"We have long believed that while the contractors are the ones who are breaking the law, the real culprits are the manufacturers who squeeze the contractors to the point where breaking the law is either required or good business," he said.
Both Levy and Nutter predicted that the agreement will have little or no impact on prices consumers pay for the company's jeans and other products. Contractors' labor expenses, they said, are only a small part of the retail cost of apparel.
Nutter also dismissed the possibility that this sort of agreement could drive more production jobs out of the country, arguing that apparel firms need a base of U.S. contractors to meet tight deadlines for fashion merchandise. "Paying people the minimum wage and respecting labor law . . . means that people at the top will have a little less and people at the bottom will have a little more, and the public won't notice anything," he said.
Levy said Guess? plans "to stay American," but he added that it is conceivable some companies will shift production out of the country to hold their costs down.
Guess?, a privately held company based in Los Angeles, has annual revenues of $750 million and employs 1,500 people. Levy said the company's contractors employ another 7,000 workers.
Run by the Marciano family of Beverly Hills, Guess? was involved in a 6 1/2-year legal battle with rival jeans maker Jordache Enterprises for control of the company. The suits between the companies were settled in May, 1990, and although the dispute prompted various government investigations unrelated to the Labor Department's probe, the company was never charged with any wrongdoing.
At apparel contractors' shops, workers typically are paid on a piecework basis. The problem, authorities say, is that the piecework rates often are so low that many workers are not fast enough to earn the equivalent of the minimum wage.
Officials also say that under the piecework system, even many of the fastest workers are unable to earn legally required time and one-half pay for their overtime hours.
Still, with Southern California's burgeoning population of illegal immigrants and unskilled workers from Latin America and the Far East, there is an ample supply of willing workers for local apparel manufacturing jobs, officials say.
