking a step in the right direction. It is a step that’s always preceded by months or years of dedicated community activism, and it represent a crucial first step by at least declaring the “will” to begin to right the terrible wrongs being done to workers around the world.

But unless eventually followed up with enforcement, the original action starts to lose its meaning. Fortunately, there are superheroes out there who have been following this game all along, and who have come up with a plan to allow cities to enforce sweatshop prevention laws. The Workers Rights Consortium (WRC) and Sweatfree Communities think that by pooling the buying power of cities, states and universities, they can create a network of certified “sweatshop-free” producers who are provided with the carrots and sticks needed to ensure that corporations, subcontractors, the consumer, AND the workers can ALL benefit from a contract.

The WRC is partnering with local sweatshop activists from coast to coast to convince their states and cities to join this network, which they are calling the Sweatfree Consortium. As odd as it may seem, governments are the underdogs here in working to get their own laws enforced. But banding together - like all good underdogs do - may give them the leverage to demand enforcement from the contractors.

It’s also important to note that there are Union factories right here in the United States that are fully capable of producing uniforms for use in our cities, and these factories need to be a part of the solution as well. As the current economic crisis has demonstrated, we need to keep our own house in order (which means protecting and strengthening middle class jobs) in order to avoid catastrophe.

If you are affiliated with a state, county, or municipality interested in having uniforms or other printed merchandise made right here by middle class workers, please contact us.
 

It seems so obvious: if you don't pay employees enough to live on, you will have low morale and high turnover, lowering productivity and creating less value. The reduction in value created will always exceed the labor costs saved. So if sweatshop owners are really "greedy", why don't they see this when they look at their labor force, factory, and financial statements? Because they can't, for two reasons:

--Piece rate work does not create value and commoditizes laborers--to the factory owner's detriment.

--Archaic, irrelevant labor costing techniques developed before spreadsheets and exported overseas become dangerous agents of poor decision making in the hands of managers who don't understand the underlying math.

First, a wiki-sized history of the garment industry. Mass communications and the growth of department stores and catalogs made mass merchandising of fashion possible. However, the difficulties in predicting fashion success coupled with long lead times required to produce a clothing line made conventional financing difficult. Investors wanted a piece of the profits--but profits in this shady business too often fell victim to a bookkeeper's eraser, the back of a wise guy's truck, extravagant garment district overheads, or a foolhardy position in a fabrication with fleeting fame. So investors settled on more predictable metrics: Labor costs could be based on negotiated piece rates and materials costs on yields. Overhead could be controlled by limiting expenses to 40 or 50% of labor costs, a benchmark at the time. If overhead were higher than that the investors' share of the profits would come out of the manufacturers' pockets.

This model lasted for a while, but profits were still elusive (because piece rates produce pieces, not garments, but more on that later). The industry moved to a licensing model which just ignored profits and took fees off of sales--now Calvin Klein doesn't produce a thing and just gets a royalty check based on sales from the vertical conglomerate that manufactures the clothing.

But the piece rates and overhead multipliers survived in the costing departments like nipples on men. Factory owners and industrial engineers measured labor costs one way: with a clipboard and a stopwatch, meticulously timing production of every step multiple times for accuracy, then increasing it by some divine multiplier like 40% to account for overhead: The industrial engineering equivalent of ordering a bacon double cheeseburger with a diet coke. Garment factories shipped these metrics to Asia along with their equipment and systems of work and they exist, unquestioned, to this day.

The problem with piece rates is that they encourage workers to produce pieces--not garments. If a worker is paid by the collar they sew, you'll end up with a ton of collars, but you may not get a ton of shirts. Collars have no value--you can't sell them. The reason garment factories rarely achieved profitability in piece rate systems was that the profits ended up on the floor, in piles of work-in-process. Sure, value was created--someone would eventually make and buy a jacket, but imagine all that gratuitous effort in the name of productivity!

