Have The Proposed Fabric And Fashion Acts Poked The USA Retail Bear?

Fashionistas are stunned, retailers are frightened, but it doesn’t appear that anyone is fighting against politicos who propose (what many feel) is a historic case of industry over-regulation by government.

Surely the politicos mean well, and everyone wants to support made-in-USA, protect the environment, and be opposed to forced labor – but the numerous financial penalties, mountains of paperwork, and disruptions included in new and proposed legislation will eventually translate into a diminished fashion industry or (potentially) a slow Lingchi death by 1,000 cuts.

It is quite true that the business of fashion is never dull, but no one expected so many liberal politicians to pour kerosine on an already distressed retail industry. Perhaps, politicos have forgotten about the numerous retail bankruptcies of the last few years, or the struggles with international supply chains. Perhaps, punishment for retail and fashion is just a step too far, and perhaps issuing industry wide guidelines would be appreciated as a better way to corral everyone to be on the same page at the same time.

Obviously, some politicos just don’t trust the retail and fashion industries. Apparently, they tapped into the NGO (non-governmental organization) world for their inspiration to profile labor rights, human rights, sustainability, and the environment and it may be no surprise that retail industry executives are generally loathe to push back against the inbound legislation – mostly for fear that their brand or corporate identity will come under media criticism. Fashion is just an enormously big target with headline appeal, and it affords the proponents the exposure that they crave. Frankly, if apparel history is correct, people have been making clothes since Adam and Eve left the Garden, and most manufacturers generally do it right (with occasional unfathomable disasters along the way).

New York City, by all accounts, is the fashion capitol of the world, so it’s completely ironic that New York’s Senator Kirsten Gillibrand was the one who delivered the latest salvo by introducing U.S. Senate proposed legislation which is aptly called the Fashioning Accountability and Building Real Institutional Change Act or the FABRIC ACT. Senator Gillibrand’s announcement was grandiose with media attention from the likes of Vogue.com and Harpersbazaar.com – but wasn’t long on the details of the bill or the millions of dollars that it would cost to set up. The bill arrived with little Congressional support and was viewed by some as promoting the position of NGO’s and organized labor to promote new standards for domestic manufacturing while inadvertently criticizing the fashion industry. The legislation is intended “to amend the Fair Labor Standards Act of 1938 to prohibit paying employees in the garment industry by piece rate, and to require manufacturers and contractors in the garment industry to register with the Department of Labor.”

To make the bill more palatable, it was caged with multi-million-dollar incentives to bring apparel assembly business back to the USA. To make the bill more terrifying, there exists the potential for expensive civil liabilities for brands or individuals who could be associated (directly or indirectly) with paying any factory less than the required wage. The idea of a guaranteed federal wage doesn’t rankle feathers. The problem for anyone who understands garment manufacturing is that piece rate is generally the main incentive to reduce cost by producing more units in a given period of time.

What remains curious for Senator Gillibrand’s introduction is that the bill is designed to protect jobs and wage infractions in New York (and elsewhere). However, the New York State data (from the U.S. Bureau of Labor Statistics) indicates that only 5,140 people are engaged as garment sewing machine operators in the state, plus the only co-sponsors of the legislation are Senator’s Bernie Sanders, Elizabeth Warren, and Cory Booker. As a point of comparison, New York City is the home of 900 fashion related companies and the host for 75 major trade show. The argument from the Gillibrand camp is likely that this legislation is federal, not state, and their office is looking after the country as a whole. While that may be true, California’s SB62 recently exchanged the piece rate for an hourly rate, and they have 15,220 workers engaged in garment sewing (per the U.S. Bureau of Labor Statistics). However, Senator Gillibrand’s federal bill would revert to the state minimum wage, so California’s new rate of $14 or $15 per hour could potentially encourage a production shift to a place like South Carolina where it is only $7.25 an hour. The other labor centric item of interest is that, remembering that piece rate is often considered as the driver of productivity, it remains quite interesting that both the Gillibrand “Fabric Act” and the California SB62 legislation both contain provisions that reinstate the piece rate if there is a collective bargaining agreement in place.

