Garment Industry

Sweatshop working conditions remain a major problem in the U.S. garment industry, according to experts GAO contacted. They say that working conditions, in many cases, have worsened during recent years. In general, today's sweatshops differ little from those at the turn of the century. The Labor Department has made some progress in combating the growth of sweatshops in the garment industry, but better coordination of labor law enforcement continues to encounter a variety of impediments. Some of these stem from existing legislative and administrative constraints on the Occupational Safety and Health Administration and the Internal Revenue Service. Further, although Labor's Wage and Hour Division has achieved coordination with those states that stress labor law enforcement, such as California and New York, the potential for such coordination appears far less with states with less vigorous enforcement, such as Florida and Texas. The Division also faces a huge and expanding regulatory mandate as its enforcement resources continue to decline. GAO applauds the Division's recent efforts to work with garment industry manufacturers to foster voluntary compliance of their contractors with federal and state labor laws. However, the Division recognizes that should these voluntary efforts fail, legislative action, such as making manufacturers jointly liable for back wages owed by bankrupt contractors, may be needed to better protect garment workers from exploitation.

GAO found that: (1) the number of sweatshops in the U.S. garment industry has increased since 1989 due to Fair Labor Standards Act enforcement and recordkeeping weaknesses, the lack of enforcement resources, and the price-competitive nature of the garment industry which gives manufacturers and contractors incentives to break labor laws; (2) although Labor has attempted to coordinate its enforcement efforts, legal and administrative limitations have constrained these actions; (3) although WHD refers some sweatshop operations to the Internal Revenue Service (IRS), it receives little information in return because IRS is legally prohibited from sharing certain information; (4) WHD coordination with state labor departments varies widely depending on states' emphasis on combatting sweatshop working conditions; (5) since 1992, WHD has attempted to supplement its enforcement efforts by encouraging garment manufacturers to voluntary oversee its contractors and educating garment manufacturers on their employment-related responsibilities; and (6) WHD voluntary compliance efforts could reduce the amount of regulation required and permit WHD to better allocate its enforcement resources.