American Apparel: the downside to sweatshop-free labor
Filed under: Company News, People
Further evidence that it's untenable for garment factories to employ American citizens while making a profit: troubles for American Apparel (APP), long targeted by the U.S. Immigration and Customs Enforcement Agency, were recently laid bare. The U.S. says nearly a third of the company's 5,600 Los Angeles factory workers may not have proper documentation: 1,600 may have gained employment through "suspect and not valid" eligibility documentation, and another 200 may be ineligible to work in the U.S. due to discrepancies in their I-9 identity documents. American Apparel has built its corporate reputation on "sweatshop-free" U.S.-made T-shirts and knit clothing. But rather than addressing the treatment or legal employment status of its workers in the SEC filing -- except with a vague statement about its policy to comply with federal obligations -- the company only addressed its profitability. Even if all the employees end up being ineligible, management said in its 8-K, filed June 24, "The Company believes that its current surplus levels of inventory and manufacturing capacity would mitigate the adverse impact of any disruption to its manufacturing activities that may potentially result from the loss of these employees."
Writing for our sister site BloggingStocks, Zac Bissonnette found the statement damning, not for its uncaring SEC-form tone but for its balance-sheet betrayal. "We have way too much inventory as it is, so this isn't a big deal," Bissonnette translates. "If the potential loss of one-third of its employees won't have a materially adverse effect on its operations, the company's operations are in pretty bad shape."
But I have other problems with this report: It reveals consumers' sense of entitlement to consume cheap goods and food, produced with entirely legal, humane working conditions. The facts are that naturalized Americans generally won't work at the wages, or under the conditions, that foreign workers are eager to. Yet the Immigration and Customs Enforcement Agency punishes the illegal immigrants, while the companies who employ them merely file forms that blithely state the its operations won't suffer if its labor force is arrested.
CEO Dov Charney has called for legalization of foreign workers, and he's helped promote his cause with billboards and T-shirts proclaiming "Legalize LA." This is great; I almost admire the factory for employing such a huge number of illegal immigrants -- at least someone is giving them work. But even "sweatshop-free," "American-made" T-shirts priced at $8 or $10 wholesale (as opposed to just $1 or $2 most T-shirts cost retailers) aren't really paying the true cost of employing workers humanely.
We need to be prepared to pay more for goods -- and to buy a lot fewer of them -- before this problem can be fixed. I'm not blaming American Apparel, or the retailers who stock their goods. I'm blaming us consumers. We did this. And it's time we put it right.
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Reader Comments (Page 1 of 1)
7-03-2009 @ 9:28AM
allan said...
Ms. Gilbert, my congradulations!
Someone who actually sees the dilemma of the consumer desires and entitlements here to buy cheap apparel and trying to fill jobs to make these same goods domesticly!
Its quite simply near impossible....there a few workers willing to work ....and even fewer that are reliable!
More columnists with your enlightened perspective need to step forward!
I thank you!
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7-05-2009 @ 8:32AM
Ash said...
I am so sick of listening to people like you continue to bash Americans. The company disgusts me for hiring illegals; and no, I DON'T CARE ABOUT THE "PLIGHT" OF ILLEGALS. They aren't supposed to be here in the first place. Yes, yes---I get it. We have to stop buying goods we can afford if the economy is going to turn around. I can do without the pious crap about how horrible people are in this country, though, because most are simply trying to get by. These same poor wretches you are so sympathetic toward are lowering the average wage in the US to a level that does not ALLOW many people to purchase goods and services at the premium prices you suggest.
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7-05-2009 @ 11:23AM
Jim said...
I have a mixed reaction to your article.
First, you are 100% correct in stating that American consumers have been ambiguous in demanding cheap clothing and other goods while decrying the low wages of workers who produce them, either inside this country or overseas.
Related to the first point, I believe that the article falls short by failing to illustrate how using union workers and paying their exhorbitant wages would increase the cost of apparel. The $10 wholesale cost that you cite would increase to at least $25.
I further disagree with your premise that consumers decreasing their purchases of apparel will help solve the problem. Reducing the demand for a commodity, such as the labor required to produce clothing, while maintaining a steady supply of labor can ony serve to reduce the price of that commodity (wages).
I would suggest that one solution to the apparel markets difficulties is fo Americans to return to a higher standard of appearance. Our dumbed-down, casual to the point of grunge standard portrays a collective lack of self-respect on our part. If we get over that, consumers will return to purchasing the clothing that they need and demand for all kinds of apparel will return to a more normal and healthy level.
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7-23-2009 @ 12:10PM
Lisa said...
You mentioned that you 'admire' companies that hire illegal aliens to allow them to earn monies while living here in the US. What you fail to portray is the big picture -- that while they are 'earning a living' here in the US, we Americans are burdened with paying for all of their medical expenses for their entire family, educating their children in our over-crowded public schools, etc. I am all for 'achieving the American dream', but like so many others who have done this legally, the illegal aliens need to pay into the system that is supporting them. They are breaking the law and it's costing us money. Why sympathize?
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9-23-2009 @ 10:44AM
Dave said...
My company, Lifewear, Inc. is located in Pottstown, PA. We are a family owned Union Made in USA manufacturer of tees, long sleeve tees and turtlenecks, and sweatshirts. We hire only American citizens and pay a decent wage for the garment industry. We ARE "sweatshop free" and pay insurance, 401K, and many other benefits. Our employees are members of "workers united-SEIU Affiliate". All components of our clothing are made in the United States. We sell wholesale only at www.Lifewear.net. You do have a choice!
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9-23-2009 @ 5:45PM
Bill said...
What part of ILLEGAL am I missing? What else that is illegal can we do? Can we pick and choose the laws we want to obey?
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