A LETTER FROM OUR CEO
Living wages in the fashion industry today
In Part 1 of this letter, we covered some of the major problems with wages in the fashion industry. We shared how it’s estimated that less than 2% of the 75 million people working to make the clothes we put on our bodies every day earn a living wage that covers their most basic needs. We shared how major brands are not taking responsibility for the roles they play in contributing to this problem. And, we shared how the incredibly slow rate at which improvement around wages is occurring is coming at the expense of human dignity and wellbeing. And finally, we shared how we envision a fashion industry in which everyone receives a living wage.
The truth is this is a complex journey that will take time. However, we believe there are clear, critical next steps brands and consumers can take to begin to transform the industry at an unprecedented rate. To summarize what you’ll read below, brands should publish and 3rd party verify their lowest wages (which Nisolo has now done!), and consumers should begin demanding that brands share their lowest wages.
Publishing lowest wages is a critical step toward living wages
In order to accelerate the journey toward more prevalent living wages, much greater transparency around wages is fundamental. And, there is no wage that is more telling than the lowest wage–not the average wage, not the “labor cost” within a product–but the lowest wage.
For better or for worse, consumers often applaud brands for their transparency when brands share things like the “average wage” in their factories or the “labor cost” that went into making a garment. The problem with both of these metrics is that they often take into account the profitable markup that a factory takes and workers never touch. Or, they’ll take into account the wages of administration and executive staff of factory groups. When it can take a factory worker 1.5 years to earn what a large fashion brand CEO can make on their lunch break, you begin to see how sharing such metrics is not necessarily that transparent and certainly does not always achieve an objective of protecting workers (Source: Fashion Revolution, 2017).
In contrast, determining the lowest wage and how far it is from a living wage changes everything. Knowing the lowest wage establishes a critical baseline and helps us understand whether or not the wages of brands and factories are on a trajectory toward living wages. Therefore, by identifying and openly sharing the lowest wage, brands take the first step toward protecting the most vulnerable workers and everyone else in their supply chains as well.
One of our closest competitors, ABLE, pioneered this thought around the importance of the lowest wage when they published the lowest wage of their Nashville, TN offices in October of 2018. Exactly one year later, just as ABLE gears up to publish the lowest wages of their factories in Ethiopia, we’re partnering with them to share the lowest wages in our supply chain as well. While it may take time before a large quantity of brands follow our lead, every great movement begins with a small minority challenging injustice and standing up for what's right.
Our history with living wages and the lowest wage in our factory in Peru
We have strived to pay a living wage to those working in our supply chain since inception. This was a huge part of why we started Nisolo in the first place. In our factory in Peru where approximately 70% of our products are manufactured, we’ve measured our producers’ expenses (by way of internal impact assessments) to ensure we provide a living wage that meets the actual needs of our shoemakers and their children since 2014. We do this by asking our shoemakers themselves how much they pay for housing, food, education, healthcare, utilities, transportation, clothing, and other essential needs (for them as individuals and for their children). This is one way we calculate a raw, living wage calculation. We also rely on 3rd party research from WageIndicator, a well-respected organization that collects wage data from around the world to evaluate the cost of a decent standard of living in our producers’ community. Based on our primary and secondary research calculations, we determined the latest living wage to be $269 a month. And, we set our lowest wage at $276 a month to ensure our producers could afford to meet their needs.
For local context, apart from providing a consistent, stable job (something that can be hard to come by in Trujillo, Peru), this $276 goes a long way for the vast majority of our shoemakers. On average, $276 per month has meant a 47% increase in the earnings of team members working at the Nisolo factory vs. their earnings prior to joining our team. And, as a reminder, this is the lowest wage in the factory and is for entry-level positions. For those who have worked with our team to strengthen their skill sets and have been at the factory for 3+ years, the average income increase is 152% higher than what they were previously earning outside of the Nisolo factory. For global context, $276 per month is significantly higher than the wages of the vast majority of factory workers in the footwear industry worldwide and 51% higher than the minimum wage in China, where most footwear manufacturing occurs (Source: The Circle. The Fundamental Right to a Living Wage, 2017).
3rd party verification and where we learned we were wrong in Peru
Many of the stats we just shared are from internal, Nisolo-led social impact assessments. We take this work very seriously and try our best to adapt state of the art methodology on a regular basis. However, we’ve made plenty of mistakes in the past. And, apart from its crucial role in pure accountability and the fight toward honest transparency in the industry, this is one reason we are firm believers in the importance of 3rd party verification.
As sustainable fashion becomes more and more on-trend and marketable, there has never been a time in history when 3rd party verification has been more critical than it is today. Both for accountability as well as for the learnings 3rd party verifications offer, this is why we chose to become B Corporation certified in 2017. Seeking to learn more, we decided to hire ACCOUNTABLE this year to do an in-depth evaluation of our factory’s wages and working conditions.
Created in partnership with ABLE and GoodOps, a supply chain consulting group, ACCOUNTABLE is a social impact assessment platform that ensures worker protection while giving customers a transparent look at the good and bad that exists within factories. The assessment evaluates wages, equality, and safety, weighing a manufacturer’s score most heavily on paying a living wage, which is calculated by looking at a combination of the leading industry standards—WageIndicator and Trading Economics—local cost of living data, and survey data conducted by ACCOUNTABLE from the actual producers working in the factory. Based on those data points, the living wage is determined by working with partners in the local community and the auditor on the ground. Elements of ACCOUNTABLE’s living wage include nutrient-rich food, water, housing, education, healthcare, transportation, childcare, clothing, other essential needs, and savings for unexpected events.
