The Trump Supply Chain and the Art of the Sweatshop

John Miller

John Miller is a professor of economics at Wheaton College (Norton, Mass.) and a member of the editorial collective at Dollars & Sense magazine. This article is forthcoming in the September/October 2017 Special Labor Issue of Dollars & Sense.

Reports that the President’s and his daughter’s clothing lines are not made in the United States put the lie to the White House’s “Made in America Week” this past July.

It was the height of hypocrisy. With the exception of his “Make American Great Again” hats and a few suits that are “stitched” in the United States, everything in Donald Trump’s clothing line, even the ties, is made in China and other developing countries, not the United States. And not one of the 838 products—garments, accessories, and shoes—advertised on Ivanka Trump’s website is made exclusively in the United States.

The Garment Supply Chain and the Trump Brand

That Trump brand garments are made outside the United States is hardly unusual. In 2015, according to the American Apparel and Footwear Association (AAFA), 97% of clothing consumed in the United States was imported. China, the top country of origin, supplied over one-third (35.9% by value) of U.S. apparel imports, followed by Vietnam, Bangladesh, Indonesia, and then nearly 150 other countries.

Garments are designed, produced, marketed, and sold through a multilayer, multinational supply chain. Typically, brand-name retailers, headquartered in either western Europe or the United States, develop designs for an ever-changing line of fashionable clothing. The retailers’ buyers then place orders across the developing world, negotiating with competing manufacturers—the contractors—over the materials used, the delivery date, and the price. Larger contractors often subcontract production to smaller factories, typically with fewer quality controls, worse working conditions, and lower costs, which they keep to a minimum by hiring and firing workers to match demand and forcing them to work overtime.

This global supply chain relentlessly drives down costs. For example, in 2013 a pair of George jeans made in Bangladesh sold for £14, or $22, at Asda, a British subsidiary of Walmart. Bloomberg BusinessWeek reports that Walmart paid out just $1.16 per pair of jeans to the Sepal Group, a large Bangladeshi manufacturer to make the jeans. Sepal pocketed 26 cents per pair of jeans and the remaining 90 cents went to cover factory costs (excluding materials). If garment workers in Sepal Group factories were paid the Bangladesh minimum wage of $68 per month and worked 50 hours a week, about 45 cents per pair of jeans would have gone to wages.

The supply chain for Trump garments is similarly international, penny-pinching, and exploitative. Let’s take a closer look at the Ivanka Trump line, which is far larger and more profitable than the now nearly defunct Donald Trump clothing line.

In 2012, the Ivanka Trump Brand, which employs just twelve employees, signed a licensing agreement with G-III, an apparel group whose clients include large brands such as Guess, Calvin Klein, and Donna Karan, and other celebrity brands such as Jessica Simpson. G-III, located in the New York City garment district, designs the brand’s line of clothes and accessories. The company’s buyers then place orders for the manufacture of those designs with contractors in China, Indonesia, Bangladesh, and other developing countries. G-III also imports the finished garments and accessories and distributes them to retailers throughout North America. The $157 blush-colored sheath dress Ivanka Trump wore to address the Republican Convention last year and other Ivanka-branded dresses, blouses, coats, denim jeans, and handbags are sold in department stores, such as Macy’s and Dillard’s, in discount outlets such as T.J. Maxx and DSW, and online by Amazon. Later this year, the Ivanka Trump Brand will open its own store in Trump Tower.

The workers who stitch and sew garments for the Ivanka Trump brand and other international brands are not only poorly paid. Garment workers, who are overwhelmingly women with few other employment opportunities, work long hours often without days off, and have been subjected to physical abuse, pregnancy tests, and other indignities. They work under dangerous conditions that have cost them their health, their limbs, and even their lives.

Empowering Women Who Work?

Those working conditions did not stop Ivanka Trump from proclaiming that, “Her professional mission is to inspire and empower women who work.” While having a job outside the home has empowered many women in the developing world, the same can’t be said for the working conditions in the export factories that make Ivanka-branded apparel and accessories.

