Industry pays right living wage

VILLA ALTAGRACIA, Dominican Republic – Sitting in her tiny living
room here, Santa Castillo beams about the new house that she and her husband
are building directly behind the wooden shack where they now live.

The new home will be four times
bigger, with two bedrooms and an indoor bathroom; the couple and their three
children now share a windowless bedroom and rely on an outhouse two doors away.

Castillo had long dreamed of a
bigger, sturdier house, but three months ago something happened that finally
made it possible: She landed a job at one of the world’s most unusual garment
factories. Industry experts say it is a pioneer in the developing world because
it pays a “living wage” – in this case, three times the average pay of the
country’s apparel workers – and allows workers to join a union without a fight.

“We never had the opportunity to
make wages like this before,” says Castillo, a soft-spoken woman who earns $500
a month. “I feel blessed.”

The factory is a high-minded
experiment, a response to appeals from myriad university officials and student
activists that the garment industry stop using poverty-wage sweatshops. It has
120 employees and is owned by Knights Apparel, a privately held company based
in Spartanburg, South Carolina, that is the leading supplier of college-logo
apparel to American universities, according to the Collegiate Licensing Co.
For Knights, the factory is a risky proposition, even though it already has orders
to make T-shirts and sweatshirts for bookstores at 400 American universities.
The question is whether students, alumni and sports fans will be willing to pay
$18 for the factory’s T-shirts – the same as premium brands like Nike and
Adidas – to sustain the plant and its generous wages.

Joseph Bozich, the CEO of Knights,
is optimistic. “We’re hoping to prove that doing good can be good business,
that they’re not mutually exclusive,” he says.

Not everyone is so confident. “It’s
a noble effort, but it is an experiment,” says Andrew Jassin, an industry
consultant who says “fair labor” garments face a limited market unless deft
promotion can snare consumers’ attention – and conscience. “There are consumers
who really care and will buy this apparel at a premium price,” he says, “and
then there are those who say they care, but then just want value.”

Bozich says the plant’s T-shirts
and sweats should command a premium because the company uses high-quality
fabric, design and printing.

In the factory’s previous
incarnation, a Korean-owned company, BJ&B, made baseball caps for Nike and
Reebok before shutting it in 2007 and moving the operation to lower-wage
countries. Today, the reborn factory is producing under a new label, Alta
Gracia, named after this poverty-ridden town as well as the Virgin of
Altagracia, revered as protector of the Dominicans. (Alta gracia translates to
“exalted grace.”)

“This sometimes seems too good to
be true,” says Jim Wilkerson, Duke University’s director of licensing and a
leader of American universities’ fair-labor movement.
He said a few other apparel companies have tried to improve working conditions,
like School House, which was founded by a 25-year-old Duke graduate and uses a
factory in Sri Lanka. Worker advocates applaud these efforts, but many say Alta
Gracia has gone further than others by embracing higher wages and unionization.
A living wage is generally defined as the amount of money needed to adequately
feed and shelter a family.

“What really counts is not what
happens with this factory over the next six months,” Wilkerson says. “It’s what
happens six years or 10 years from now. We want badly for this to live on.”

Santa Castillo agrees. She and many
co-workers toiled at other factories for the minimum wage, currently $147 a month
in this country’s free-trade zones, where most apparel factories are located.
That amount, worker after worker lamented in interviews for this article, falls
woefully short of supporting a family.

The Alta Gracia factory has pledged
to pay employees nearly three and a half times the prevailing minimum wage,
based on a study done by a workers’ rights group that calculated the living
costs for a family of four in the Dominican Republic.

While some critics view the living
wage as do-gooder mumbo-jumbo, Castillo views it as a godsend. In her years
earning the minimum wage, she said she felt stuck on a treadmill – never able
to advance, often borrowing to buy necessities.

In many ways, the factory owes its
existence to an incident a decade ago, when Joe Bozich was attending his son’s
high school basketball game. His vision suddenly became blurred, and he could
hardly make out his son on the court. A day later, he couldn’t read.

A doctor told him the only thing
that would cause his vision to deteriorate so rapidly was a brain tumour.
So he went in for an MRI. “My doctor said, ‘The good news is you don’t have a
brain tumour, but the bad news is you have multiple sclerosis,”’ he says.

For three days, he couldn’t see. He
worried that he would be relegated to a wheelchair and ventilator and wouldn’t
be able to support his family. At the same time, a close friend and his brother
died, and then one of his children began suffering from anxiety.

“I thought of people who were going
through the same thing as my child and me,” Bozich recalls. “Fortunately, we
had the resources for medical help, and I thought of all the families that
didn’t.”

“I started thinking that I wanted
to do something more important with my business than worry just about winning
market share,” he adds. “That seemed kind of empty after what I’ve been
through. I wanted to find a way to use my business to impact people that it
touched on a daily basis.”

