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Less than six weeks into the Obama administration, a lot of change has already come. Hundreds of billions of new federal dollars have been allocated for green jobs, mass transit, unemployment benefits, health care for kids, and dozens of other worthy projects.

So much work has already been done, that activists on the left – who have struggled against an impenetrable headwind for eight years – suddenly find themselves chugging downhill at full speed. This is both exhilarating (because of the possibilities) and frightening. After all, what if your issue somehow gets left behind? What if events bring about a GOP resurgence in 2010 and the window for progressive change closes up as swiftly as it opened?

I’ve written in this space recently that I trust the President to attack each important issue strategically, accounting for political realities and the constraints of public opinion.

Still, those of us who have put blood, sweat and tears into the global anti-sweatshop movement have a responsibility to keep our eyes on the ball. While President Obama juggles EFCA and embarks on the delicate process of adding teeth to NAFTA’s labor protections, we plebes need to keep working as hard as we can in the trenches; and that means passing local procurement ordinances, supporting Union and Fair Trade labels, and standing in solidarity with USAS, Sweatfree Communities, ILRF, WRC and others as they fight alongside workers for justice, factory by factory.

In this crucial and exciting moment in U.S. (and thus world) history, I thought it would be helpful to give a brief run-down of recent events that will impact the struggle to end sweatshops in the garment industry. Hopefully, the Ethix Merch Blog will be a place where you can continue to follow the “story” and progress of the broad anti-sweatshop movement.

The Stimulus Plan

The “Buy American” provision of the American Recovery and Reinvestment Act says that “None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.”

This language would seem to imply that any uniforms bought specifically for new workers hired with stimulus dollars would need to be USA made which, of course, is by no means synonymous with “sweatshop free.” Furthermore, while a clause within the stimulus plan mandates the payment of prevailing wages to workers, it makes no mention of wages for the garment workers who make the uniforms.

The complicity of the U.S. government in the exploitation of garment workers seems to be one of those areas where the president isn’t quite ready to dive in head-first.

The Federal Budget

The president’s budget seeks to
• Reverse the trend of ”growing workloads and shrinking staff” within the labor department.
• “Increase funding for the Occupational Safety and Health Administration”
• “Increase enforcement resources for the Wage and Hour Division to ensure that workers are paid the wages that are due them;”

We will certainly keep track of these priorities and whether or not they survive the budget process over the coming weeks. If they do, we will have taken a large step forward toward halting the “race to the bottom” that drives down wages and conditions everywhere.

The Department of Labor

Aside from budgetary issues, the DoL has policy decisions to make that are under its own jurisdiction. For these decisions we’ll depend on newly-confirmed Secretary of Labor, Hilda Solis.

You can see that the DOL’s staff directory is basically Swiss cheese right now. We’ll give the new secretary a couple more days (we’re on Obama time, now!) to get her house in order before we start asking her why sweatshops are still allowed to exist in the United States.

Hilda Solis is likely to be a strong force behind the Employee Free Choice Act. If this act passes, it will make it much easier to organize garment factories around the country. Of course, when and if that happens, we’ll need to see what can be done to ensure that an organized workforce doesn’t drive the entire U.S. garment industry overseas. Which leads us into…

The Global Anti-Sweatshop Movement

Universities are finally starting to figure out how deep the rabbit hole goes, when it comes to global sweatshop abuses. Russell Athletic (a subsidiary of Fruit of the Loom, which is itself owned by Berkshire Hathaway), one of the largest providers of collegiate licensed apparel, has lost its contract with several large universities as a result of commendable work done by the Workers Rights Consortium.

Workers at a Russell factory in Honduras formed a union, and were subject to the predictable firings and intimidation. WRC exposed these violations of law, and the universities— including Columbia, Cornell, Duke, Georgetown,Michigan, Purdue and Rutgers  --who are members of the WRC, decided that Russell’s response (shutting down the factory) was exactly the kind of attitude that they signed up with WRC to prevent. So they pulled their business, showing that two can play the “profit is king” game. David Bonior has a great article on these events in the Huffington Post.

Meanwhile, the movement continues to try and unite large buyers into a force to be reckoned with. On the university side, this has taken the form of the Designated Suppliers Program, for which approximately 45 universities have expressed support. On the government side, it is the Sweatfree Consortium, which has been adopted by 8 states, 38 cities, 15 counties, 118 school districts, and 3 high schools nationwide.

