Lowest Wage Challenge
What is the Lowest Wage Challenge?
It is estimated that less than 2% of the people who make the clothes we all wear earn a living wage (Source: The True Cost). This means 98% of workers in the fashion industry are being held in systemic poverty and cannot meet their most basic needs. And, 75% of these workers are women between the ages of 18 and 24 (Source: Fashion Revolution, 2017).
In order to move towards living wages across the fashion industry, ABLE and Nisolo are partnering to launch a challenge to the industry to publish their lowest wages at each manufacturer and be transparent with what workers are paid. ABLE and Nisolo have begun by auditing their manufacturing in Ethiopia (ABLE) and Peru (Nisolo) and publishing those lowest wages, and are asking consumers and brands alike to join a movement of protecting the most vulnerable workers through true transparency.
Why are lowest wages important?
We believe that it’s important for companies to publish their lowest factory worker wages–not an average, or the cost of labor in a garment – because it gives customers insight into what brands pay the most vulnerable people in their supply chain. The lowest wage is the clearest indicator of how the most vulnerable workers are being treated.
Part of why the wage problem has gotten so bad is that it’s been in the dark. When consumers see the lowest wage, they can pressure brands to pay their factory workers ethically, and make an informed decision to protect the women who make their clothes.
Why are you publishing wages?
Part of why the wage problem has gotten so bad is that it’s been in the dark. Information about wages is not available, and what is available is usually an average or a labor cost percentage. Those numbers are helpful, but only when accompanied by more tangible information. When consumers see the lowest wage, they can pressure brands to pay their factory workers ethically, and make an informed decision to protect the women who make their clothes.
What are wages currently like for factory workers in the fashion industry?
Minimum wages in the fashion industry are generally only half of what can be considered a living wage, which is the amount someone needs to cover their basic living expenses including food, water, housing, education, healthcare, transportation, clothing, and other essential needs (Source: Global Fashion Agenda, 2017).
This is not a small problem. In fact, it’s estimated that the fashion industry employs 75 Million factory workers around the world (that’s a higher number than the population of over 220 different countries) (Source: Fashion United, 2017). Factoring in that many workers have children, the number of people this problem is affecting quickly becomes as large as the population of the United States, the 3rd largest country in the world.
Why is there a particular focus on women?
First, this is largely a women’s issue. Fashion is one of the world’s largest industrial employers of women, as women make up an estimated 75% of its 75+ million workforce (Source: Fashion Revolution, 2017). Secondly, Women’s economic empowerment is crucial to ending poverty. Women also statistically reinvest more of their income into their families, so it could be said the best way to break cycles of poverty in families is by paying women. The fashion industry is a female-oriented industry where we can have immediate impact.
What is a living wage and why is it important?
The end to generational poverty starts with living wages. Elements of a living wage include food, water, housing, education, healthcare, transportation, childcare, clothing and other essential needs, and savings for unexpected events. Calculating a living wage looks at a combination of the leading industry standards—Wage Indicator and Trading Economics—local cost of living data, and survey data from the facilities audited. Based on those data points and knowledge of the local economy, an auditor determines the living wage.
Wages dictate what families are able to provide for themselves. Special programs and incentives are helpful, but basic needs must be met and a family must have discretionary income to spend on their own choices. Healthy wages are the beginning of financial freedom, and freedom of choice outside of poverty.
Article 23(3) of the Universal Declaration of Human Rights (UDHR) declares a living wage to be a human right, stating “Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity..."
ABLE / Nisolo
How do you calculate a living wage?
Our methodology looks at a combination of the leading industry standards—Wage Indicator and Trading Economics—local cost of living data, and survey data from the facilities we audit. Based on those data points and knowledge of the local economy, the auditor determines the living wage. Elements of a living wage include nutrient-rich food, water, housing, education, healthcare, transportation, childcare, clothing and other essential needs, and savings for unexpected events.
Are the men in your factories paid the same as the women? What do the men make?
Yes, the wages you see in our reports reflect the lowest wage of a worker in the factories with which we do business. All of the factories we work with must pay men and women the same wage for the same work.
When you convert different economies’ currencies to dollars, it often seems low. Can you explain?