He regained his full vision after
three weeks and says he hasn’t suffered any further attacks. Shortly after
Bozich recovered, Knights Apparel set up a charity, weKAre, that supports a
home for orphans and abused children. But he says he wanted to do more.

A national collegiate bodybuilding
champion at Vanderbilt, Bozich was hired by Gold’s Gym after graduation and
later founded a unit in the company that sold Gold’s apparel to outside
retailers. Building on that experience, Bozich started Knights Apparel in 2000.

Still solidly built at 47, he has
made apparel deals with scores of universities, enabling Knights to surpass
Nike as the No.1 college supplier. Under Bozich, Knights cooperates closely
with the Worker Rights Consortium, a group of 186 universities that press
factories making college-logo apparel to treat workers fairly.

Scott Nova, the consortium’s
executive director, says Bozich seems far more committed than most other
apparel executives to stamping out abuses – like failure to pay for overtime
work. Knights contracts with 30 factories worldwide. At a meeting that the two
men had in 2005 to address problems at a Philippines factory, Bozich floated
the idea of opening a model factory.

Nova loved the idea. He was
frustrated that most apparel factories worldwide still paid the minimum wage or
only a fraction above – rarely enough to lift families out of poverty. (Minimum
wages are 15 cents an hour in Bangladesh and around 85 cents in the Dominican
Republic and many cities in China – the Alta Gracia factory pays $2.83 an
hour.)

Bozich first considered opening a
factory in Haiti, but was dissuaded by the country’s poor infrastructure. Nova
urged him to consider this depressed community, hoping that he would employ
some of the 1,200 people thrown out of work when the Korean-owned cap factory
closed.

Bozich turned to a longtime
industry executive, Donnie Hodge, a former executive with JP Stevens, Milliken
and Gerber Childrenswear. Overseeing a $500,000 renovation of the factory,
Hodge, now president of Knights, called for bright lighting, five sewing lines
and pricey ergonomic chairs, which many seamstresses thought were for the
managers.

“We could have given the community
a check for $25,000 or $50,000 a year and felt good about that,” Hodge said.
“But we wanted to make this a sustainable thing.”
The factory’s biggest hurdle is self-imposed: how to compete with other apparel
makers when its wages are so much higher.
Bozich says the factory’s cost will be $4.80 a T-shirt, 80 cents or 20 percent
more than if it paid minimum wage. Knights will absorb a lower-than-usual
profit margin, he said, without asking retailers to pay more at wholesale.

“Obviously we’ll have a higher
cost,” Bozich said. “But we’re pricing the product such that we’re not asking
the retailer or the consumer to sacrifice in order to support it.”

Knights plans to sell the Ts for $8
wholesale, with most retailers marking them up to $18. “We think it’s priced
right and has a tremendous message, and it’s going to be marketed like crazy,”
says Joel Friedman, vice president of general merchandise at Barnes & Noble
College Booksellers. He says Barnes & Noble will at first have
smaller-than-usual profit margins on the garments because it will spend heavily
to promote them, through a Web campaign, large signs in its stores and other
methods.

It helps to have many universities
backing the project. Duke alone placed a $250,000 order and will run full-page
ads in the campus newspaper, put postcards in student mailboxes and hang promotional
signs on light poles. Barnes & Noble plans to have Alta Gracia’s Ts and
sweats at bookstores on 180 campuses by September and at 350 this winter, while
Follett, the other giant college bookstore operator, plans to sell the T’s on
85 campuses this fall.

Still, this new, unknown brand
could face problems being sold alongside Nike and Adidas gear. “They have to
brand this well – simply, clearly and elegantly – so college students can
understand it very fast,” says Kellie A. McElhaney, a professor of corporate
social responsibility at the University of California, Berkeley. “A lot of college
students would much rather pay for a brand that shows workers are treated
well.”

Nike and Adidas officials said
their companies have sought to improve workers’ welfare through increased wages
and by belonging to the Fair Labor Association, a monitoring group that seeks
to end sweatshop conditions. A Nike spokesman said his company would “watch
with interest” the Knights initiative.

To promote its gear, Knights is
preparing a video to be shown at bookstores and a Web documentary, both
highlighting the improvements in workers’ lives. The T-shirts will have hanging
tags with pictures of Alta Gracia employees and the message “Your purchase will
change our lives.” The tags will also contain an endorsement from the Worker
Rights Consortium, which has never before backed a brand.

In a highly unusual move, United
Students Against Sweatshops, a nationwide college group that often lambastes
apparel factories, plans to distribute fliers at college bookstores urging
freshmen to buy the Alta Gracia shirts.
“We’re going to do everything we can to promote this,” says Casey Sweeney, a
leader of the group at Cornell. “It’s incredible that I can wear a Cornell
hoodie knowing the workers who made it are being paid well and being
respected.”

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