Lastly, read here about the hard-fought victory of NYC garment workers who, like so many of their brothers and sisters, labored for below-minimum wages and worked forced, unpaid overtime.

Is Barack Obama really a progressive? That is the question being asked daily, in many different ways by pundits and bloggers, in a tone that suggests the questioner has already decided in the negative.

Manufacturers can't actually "make money"--but they can Create Value when they make a product worth more than the sum of its parts. The Value Created can even be measured precisely:

VALUE CREATED = SALES - MATERIALS COSTS.

The only way a manufacturer can Create Value is by making improvements to raw materials that customers are willing to pay for.

Manufacturers can't Create Value by making profits, because profits are not part of the Value Created equation. Manufacturers can't Create Value by lowering labor costs, because labor costs are not part of the Value Created equation. Manufacturers can't Create Value by making products. Products have no value until a customers are willing to pay for them.

Manufacturers can't Create Value by making work. Any work that a customer is not willing to pay extra for does not Create Value. Stitching a logo on a shirt is "Value Added Work". The work done finding, collating, collecting, counting, cleaning, upacking, carrying, and returning the cones of thread used to stitch this logo is "Non Value Added Work". It's an investment with no return. The worker worked just as hard not adding value as he did adding value. Management couldn't add any value--they were too busy trying to make workers stitch faster to even notice all that Non Value Added Work.

Value Created is the pie that gets split up into wages, salaries, dividends, and reinvestment in corporate sustainability. When the parties cooperate to make the pie bigger, everyone benefits. Shifting personnel from Non Value Added Work into Value Added Work and sharing the subsequent gains is the most effective way for a management and labor to make less work--and more value.

Value Creation leads to job creation, discretionary income, sustainable profitability, and improved competitiveness. It worked for our company.
It can work for our economy.

What, exactly, defines a Living Wage? How much the employer is spending? How much the employee gets before taxes? after taxes? after work related expenses? If a Living Wage is meant to signify the absence of poverty, and poverty is defined as an inability to meet mandatory household expenses, then a Living Wage can also be defined as the presence of Discretionary Income.

In the labor / management dynamic, the employer sees "Payroll Expense" while the employee sees "Discretionary Income". Picking a number like Regular Pay to negotiate is a zero sum game: one side has to lose.

There are, however, many variables that can be adjusted to reduce Payroll Expense and increase Discretionary Income at the same time to produce a win-win negotiation.

If we deconstruct the labor / management pay equation, you can see more clearly what I'm talking about:

Value Added Payroll Expense
plus: Non Value Added Payroll Expense
less: Tax Incentives

equals: Total Employer Payroll Expense

less: Health Care Benefits
less: Retirement Benefits
less: Workers Compensation
less: Employer Taxes
less: Unworked Pay

equals: Regular Pay

plus: Incentive Pay
plus: Overtime Pay
plus: Bonuses

equals: Gross Pay

less: Payroll Taxes

equals: Net Pay

less: Union Dues
less: Health Care Contributions
less: Pension Contributions

equals: Net Paycheck

less: Commuting Costs
less: Check Cashing / Bank Fees
less: Incremental Lunch Costs
less: Incremental Child / Elder Care Costs
less: Coworker Vig (Birthday parties, etc)

equals: Household Income

less: Mandatory Household Expenses

equals: Discretionary Income

When management and labor work together to increase this number: (discretionary income)/(payroll expense) everybody wins. I will be providing specific examples over the next several weeks.
 

A "Buy American" proposal attached to the house federal stimulus bill has resulted in a predictable uproar from Republicans and their patrons, captains of industry with vested interests in globalization. The two main arguments against the amendment negate each other:

1. Our trading partners (read: China) will respond to domestic preference policies with their own protectionism, shutting out US exports.
2. Domestic pricing is not competitive with imports (read: China) and this policy will cost taxpayers dearly in these lean times.

Countries like China already have protectionism: permitting forced labor, child labor, and human rights violations in the workplace enables its manufacturers to be global low cost producers in labor intensive industries. That's why US manufacturers can't even win bids in our own country without government interference. And if we can't win on our own turf, our trading partners don't have to bother with legislating protectionism.