It’s easy to look at wages from other countries and see how they convert to dollars, but that’s not always helpful. What’s most important is that people are making a wage that meets their needs in their local context. Only looking at dollars misses the most important part of the conversation, which is that living wages is based on local cost of living.
Living wages are based on the local cost of living, so what’s most important is that workers are making a wage that meets their needs in their local context. A living wage is calculated based on the local costs for nutrient-rich food, water, housing, education, healthcare, transportation, childcare, clothing and other essential needs, and savings for unexpected events.
Conversion to USD, however, is useful to illustrate how little it would take for brands to bring all workers to a living wage.
Why do you charge so much for your products if you don’t give that much to your factory workers?
In addition to providing our producers a living wage, we have other expenses we need to pay to maintain the health of our business. Other expenses include raw materials, shipping and delivery, corporate staff, marketing, and other administrative costs.
How are lowest wages different from a living wage, or a fair wage?
The lowest wage is literally the lowest wage an organization pays an individual at each manufacturer, which is an important number that shows how the most vulnerable workers are cared for.
A living wage is based on an estimate of the cost of living in a community or region based on typical expenses, taking into account the costs of food, medical, housing, transportation, utilities, childcare, education, taxes, and savings. We believe all manufacturers should be striving to provide a living wage as their lowest wage because that ensures everyone in their organization can meet their basic needs.
A fair wage, while by definition is intended to be reasonable for the type of work done, is often too subjective.
What’s the difference between the minimum wage and living wage?
The minimum wage is the legal minimum hourly wage employers are required to pay employees, and a living wage is the minimum hourly wage required to meet someone’s basic needs in a given location in order to live above the poverty line. The living wage takes into account things like housing, healthcare, childcare, healthy groceries, water, education, transport, clothing and other essential needs, including savings for unexpected events.
The MIT Living Wage Calculator is a leading resource for determining living wages in the United States, which is what we’ve used to evaluate our lowest wages in Nashville.
Almost universally, the minimum wage is not enough for someone to meet their basic needs. For example, in Nashville, TN, the minimum wage is $7.25/hour and the living wage is $11.24/hour for a single adult. That’s over a 55% differential. Overall, people making the minimum wage are most likely living in poverty.
Why are living wages so important?
Living wages are key to lifting people and families out of poverty. It is the minimum required to meet someone’s basic needs, which is what ends cycles of poverty and dependence on government assistance, minimizes employee turnover, maximizes productivity, increases employee retention, and leads to better overall health and education for each generation. It’s also the right thing to do.
Article 23(3) of the Universal Declaration of Human Rights (UDHR) declares a living wage to be a human right, stating “Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity...”
What process did you use to publish your wages?
ABLE developed the ACCOUNTABLE assessment tool to more deeply evaluate the impact of their supply chain on workers, with a particular focus on women. It rigorously audits the employment practices of manufacturers while identifying and correcting participant factories’ policies and procedures based on the findings. The three focus areas of the audit are wages, equality and safety. To learn more about ACCOUNTABLE and see our audits, visit www.accountablebrands.org.
Why don’t brands publish their lowest wages?
Most brands don’t publish their wages because they don’t want you to know that the people who make the products you wear are being paid a wage that holds them in poverty. Nevertheless, all brands can access and share the lowest wages in each of their manufacturers. So nominate your favorite brands to join the Lowest Wage Challenge!
How did poverty wages in the fashion industry become the norm?
A lot of things have contributed, but the major driver has been brands cutting costs that results in more consumption and unhealthy consumer behavior. We love having the newest and greatest products at the cheapest price, and we don’t think about who is really paying the cost. And brands are making a lot of money from it, so there’s no incentive to change.
The good news is that because consumerism is a big part of the problem, it can also be a big part of the solution. If consumers start demanding change from brands with their wallets, we will start to see change throughout the entire supply chain.
Will moving to living wages make products cost more?
Products would cost slightly more, but only by a very small fraction. Studies show that it would only cost a brand between 1-4% of the cost of the garment to ensure living wages across its supply chain (Source: Oxfam, 2019). As a consumer, the price of clothing would increase 0-2% to provide a living wage to the people who made it.