Look, for example, at conditions in the Chinese factories that supply the bulk of Ivanka Trump clothing. In October 2016, the Fair Labor Association (FLA), a monitoring group that announces upcoming inspections to its members, investigated a Chinese factory where 80 workers make apparel for the Ivanka Trump label as well as for Calvin Klein, Tommy Hilfiger, and other G-III clients. The FLA found 24 violations of its Workplace Code of Conduct, based on International Labor Organization (ILO) standards. The most egregious, requiring “immediate action,” were:

  • the failure to provide legally mandated social insurance, including injury, medical, maternity, and unemployment insurance, earned leave, and pensions.
  • monthly overtime hours ranging from 42 to 82 hours, well above the 36 hours per month legal maximum, and production targets that require 17 hours overtime per week.
  • wages (between $255 and $283 a month) below the minimum wage in some parts of China.
  • health and safety violations including the failure to provide workers with safety equipment, and to monitor the workplace for disease hazards.

G-III increasingly places orders in the factories of other countries with still lower costs and even worse working conditions than in China. In Indonesia, the P.T. Buma factory makes clothing for G-III brands including Calvin Klein, Karl Lagerfeld, and Ivanka Trump. In Subang, West Java, where the factory is located, the minimum wage is just $173 a month, one of the lowest in Indonesia and in Asia as a whole, and about 40% lower than the minimum wage in Chinese factories. An investigation conducted by The Guardian newspaper found that the mostly women workers at P.T. Buma could not afford to have their children live with them—a problem of balancing work and family Ivanka Trump fails to cover in her book Women Who Work: Rewriting the Rules for Success.

In Bangladesh, where G-III has contracted for the production of Ivanka Trump jeans, garment workers’ wages are still lower and working conditions yet worse. Shipping records do not reveal which factories in the country produce Ivanka Trump clothing. But we know that Bangladesh’s garment industry grew to be the world’s second largest exporter by endangering and exploiting workers. Bangladesh’s garment workers typically earn a minimum wage less than half of that in West Java, and about one-quarter of the Chinese minimum wage. And their working conditions are notoriously dangerous. Since 2005, more than 600 garment workers have died in factory fires in Bangladesh. In 2013, the Rana Plaza factory building, just outside of the capital city of Dhaka, collapsed—killing 1,138 workers and inflicting serious long-term injuries on at least 1,000 others. It is the worst disaster in the history of the garment industry.

Sweatshop conditions are the norm in the garment industry. But the practices of the Ivanka Trump label are no better and most likely worse than even that dismal norm. Nike, Hennes & Mauritz, and Levi Strauss, a G-III client, disclose the locations of the factories making their clothes and shoes. The Ivanka Trump brand does not. Also, after the Rana Plaza disaster, over 100 clothing lines and manufacturers invested millions into financing safety improvements in garment factories through the legally binding Accord on Fire and Building Safety in Bangladesh and the non-binding Alliance for Bangladesh Worker Safety, a group made up of 29 North American retailers. Ivanka Trump’s company and G-III have had nothing to do with those efforts. The Ivanka Trump brand’s lack of transparency about where its clothes are made and failure to participate in industry efforts to improve conditions for garment workers adds up to a lack of accountability and wanton disregard that endangers the “women who work” Ivanka Trump celebrates.

More U.S. Sweatshops?

In 1997, just two decades ago, 41% of the clothes consumed in the United States were made in the country and, in 1967, five decades ago, the number was 95%— a far cry from today’s 3%.

Still, there is little reason to believe that garment industry, including stitching garments for the Trump labels, will return to the United States.