This Buy American Amendment is simply an extension of the Berry Amendment, which requires the US military to give procurement preference to domestic suppliers. It's a 75 year old law which has evolved through several wars, depressions, recessions, and expansions, and now, in practice, resembles the mechanisms proposed by anti sweatshop labor activists.

All contractor addresses are listed and complaints about contractors are thoroughly investigated. Here's the catch, and here's why it works: the complaints do not come from abused workers, but from losing bidders who insist that the winning bidder could not be manufacturing domestically under US labor laws. The burden of proof is on the losing bidder. This system has evolved to be self policing in this way.

The Berry Amendment has exceptions for a long list of "qualifying countries", all of which happen to have high labor standards. It's a safe bet for us, because of all the countries which protect human rights in the workplace, the USA has become the low labor cost producer in many industries. Oh yes I did just say that--it's true. Canada just winked at us in their rear view mirror. But if this mechanism is codified to encourage human rights in the workplace, the Berry Amendment would be a human rights law, not a protectionist law.

After 75 years of amendments weakening the Berry Amendment, last year the government expanded the Berry Amendment outside the military--to Homeland Security. This proposal expands it even further, to the Transportation Safety Administration. If new legislation like minimum wage increases and the Employee Free Choice Act pass, then extending the Berry Amendment throughout the Federal Government and encouraging states to adopt it will be the fastest way to prevent our government from facilitating further human rights abuses.
 

I felt a little guilty accepting that first vacation paycheck, from Bear Stearns in 1989. I had never been paid for not working before. Should I have been working that week? Should I make up the time? Of course not; Bear Stearns wasn't looking at my hourly output as a financial analyst--they looked at my salary and benefits package as a fixed cost spread over the course of a year.

Hourly workers in union jobs enjoy this privilege of "unworked pay". Their employers pay holidays, vacations, sick days, and personal days so workers can enjoy themselves without feeling pressure to earn. Most hourly nonunion jobs do not offer all of these perks, and most part time jobs or sweatshops offer none. At a union shop, this privilege is sacred. Health contributions skyrocket, pensions disappear, wages and hours shrink--but not get paid for Christmas? Never.

The privilege is so sacred at union shops that its cost tends to disappear from all sorts of analyses:
• Engineers who calculate the labor cost of a product
• Employees who leave for "higher paying" jobs that don't offer unworked pay
• Labor activists who only look at "Gross Wage" when deciding if an employer pays a living wage
• Productivity consultants who determine "standard allowed minutes" with a stopwatch without considering paid breaks
Omitting unworked pay from these analyses can have unintended consequences. The employer paying less than a "living gross wage" but offering unworked pay can meet (and have met) living wage standards by raising their gross wages and eliminating unworked pay--penalizing only workers. A piece rate worker can never reach 100% efficiency without working through her breaks. When unworked pay is not factored into the labor cost of a product, these costs come out of the company's bottom line instead of being passed through to the customer.

How big a cost is it? BIG. To put it in perspective, in our Unite Here contract, a worker with two years experience gets ten paid holidays, two weeks paid vacation, and five paid sick and personal days. That's 25 days of unworked pay. That leaves 236 weekdays. On average, 12% of every dollar spent on direct labor results in an indirect payment for unworked pay. That's more than the employer load for social security, medicare, and unemployment insurance combined, and no consultant would ever dream of omitting those expenses from a labor cost analysis.

Put another way, my company, Unionwear spends more on unworked pay in every baseball cap than it does on cotton. However, it may be a big cost, but that doesn't mean it's a big problem. Our workers deserve unworked pay, our pricing reflects the expense, and our customers don't mind paying a small premium to ensure that that their products were sewn by people who don't have to work through Christmas.
 

In keeping with the recently-proclaimed "Era of Responsibility," we are proud to highlight the efforts of one of our newest customers, FuseWashington.org.

Fuse is an online advocacy organization for progressive public policy. But they are also - as are most organizations - consumers of custom-printed merchandise. It is all too easy to order such merchandise (as many, many organizations do) without bothering about something so easily swept under the rug as labor conditions.

Undoubtedly, Fuse is working with a very limited budget, making it all the more difficult to take responsibility for their impact on people and the economy. But in ordering mugs for their new "Mugging for Progress" line, Fuse went the extra mile. Their acrylic mugs are Union Made in the USA, and the ceramics are Made in USA. (Union made ceramic mugs don't yet exist.)