We learned a lot from this audit and are excited to share more, but one of the most important learnings was that the living wage (reminder “living wage” roughly means the cost to meet a worker’s basic needs) we calculated internally of $269 was lower than the $280 living wage ACCOUNTABLE concluded from their findings. And, our lowest wage of $276 was $4 shy and 1.4% off from the living wage findings of ACCOUNTABLE’s audit.
We were wrong. Once we discovered this wage gap, we immediately worked with our team to raise our lowest wage to $280 a month, thereby ensuring all of our producers’ ability to earn a 3rd party verified living wage. In regards to our factory’s health and safety, an additional important learning was that we need to be more diligent with our factory’s 2nd and 3rd tier suppliers. We’ve since established a supplier Code of Conduct and will continue to monitor the social and environmental practices of the suppliers our factory uses to source materials. Our goal is to push them toward living wages as well.
What about the rest of our supply chain?
Nisolo currently operates across four countries, including the U.S., Peru, Mexico, and Kenya. We are on a journey toward ensuring that the lowest wages everywhere we operate are 3rd party verified living wages. We are not there yet, but here’s what we know thus far:
In the U.S., thankfully Massachusetts Institute of Technology (MIT) offers sound living wage data for every county in the country. In Nashville, where our headquarters, retail store, and distribution center are located, we learned that our lowest wage was not considered a living wage (once commissions and bonuses were taken out). When we referenced MIT’s research and saw that a living wage for a single individual in Nashville is $11.73 an hour, we raised our lowest wage from $10 an hour to $12 an hour for all of our current and future team members.
In Mexico, the lowest wage across our three partner factories is currently $226.16 per month, which, according to WageIndicator’s research, is technically a living wage in this area. In rural Kenya, where our jewelry is made in partnership with independent artisans, the lowest wage paid is $163.90 a month. According to our internal impact assessments (based on interviews about living expenses with the artisans themselves), $163.90 is 14% higher than the living wage and is also in line with WageIndicator research for rural Kenya.
While we have put a lot of time and research into the remainder of our supply chain outside of Peru, these figures have not yet been 3rd party verified. Taking a stand for accountability in the industry and all that 3rd party verification can teach you, we are planning to pursue 3rd party verification throughout the remainder of our supply chain over the next two years.
Because of the ways we have seen firsthand countless times how receiving a living wage can completely transform the wellbeing of entire families, our hope is that one day, all brands will openly share the lowest wages within their factories and begin working toward making them 3rd party verified living wages.
YOU are the critical piece for righting what’s wrong in the industry today
Nisolo and ABLE are two brands out of thousands and thousands operating in the fashion industry. Obviously, we hope other brands will follow our lead and begin to share their lowest wages on the path toward providing living wages. However, from a basic economics standpoint, Supply (that is, the industry naturally moving in the direction of living wages) will never fix itself. Rather, Demand must outpace and drive Supply forward. Put simply, unless consumers begin to step up and demand through their words and purchases a faster shift toward living wages from the brands they love, this change will continue to happen far too slowly at the expense of human dignity and wellbeing.
A perfect and important example in the fashion industry of Demand pushing Supply forward at an unprecedented rate occurred not long ago. Child labor remained rampant throughout the fashion industry in the 1980s and 1990s despite the efforts of governments, NGOs, and certain brands to combat it. When consumers became aware after photos and videos emerged of children making clothes for major brands in the mid-1990s, consumers took to the streets demanding change and child labor rates curbed dramatically. Child labor in the fashion industry is still undoubtedly an issue, yet, since the 2000s, child labor has been cut down by another 38% (Source: International Labour Organization, 2017). While there is crucial work still to be done relating to child labor, the fashion industry today is light years away from the 1980s and 1990s in large part because consumers demanded this change and the supply chain responded accordingly.
A fashion industry where an estimated 98% of workers are unable to meet their most basic needs is unacceptable. Governments, NGOs, and brands have been talking in circles about this for too long now, and change is once again occurring far too slowly. The time has come for this generation of consumers to demand more from the industry for the sake of millions of people and their families.
Before we share a call to action, let’s pause and ensure we’re not getting lost in the numbers of this issue–75 million people and only 2% earn enough to cover their basic needs. These numbers are astounding on their own, but let’s bring them to life. There are real people with names and homes and families behind these numbers, and they likely made the clothing you are wearing right now. With 75% of them being women, let’s ask a different way: Is she safe from physical and sexual harm because of the stability of her job? Is she earning enough to put food on the table? Can she send her children to school, deterring generational poverty? Is she free to dream? Brands publishing their lowest wages is the first step of many to ensuring a “yes” to these questions, as it lays the baseline foundation for providing a living wage to everyone in the fashion industry’s supply chain.
To accelerate the shift toward living wages, we are partnering with our competitor, ABLE, to co-launch a movement that makes next steps for consumers and brands as seamless and straightforward as possible.
It’s called the #LowestWageChallenge, and this movement depends on you asking other brands outside of Nisolo and ABLE to share their lowest wages. Here is where you can learn more, and here is where you can take action.
It's time to shake up the industry and challenge the status quo.