If a worker only sews collars, she is going to go from novice to expert in a short period of time and make the better paid veteran sitting next to her start to look expensive. This commoditizes the laborer and makes it difficult to see who has the know how and experience to create value. So when times got tough, it made perfect sense to cut labor costs by squeezing out higher paid veterans. And, because the workers were focused on producing parts rather than the whole to begin with, value creation probably didn't suffer much.

The overhead multiplier used in the garment industry became a weapon of mass destruction when Excel was introduced to the schmata trade. That overhead is 40%-50% of labor in garment manufacturing was as accepted a benchmark as the keystone markup is in retail. But using this benchmark in financial modeling and decision making without regard to its origins or the underlying math will lead to some terrible decisions.

Keep in mind that in financial statements, labor is only charged when a product is sold. All other expenses--such as the labor invested in work in process that is not made into garments--gets put into inventory. So when a spreadsheet uses 40% of labor costs to calculate overhead rather than trying to predict the actual overhead, overhead--representing "fixed" expenses--appears to fluctuate with labor costs. If you lower your labor costs, your overhead will be appear to be reduced, when in reality it stays the same and probably increases because of the need for additional management. If you increase your labor costs, or add more laborers and expand within the same facility, or you create more value and sell more units using the same workers, your overhead will appear to increase, when in reality it stays the same and actually decreases on a unit basis.

And when you tag an artificial expense onto your labor costs, you obscure your true unit profitability. In other words--YOU CANNOT SEE HOW MUCH MONEY YOUR WORKERS ARE MAKING FOR YOU, which marginalizes the impact of better workers, further commoditizing them.

One of my favorite quotes was from a one time garment magnate whose company was insolvent and we were negotiating to buy his assets. His calculations used the overhead multiplier, and mine used actual labor costs and actual overhead costs. Of course his calculations showed his company should still be in business, because they neglected the eighteen 40-yard dumpsters of obsolete work-in-process we had to remove after the deal closed. Our calculations showed much lower profitability. He said to me, "With the way you calculate profits, I can't understand how you make any money." He--and his generation of "garmentos"--would never understand that value can't be created with a calculator.

This distinction is critical to the the fight against sweatshops. There appears to be a battle within the left about whether to boycott sweatshops, police sweatshops, or just ignore them, because in many environments a job in a sweatshop is far better than the alternative. I believe in a fourth way: co-operation. There are practices in every sweatshop that hurt both workers and management, and whose elimination would help both labor and management, but management knows no alternative. They just know the clipboard, the stopwatch, and the piles of work in process showing that everyone has plenty of work. If we could just show sweatshop management how to create more value by converting that waste into wages, those factories would become more competitive, and the race to the bottom might start to reverse itself.

Even in our fast-paced modern world, one thing always remains the same: hard work pays off, in the long run. That attitude is exemplified by two organizations that Ethix Merch was proud to bring together for the first time…The Green Party of the United States and Garyline Promotional Products.

Even though Democrats and Republicans have traded control of the White House and Congress for the past 150 years or so, smaller political parties still play an essential role in our democracy. And few parties have shown as much grit and gumption as the Green Party, which has become a household name by successfully pushing to move environmental issues into the forefront of our political discourse. The party has also been a staunch ally of labor, serving as one of the highest-profile advocates for the marriage of green and blue, or “teamsters and turtles.” Little by little—winning local and sometimes even statewide elections and influencing the debate at every turn—they are making a big difference.

Garyline, meanwhile, has also been a pioneer in bridging the green/blue divide, within the world of ethical merchandising. It is still an unfortunate truth that products made with respect for the environment and for workers cost a little bit more than the typical junk that poisons our air and water and hangs workers out to dry. Garyline shrugs its shoulders at these extra costs, offering the widest selection of environmentally-friendly AND Union Made products in the business.

We couldn’t be happier to be bringing these two workhorses together in the Green Party Online Store. Please take this opportunity to visit the store and pick up a Union Made tote bag or BPA-free water bottle emblazoned with the Green Party logo. How often can you support unions, the environment, and democracy all at the same time?