Through such decisions, Fuse is creating change while advocating for change. It is exactly this sort of virtuous circle that, if and when it spreads, will turn the tide against systematic poverty and exploitation in the global economy.

Thanks, Fuse, for doing your part! Please visit the site and show your appreciation by buying "Mug for Progress." Also, be sure to check out the "Mugs & Drinkware" section of EthixMerch.com to order mugs for your own organization.

Nothing like getting stabbed in the heart by NPR on my commute to work this morning.

"Most Asian stock markets rose modestly Monday as Asian exporters expect to get a boost from Obama's massive economic stimulus package."

The crime turned out to be reflux, the pain ephemeral, and meta-analysis could have just been filler on a day when US markets were closed. After all, why would Asian exporters think they would get an immediate boost from the US economic stimulus package?

The short answer is... "Why wouldn't they"? There are no safeguards to ensure that the goods used in the rebuilding and expanding of our infrastructure are manufactured domestically. In the absence of these safeguards, government agencies charged with spending the stimulus money will be pressured by their own purchasing laws to scrimp on non-labor hard costs.

In other words, the shovels in our "shovel ready" projects will probably be Made in China. Does this make sense? Do the math.

Obama is proposing $120 billion of the $850 billion stimulus to be spent directly on infrastructure projects to stimulate employment, which will directly employ 1.2 million laborers in construction, manufacturing, transportation, and energy. These jobs will indirectly create 2.4 additional new jobs as retailers and services expand to meet the needs of the newly employed. Each billion of infrastructure investment is expected to result in 30,000 new jobs.

Why? The INTRALOCAL MULTIPLIER. A working class laborer keeps money in the community longer, shopping at a neighborhood store instead of multinational chains at shopping malls, renting the top floor of a two family home from a private individual instead of sending in a mortgage check that's been syndicated to investors in dubai, paying in cash instead of on a credit card. His shopkeeper and landlord recycle this money in much the same way, leading economists to believe that every $1.00 invested in working class employment results in $1.50 in economic activity.

As a factory owner I think spending $1000 per year, per laborer, on safety and weather gear, tools, equipment, and uniforms over the four year life of a public works project is a reasonable projection. I'm assuming imported goods will win all bids on price. 1.2 million workers X $1000 X 4 years = $4.8 billion dollars. If the same gear is manufactured domestically, it may cost 20% more, or $6 billion.

Lets compare the two scenarios:

$4.8 billion spent on imported goods to support the stimulus workers: zero jobs, zero GDP

$6.0 billion spent on domestic goods to support the stimulus workers: 180,000 jobs, 9 billion in GDP

Return on $1.2 billion premium for domestic goods:
$6,000,000,000 x 30,000 jobs/billion = 180,000 jobs
$6,000,000,000 x 1.5 intralocal multiplier = $9 billion in GDP

Here's the punchline:
Government cost per job created by domestic requirement: $1,200,000,000/180,000 = $6,666
Government cost per job created by economic stimulus: $850,000,000,000/3,600,000 = $236,111

I don't think I could comment on that without sounding obnoxious, so I'll just let it stand. Even if this stimulus plan weren't about creating jobs, the tax revenue on the $9 billion increase in GDP exceeds the government cost savings.
 

Do you want to see the words "Made in USA" again? I certainly do.

I own a hat and bag factory in Newark, New Jersey, where 100 union garment workers earn a living wage and health benefits sewing products way more labor-intensive than T-shirts and jeans. There are much easier ways to make a living, but I love my job.

What do I do all day? I solve problems. I believe every business problem can be solved mathematically. Some short term problems can be solved with simple equations. "How can we meet that deadline? Spend extra on shipping." "How can we increase profits on our next production run? Cut costs by outsourcing manufacturing overseas."

Some short term solutions create long term problems. After years of outsourcing manufacturing jobs overseas, our economy discovered that our underemployed consumer base had lost the ability to consume at the same time that our businesspeople had lost control of the means of production. Longer term problems can't keep human behavior out of the equation, but complex mathematical equations can still be solved with a combination of approximation and trial and error--also known as gut instinct and commitment.

So how do we solve this problem? First, we define the problem. For the last twenty years our business minds focused on the problem of increasing profits. Maybe they were focused on the wrong problem. Maybe the problem to solve is, "How do we build a sustainable economy?". My gut instinct tells me we build a sustainable economy by encouraging the building of sustainable businesses.