Senator Gillibrand’s federal legislation follows new state legislation that was put forward by two New York State politicians: Senator Alessandra Biaggi and Assemblywoman Anna R. Kelles. They introduced the Fashion Sustainability and Social Accountability Act (the Fashion Act) to assure that “labor, human rights, and environmental protection are prioritized.” Senator Biaggi also said that “New York State has a moral responsibility to serve as a leader in mitigating the environmental and social impact of the fashion industry.” Their state legislation looks at fashion companies who do business in New York State with over $100 million in revenue to map 50% of their supply chain, and also add things like a list the annual volume of material they produce by material type, plus the median wages of workers or prioritized suppliers, and the wage comparison to local minimum wage and living wage. In addition, any citizen can file a civil action against a person or business who is alleged to be in violation – and the fine can be quite large.

The goals or objectives of these bills are generally good and any criticism could be moderated, but a key issue is that important parties in the retail and fashion industries were not necessarily included in the bills creation. The very idea that politicians feel compelled to exercise control over private industry by attempting to legislate penalties to achieve goals that they created – is a weak premise. There seems to be a total disregard for the fact that industry executives at most brands, retailers, and apparel manufacturers actually try to do the right thing.

Anyone in the fashion world will tell you that the industry already has significant rules and regulations. Some industry experts (with a sense of humor) might even tell you that the five-pocket jean was invented by the federal government – as a permanent place to put their hand in fashion’s pocket. Prior to former President Trumps tariffs, the fashion industry was paying about 50% of all duties collected for all products brought into America. In addition to the extra tariffs (taxes), textile chemicals are regulated, wastewater is regulated, labor is regulated, labels and buttons are regulated – as is sewing thread. Domestic and foreign factories are monitored for wages, worker rights, and human rights. Industry issues do arise – but they often come from unregulated sub-contractors, and any new legislation is unlikely to alter that type of bad behavior. One thing that does remain clear, is that these attempts to micro-manage private industry are making it harder (and more costly) for the reputable companies to survive.

While politicos now seem compelled to go after their own tax-paying constituents, it would be helpful if someone would take a look at what the federal government does when it comes to sourcing apparel for the military and for governmental uniformed occupations. The Berry Amendment requires that all garments made for the military must be produced entirely in the United States. However, the government often gives the apparel orders to sewing machine operators who are inmates in the federal prison system, and then it pays them between $.23 and $1.15 an hour versus the minimum wage paid outside of prison walls. The government claims that the use of prison labor prevents recidivism, but how may prisoners actually graduate from prison to become sewing machine operators? Check out a government independent corporation called UNICOR (formerly Federal Prison Industries) which is part of the Federal Bureau of Prisons, which is part of the Department of Justice. In 2021 they had sales of $127,956,000 in clothing and textiles – and the question remains: to level the playing field – is Senator Gillibrand also looking at creating an hourly minimum wage or collective bargaining agreement for federal prisoners as well?

The mission of reputable fashion companies to produce stylish and excellent quality products in a responsible manner. They focus on manufacturing and productivity, human rights, worker rights, diversity, the environment, sustainability, circularity, and quality. Politicos, of late, must feel this is not good enough.

First came the Smoot-Hawley Act in 1930 which created the base fashion tariffs that actually helped push America into the great depression. The industry survived Smoot-Hawley and eventually moved to operate globally, while always bringing fashion and value to America. There have been challenges along the way – with the former quota system, the introduction of the World Trade Organization, and OSHA regulations. However, in more recent times, the fashion bear was poked by the Trumpian China tariffs, and the difficulty of working to support the Uyghur Forced Labor Prevention Act (UFLPA) affecting large percentage of the sourcing that arrives from China.

Looking at these regulations and the proposed Fabric/Fashion Acts – Politicos might want to slow down their progression, or spend more time including fashion industry executives in the crafting. It’s one thing to suggest guidelines, and quite another to legislate, penalize, and criticize constituent companies.

Some who worry about the future of the fashion industry are concerned that many of these new potential laws and proposals could create massive retail industry Lingchi – which, according to ancient history, is a slow and painful death caused by 1,000 cuts.