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Balanced Solution Required for Garment Industry Trouble : Reputable firms must be preserved, but strong self-policing is crucial

August 20, 1995

When state and federal agents freed 72 Thai men and women from peonage in El Monte, they fully expected to find the sweatshop was making the fake designer-label garments that are the bane of the fashion industry. What they found was even worse: The goods were all too real, destined for Neiman Marcus, Robinson's May, Macy's and other major retailers. For three years indentured Thais labored behind barbed wire for as little as 70 cents an hour to clothe debutantes in Dallas, matrons in New York and Valley girls in L.A. Even the most hardened must be shocked at this ruthless Third World exploitation on American soil.

The U.S. Department of Labor has asked the retailers to contribute toward the $5 million in wages owed the workers. Though not legally liable, the retailers should agree, either out of shame or for PR reasons. But even if the enslaved workers are made whole, the larger question is how to prevent future abuses without imposing such Draconian controls that the garment industry is driven out of Southern California into the even murkier work worlds of Asia and Latin America. A difficult balance is involved, because many L.A. garment workers take jobs that are sometimes dangerous, at below the minimum wage, and value them.

It is unreasonable to expect out-of-state retailers to monitor factories in Los Angeles, which has surpassed New York as the main garment-making center, with 110,000 workers toiling at about 4,000 sewing shops, many unlicensed. But for its part the state Department of Industrial Relations should tighten licensing procedures. The department already has begun to check with the Internal Revenue Service and other agencies and will not issue a business license if there are unaddressed tax or other problems. Also, the department on Friday began to issue public lists of factories whose licenses have lapsed. Had that list been available earlier, manufacturers would have been alerted not to buy from D&R Fashions, the front for the El Monte slave shop. That said, state licensing is rather hollow. Inspectors never visited D&R in the two years it held a valid license, and 13 of the 16 manufacturers that bought the slave goods were unlicensed.

Thus enforcement is the rub in the search for a solution. The budget for the Industrial Relations Department has been cut by 28% over five years; it has only 75 field inspectors. Given the state government's budget woes, the garment industry must police itself better. The U.S. Department of Labor has urged manufacturers to sign agreements to monitor their subcontractors. In exchange, the manufacturers are promised that their liability for any violations will go back only three months instead of three years. California's Legislature in the past has resisted assessing fees on companies to self-finance enforcement. The El Monte horrors should change that.

More problematic is a proposal by garment unions to broaden the legal liability of manufacturers for wage and labor violations committed by their subcontractors. Current law holds them financially liable only if the subcontractor is unlicensed. Govs. George Deukmejian and Pete Wilson have vetoed union-backed bills in the past.

The issue, now as then, is both to prevent abusive labor practices and to preserve a vibrant industry, one of the few growth areas in Southern California. This region is particularly well-suited for garment making, partly because of abundant labor but also because it is much closer to the 7th Avenue fashion designers in New York than faraway Asian factories. That means L.A. shops can respond quickly to fast-changing merchandising needs.

That advantage offsets the high cost of doing business here. The risk in stricter liability laws is that they might drive manufacturers to seek products from China, India, Malaysia and other countries that have deplorable labor conditions but are well beyond the control of American authorities. Therefore, we oppose any expansion of the union-proposed joint liability concept for now. But the El Monte slave shop has put the garment industry on notice that it can no longer ignore exploitative labor practices. Ethical retailers, manufacturers and subcontractors must police their industry or public outrage will soon force government to do it for them.

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