I see nothing morally wrong with making enormous profits. But profit, by definition, is cash taken out of a corporation. A corporation, by definition, is a legal entity expressly developed to earn a profit. Sustainability requires that cash be reinvested in a business to harvest future growth.

THAT'S the problem. That's THE problem. That's the PROBLEM.

That's the problem I've spent the last 15 years of my life trying to solve. How does a business, and by extension, an economy, find a balance between profitability and sustainability? Here's what I've come up with so far: Long Term Sustainability = Profitability + Workplace Satisfaction.

In the short term, workplace satisfaction does indeed lower profits. In the long term, workplace satisfaction creates sustainable profits. Garment workers rewarded with union wages and benefits have a stake in the long term success of a business and its enduring customer relationships. A living wage can buy the gifted hands of a veteran seamstress. Low employee turnover means knowhow and resourcefulness on the factory floor. High morale means high productivity, lowering costs and speeding up deliveries. Company loyalty translates into pride in workmanship, which increases revenues. Sharing gains with workers results in a culture of continuous improvement. Product development, process innovation, and creative compensation ideas can all come from the factory floor. A thriving factory creates value in the community by creating jobs, supporting families, and recycling dollars as businesses sprout up all around it. The local living economy has a vested interest in the success of its manufacturers and reinvests some its tax dollars in public / private partnerships in order to ...

Well, I could go on and on, because that's what sustainability is all about. And, trust me, I will--that's what this blog is all about: mathematical proof that happy workers are good for business.

“Up with the workers…yeah, yeah!
Down with the bosses…boo, boo!”

I always feel a little silly walking the picket lines, and this past Sunday was no exception. Nevertheless, I marched dutifully on, hoping that my presence - among about fifty others as part of the CLEAN Car Wash Campaign– would help convince the owner of this Car Wash to pay the workers the legal minimum wage. 

On the other side of the fence, the carwasheros themselves started an impromptu soccer game, since most of the potential customers respected the picket. The managers brooded and scowled.

There’s a lot of time to think when your only essential task is to put one foot in front of the other, so I began to reflect on my surroundings. We the protesters, I realized, with our like-colored (Union made!) t-shirts and kitschy slogans, could easily be mistaken for fans of the soccer game. Except that we were players, too. Our task was to prevent cars from driving onto the field.

I imagined that in place of the large sign reading “Vermont Hand Wash” there was actually a scoreboard. I kept a mental score as I marched and chanted.

A worker strikes an errant ball, which skips off a managers pant leg. The manager must bend down and wipe off a streak of resulting grime! Workers: 1, Bosses: 0

A car starts to turn into the driveway…but wait! A protester hands her a flyer and…yes! The car changes course and pulls back into traffic! Workers: 2, Bosses: 0

Things are looking up. We’re way out in front now. Our chanting grows fiercer and the collective energy swells. Nothing can stop us! We wouldn’t be surprised if the owner came out waving the white flag of surrender at any moment, agreeing to raise wages, improve conditions and recognize the Union.

2 o’clock comes and the protesters pack it in. We filter off to our regularly scheduled Sunday afternoons, secure in the feeling that we’ve struck a mighty blow for justice.

Two hours later, I drive by the wash and notice that it is packed with cars. There’s no time for soccer now, but the game goes on as the workers sweat with exertion--furiously working despite the harsh chemicals they are inhaling or the illegally low wages they are being paid. My mental scoreboard is reversed and I am left wondering if perhaps our protest wasn’t just a minor inconvenience for the owner and a missed opportunity for tips for the carwasheros.

Ordinarily, this is how the game would have ended, and I would have felt the way I did after casting my vote for John Kerry. (“I want my fifteen minutes back!”)

But instead I feel hopeful. With Barack Obama headed for the White House and Hilda Solis on the way to the Department of Labor, the odds that have been stacked against Unions and workers for so many years may be starting to change. Come 2009, our little band of volunteers and worker-organizers will have some power on our bench.

Facing card check neutrality and funding for wage and safety enforcement, Mr. Pirian might start to see our protests as one face of a ferocious justice-seeking behemoth.

Or maybe Obama, Solis and the new Congress will do such a fabulous job that our protests won’t even be necessary, and we can all spend our Sundays playing soccer.