Producing garments in the United States would afford retail brands greater control over the production process, reduce transportation costs, and shorten delivery times. But the obstacles to the return of the garment industry are manifold. Most importantly, the gap between the cost of clothes made in the United States and those made in the export factories of the developing world is immense. In 2013, a denim shirt that cost $3.72 to make in Bangladesh would have cost $13.22 to make in the United States, according to the estimates of the Institute for Global Labour and Human Rights. Manufacturers, who complain about the lack of trained workers willing to work in the garment industry and rely on an immigrant workforce, worry that Trump’s anti-immigrant rhetoric and policies will reduce their supply of workers. “The only people left to work in this [industry] are immigrants,” Marcus Wainwright, co-founder of Rag & Bone told the Los Angeles Times. “Cut down on them and it will make things a lot harder.” Finally, higher costs would mean higher prices. But according to a recent NDP Group survey, less than one-quarter of respondents (23%) were willing to pay more for products with a “Made in the U.S.A.” label.

Even if Trump’s rhetoric could somehow bring about the return of the garment industry to the United States, it would do little to create good jobs or put an end to dangerous working conditions and rock-bottom wages for garment workers. The epicenters of the U.S. garment industry are the garment districts of the Los Angeles and New York areas, where a majority-immigrant workforce sews and stitches clothes for major retailers.

Two recent investigations uncovered the sweatshop conditions endured by workers in the Los Angeles area garment factories. Between November 2015 and April 2016, the Wage and Hour division of the Department of Labor (DOL) conducted an investigation of 77 (out of a total of about 2000) garment factories in the greater Los Angeles area. The DOL found wage and hour violations in 85% of those investigations, and that the offending establishments owed their workers $1.3 million in back wages, the equivalent of about $1500 per worker, or four to five weeks of pay. The report linked ten national retail chains to wage violations in Los Angeles area factories, including Dillard’s, Forever 21, Macy’s, Nordstrom, Ross Stores, and T.J. Maxx.

Later in 2016, the UCLA Labor Center published its report on working conditions in the Los Angeles area garment industry. They found that of the 307 workers they interviewed,

  • 82% had never received health or safety training at their workplace;
  • 72% reported that their workplaces were brimming with dust;
  • 60% reported excessive heat and dust that made it difficult to work and to breathe;
  • 49% reported that no first aid kits were available on site;
  • 47% reported that workplace bathrooms were soiled and unmaintained;
  • 42% reported that exits and doors in their shops were regularly blocked;
  • 42% had seen rats and mice in the factories where they work.

The relentless downward pressure that retailers and brands place on costs is the driving force behind the widespread wage violations and dangerous working conditions. Contractors on average receive a sewing fee that is only 73% of the fee that would allow the sewer to be paid the minimum wage and the required premium pay for overtime, according to the DOL report. In some cases, workers were being paid a piece rate per garment that added up to wages of as little $4 to $6 an hour, when the federal minimum wage was $7.25 per hour and the California minimum wage was $10.50 an hour.

Reform Not Relocation

If the return of the garment industry in the United States would not put an end to the exploitative practices, what would? The very measures that brought about the near elimination of sweatshop conditions in the U.S. garment industry by 1960 are a good place to start. The unionization of garment workers, and the imposition of federal laws and government regulations of workplaces, including a minimum wage and 40-hour workweek, combined with the post-World War II economic boom, lifted wages and improved working conditions in the U.S. garment industry. Since then, declining economic opportunity, severe cutbacks in inspectors, declining union representation, the diminishing value of the minimum wage, and a disempowered immigrant workforce all paved the way for the reemergence of sweatshops in the United States. While there is relatively little garment manufacturing in the United States, sweatshop conditions have become much more prevalent over the last 40 years. In addition, the same factors have undermined labor conditions in construction, meatpacking, janitorial and cleaning services, and other jobs.

