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Regulators Predict Problems With Wage Hike

Labor: Officials fear anticipated increase would be hard to enforce and would push even more garment firms to cheat.


Just as they are starting to show progress in combating abusive working conditions in Southern California's garment-manufacturing sweatshops, government regulators fear they soon will be set back by a major new struggle: enforcing a higher federal minimum wage.

Federal and state authorities predict that the anticipated 90-cents-an-hour increase in the minimum wage would turn more garment firms into labor law scofflaws.

Sewing contractors who already are squeezed financially will face further pressure if Congress raises the pay standard from $4.25 to $5.15 an hour. The House of Representatives has already approved the increase, and the Senate could act on the measure as soon as next week. The result, authorities say, is that some contractors who now obey labor standards will go "underground" and cheat on the minimum wage and other laws.

What's more, the impact could be broad, inasmuch as the apparel industry now rivals aerospace and high technology as the biggest manufacturing employer in Southern California.

"I see tremendous problems there," said William Buhl, San Francisco-based regional administrator for the wage and hour division of the Labor Department. "They can't even pay the minimum wage now. How are they going to pay $5.15 an hour?"

Even more critical was Jose Millan, assistant California labor commissioner, who called raising the minimum wage "a feel-good measure." The problem, he said, is that "no one is thinking about the consequences," particularly in enforcing the law.

Millan and other regulators expressed concern that as employers increasingly try to skirt the higher minimum wage, they could resort to such tactics as using illegal child labor. Children, they point out, are more willing than adults to work for illegally low wages. As a result, authorities said, minors could wind up in hazardous situations and working longer hours than allowed under child labor laws.

In addition, officials say, employers who pay workers in cash "under the table" to avoid the higher minimum wage are almost certain to violate laws requiring them to provide employees with workers' compensation insurance coverage.

Many industry officials and worker advocates agree with that outlook.

"I'm concerned about how a wage increase would affect honest contractors," said Joseph Rodriguez, executive director of the Garment Contractors Assn. of Southern California.

"The honest contractors have to compete with the dishonest operators, the contractors who blissfully violate labor laws. Some honest people in this industry may become desperate--and desperate people sometimes do foolish things."

Rodriguez said contractors are under severe pressure from the manufacturers employing them, many of which threaten to send work overseas if prices aren't held low.

Although increasing the minimum wage has broad public support, some low-paid workers in the garment-manufacturing industry see little hope that they will immediately benefit. Graciela Ceja, a Mexican immigrant who has sewn garments in Los Angeles for more than 10 years, explained that she is paid by the number of pieces she sews, not by the hour.

A minimum wage increase "will help people with professions, but not poor workers," she said. Ceja said that in an average week, she works more than 50 hours stitching garments and earns about $120, roughly half the legal minimum.

Still, supporters of the minimum wage boost argue that the benefits of an increase outweigh the drawbacks. When the minimum wage rises, "there's not much debate over the fact that many people get a raise even if noncompliance goes up," said Alan B. Krueger, a labor economist at Princeton University who was chief economist for the Labor Department in 1994 and '95.

He noted that according to Bureau of Labor Statistics figures for last year, roughly 10 million nonsupervisory workers earned between $4.25 and $5.14 and hour, and the vast majority would stand to benefit directly from the proposed increase in the minimum wage.

The increase is also expected to ripple upward to millions more workers who are slightly higher up on the pay scale. By way of comparison, the number of workers illicitly paid less than the minimum currently is estimated at about 1 million.

Maria Echaveste, head of the Labor Department's wage and hour division, said, "What we have to focus on is that it's not the level of the violation rate that should determine if it's good policy."

Echaveste acknowledged that enforcing the new law in the abuse-ridden garment industry "is going to be a real problem for us."

She said other industries that traditionally have had large numbers of employers violating minimum wage requirements--including janitorial services, agriculture and home health care--also present a heightened "risk" to regulators.

Echaveste said the Labor Department will look for other ways to improve compliance with the law, including increasing education programs for employers and enlisting the help of worker advocacy groups.

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