Founder’s Letter: The High Cost of Low Wages
This past weekend was Labor Day in America — also in Canada, although we spell it Labour Day. Almost everyone I know loves the holiday, plans for it and thinks of it as the last weekend of summer.
Similar to International Workers’ Day and other holidays around the world, Labor Day celebrates workers, as well as the labor movements that advocate for workers’ rights and working conditions.
So, on this Labor Day, instead of barbeques and beach days, I was thinking about workers and two pioneering figures who shaped industry in the 20th century.
Henry Ford’s history is not without controversy. But in January 1914, he more-than doubled the daily pay for auto workers at Ford Motor Company from $2.34 to $5. Using this website calculator, in today’s dollars, that new pay rate is equivalent to $162.30 per day in current values. The story goes, Ford recognized that producing car components on an assembly line was terribly boring work and low wages meant workers would change jobs frequently. Before the pay bump, Ford was dealing with employee turnover of about 370 percent per year.
Almost 110 years later, in December 2023, the Bangladesh Minimum Wage Board established the garment sector’s updated minimum wage to about $113 per month, up from its previous rate of $72.90 per month, where it had been for five years without change.
Compare Ford to Adriano Olivetti, whose Olivetti & C. SpA was at one time, the largest typewriter company in Italy. Under Olivetti’s leadership, the company acquired American Underwood Typewriter, eventually becoming the largest typewriter company in the world.
Olivetti was clearly a savvy businessperson who recognized the need to make a profit, but he also believed there was a symbiotic relationship between industry and society. Much like today’s B Corporations, Olivetti & C. had a mission to benefit others. Olivetti’s 15,000 workers were paid up to 50% more than other factories in Italy and by the 1950s, his company offered nursery schools for his workers’ children, granted nine months maternity leave, flexible work hours and daily hourly work limits — all the while turning great profits. Olivetti also had an interest in urban planning, working with architects and city planners to transform the city of Ivrea, Italy, where the company is headquartered. The city was designed to create “harmony between private life and public life, between work and the home, between centres of consumption and centres of production,” Olivetti explained in his book “Citta dell’Uomo” (meaning “City of Man”). In 2018, UNESCO recognized Ivrea as an industrial city of the 20th century.
When I think of these examples set by industrialists like Ford and Olivetti, I am somewhat embarrassed that our industry pays its sewers so little. And I wonder why the brands and retailers who sell clothing that is sewn so inexpensively feel that it’s okay to pay their own workers so little. Just last week I heard about one large company that is looking to lower its prices by over 20% in 2025 for apparently no reason at all other than their desire to make more.
I know there are countless methods of calculating or defining “living wages,” which makes determining fair wages very complicated. But for me, living wages should be a human right. That right is not currently in the hands of the factory owners as it was for Ford and Olivetti. Instead, it’s determined by the brands and retailers who only seek to buy at the lowest possible price and once there, start again pushing their supply chain even lower.
There seems to be no end to this cycle — and no solution to be found. Factory owners I know often bow their heads in shame being forced by their customers to pay as little as possible to the poorest workers. Meanwhile the brands report with apparent pride that their profits climb from quarter to quarter.
It’s not like this is a new or radical or even unknown concept in our industry. It’s enshrined in the United Nations’ Sustainable Development Goals.
Don’t brands want to sell products made by people who can live a proper life, able to pay for housing and school for their children? Last year’s settlement in Bangladesh with workers on minimum wages won’t leave my brain. It can’t.
One of Henry Ford’s aphorisms was “Don’t find fault, find remedy.” That’s an idea that is shared by a lot of people, including many in our business. I hope soon the day will come when consumers reward the most decent brands. In the meantime, those of us who care will work to find ways to share the message that living wages should be the baseline pay for sewers and others in our industry regardless of where the product is made. We will push for decency. We all need to be proud of where we work.
– Andrew Olah