Organizing garment workers, hiking the minimum wage, hiring enough inspectors to effectively enforce the labor law on the books, and granting legal status to immigrant workers would make a real difference in the lives of U.S. garment workers. “Hot goods” legislation would also help tame the abuses of the garment supply chain. Hot goods provisions of the federal Fair Labor and Standards Act, for instance, bar the (interstate) shipment or sale of goods by retailers who know or should have known were produced in U.S. factories that violate federal labor law. The threat of an embargo would be a powerful tool in an industry where on-time delivery has become non-negotiable.

Joint liability agreements—making retailers responsible for the safety, working conditions, and wages of their subcontractor’s factories—would also make a big difference in today’s global economy, where international buyers have been able to escape responsibility for conditions in the far-flung factories of their subcontractors. The Accord on Fire and Building Safety now in place in Bangladesh is just such a joint-liability agreement, holding apparel brands and retailers legally accountable for the safety conditions in the factories that make their clothes. If they were applied broadly to working conditions and wages (and not just safety) and in multiple apparel-producing countries, joint liability agreements could put an end to the worst forms of bottom-feeding practiced by the international brands.

Ivanka Trump’s disinterest in the Accord or most any other reform of the garment industry endangers rather than empowers the women who work making her clothes. That’s as hypocritical as her father’s “Made in America Week.”

Sources: “Latest Trends in the US Apparel Industry,” by Sheng Lu, Department of Fashion & Apparel Studies, University of Delaware; “Garment Industry Supply Chains,” Celia Mather, Women Working Worldwide, 2004; “Ninety Cents Buys Factory Safety in Bangladesh on $22 Jeans,”, June 6, 2013; “G-III Apparel Group, Ltd. Signs License for Ivanka Trump Brand,” Business Wire, Dec. 10, 2012; “The contractor that designs Ivanka Trump’s clothes does not offer a singe day of paid maternity leave,” by Danielle Paquette, The Washington Post, Aug. 8, 2016;  “G-III Apparel Group Ltd. – China,” Fair Labor Association Report, Oct. 10, 2016; “Workers endured long hours, low pay at Chinese factory used by Ivanka Trump’s clothing-maker,” by Drew Harwell Washington Post, April 25, 2017; “Revealed: reality of life working in an Ivanka Trump clothing factory,” by Krithika Varagur, Subang, West Java, The Guardian, June 13, 2017; “How Much Does It Cost To Make A Denim Shirt in Bangladesh, Versus the U.S.?” CNN, May 2, 2013, Institute for Global Labour and Human Rights; Reshoring Garment Production: China to the United States – The Tipping Point,” by Margaret Bishop et al, Fashion Institute of Technology, Nov. 25, 2011; “As Trump pushes for U.S. Manufacturing, ‘Made in America” is losing its luster in the fashion world,” by David Person, Los Angeles Times, Jan. 21, 2017; “Garment Industry’s Wage Violations Share Common Thread,” by David Weil, U.S. Labor Department Blog, Dec. 22, 2016; “Department of Labor Blasts So Cal Factories for Wage Theft,” by Andrew Asch, California Apparel News, Nov. 17, 2016; Dirty Threads: Dangerous Factories, Health and Safety in Los Angeles’ Fashion Industry, UCLA Labor Center, Dec. 2016; “Sweatshops Persist in U.S. Garment Industry,” by Kristi Ellis and Khanh T.L. Tran, Women’s Wear Daily, Dec. 5, 2016; “Trump’s outrage over outsourcing doesn’t apply to his own merchandise,” by Robert Lawrence, PBS Newshour March 6, 2016; “How many Trump products were made overseas? Here’s the complete list, by Michelle Ye Hee Lee, Washington Post, August 26, 2016; “For the Trumps, ‘Made in U.S.A.’ May Be a Tricky Label to Stitch,” by Laura Holson and Rachel Abrams, New York Times, Dec. 28, 2016; and, “How Ivanka Trump’s Fashion Line Collides With Her Father’s ‘America First’ Agenda,” by Matea Gold, Drew Harwell, Maher Sattar, and Simon Denyer, The Washington Post, July 14, 2017.

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