When Alta Gracia was launched in 2010, it was hailed as an experiment to show the world that garment factory workers in the developing world could aspire to a living wage and that their labor rights could be respected. But to survive, the company, which sells Dominican Republic-made T-shirts and sweatshirts to American college students, also needs to make a profit. And then came Covid-19.
Nine months after the pandemic, High grace the workers were laid off without pay and the US-based company is struggling to stay afloat. This isn’t the first time the company has run into trouble, and its inability to stay afloat for a decade has led some to question whether a clothing company can pay a decent salary and remain profitable.
For the workers, the situation is dire. “I am two months late in paying the rent,” said Valentina García, who has been at the factory for seven years. “I owe my neighbor 12 thousand pesos [$200]. “I do not have zero in the bank and I have two children to support,” he added.
In December, work at the small factory in the Caribbean was suspended for three months and in March the leave was extended for another 90 days, putting union leader Eduardo Cabrera in a panic. “They gave us two options. Temporarily suspend the activity or the definitive closure “.
Workers like Patricia Sandoval, who remembers her first day at the factory more than a decade ago, feared the worst. “We are all concerned that the company will go bankrupt and leave us with nothing. Everyone is thinking ‘give me my severance pay and let me go.’
The Dominican government grants workers in licensed factories a monthly subsidy of 8,500 pesos ($ 150), or 75% of the minimum wage. But it represents only 30% of the monthly living wage of 27,027 pesos ($ 475) that Alta Gracia workers like Patricia and Valentina have earned consistently over the years. Those in debt never see the government subsidy at all. “The bank takes it directly from my salary,” said several workers, all of them women.
Scott Nova, Executive Director of the Workers’ Rights Consortium (WRC), has ensured that labor rights are respected in the factory from the start of the company. No one disputes his claim that Alta Gracia is the only garment factory in the developing world that pays a living wage in an industry known for exploitation and appalling working conditions.
But this time Nova acknowledges that the living wage is not being met. “There’s a lot of anger and frustration and it’s completely understandable,” he says.
Some workers have registered with employment agencies. But accepting a new job while on leave means running the risk of losing the severance pay workers are entitled to if the company retires. And job opportunities during the pandemic are rare. Most of the suspended workers want to go back to work in Alta Gracia, where workers are paid almost 2.5 times the minimum wage. They also receive paid vacations and union representation. As Valentina says: “The pay is better, we don’t have to travel and we all get along”.
In the wake of the Covid-19 pandemic, the global garment industry has suffered a brutal blow. Clothing orders have plummeted and revenue has plummeted in an industry considered nonessential. Mark Anner, professor of labor and industrial relations at Penn State University, says the pandemic has triggered the worst garment industry crisis in contemporary history, with conservative estimates suggesting at least 3.5 million (10%) of garment workers globally have lost their jobs in 2020.
The Clean Clothes Campaign estimates that during the months of March, April and May 2020 garment workers around the world had already lost between $ 3.19 billion and $ 5.79 billion in wages.
Unlike many competitors in the Dominican Republic and abroad, the Alta Gracia factory was able to continue to operate by switching to mask-making when the pandemic hit, maintaining social distancing and ensuring that workers received face coverings.
Meanwhile, the company’s CEO, John Allen, who took office in 2019, leveraged his e-commerce expertise to sell Alta Gracia t-shirts online through platforms such as College t-shirts, Shelley Cove or Ivory Ella.
The 60 workers left at the company received a living wage for most of 2020. Until now.
Aside from the pandemic, Alta Gracia’s almost exclusive reliance on a student customer base has undoubtedly made matters worse.
About 400 Barnes and Noble College and Follet stores sell Alta Gracia clothing at universities across the country. But with students studying online, most of the campuses are deserted and so are their stores, making a company that hasn’t been able to diversify even more vulnerable.
Alta Gracia’s problems are not all related to the coronavirus, and in recent years the company has experienced both a capital shortage and wavering orders from retailers.
Despite multiple investors and numerous management changes, CFO Suzanne Travaille says Alta Gracia has never been profitable. “In its history, the factory has not been balanced.” Today the company is losing money.
In October 2019, six months before the pandemic, the factory laid off 44 workers or 40% of its workforce to “increase efficiency” amid a drop in customer orders. Half of the staff at the Atlanta headquarters, including its head of marketing, were also laid off that year. “The whole company is suffering,” said CEO John Allen.
Mark Anner, who runs the Center for Global Workers’ Rights and advises the University students against clandestine workshops (USAS) At Penn State University, he believes the living wage model is viable. But he cautions that the garment industry’s margins are slim and that companies need scale to thrive.
Others argue that Alta Gracia is not the best barometer of a living wage business model. “I don’t think Alta Gracia was a real test,” says Nova, who monitors labor standards in factories around the world.
In his view, the effort would have to be led by a larger company “that really offers millions of consumers a choice” and has “significant marketing dollars.”
Among the multitude of global companies promoting socially responsible slogans, which have not always been verified, some believe that the company has fallen short in promoting how Alta Gracia, backed by a strict certification process, is truly unique.
Megan Lowell, a sophomore whose mother, visiting from Seattle, recently purchased an Alta Gracia long-sleeved T-shirt at the Barnes and Noble campus store at Catholic University, was unaware that her purchase was helping to keep alive. an ideal.
Clearly, retailers who sell name-brand clothing produced in sweatshops alongside products that are socially responsible see the dangers of pitting one brand against the other.
That is why Nova ultimately believes that a successful living wage company would have to “sell nothing but living wage goods.”
The premise when the company was launched under the leadership of Joe Bosich, founder of Knights Apparel, was that socially conscious college students would buy Alta Gracia products. John Allen, the current CEO of the company, believes that social impact is only part of the package. “We still need to be cost competitive and sell a high-quality product,” he says.
Since The Guardian began reporting, the company has obtained funds from private donations and has promised to pay 50% of the living wage for six weeks to make up for part of the loss of the workforce during the leave. In addition, workers will continue to be entitled to the government subsidy.
Workers like Keila Mena were relieved to hear the news. She had moved in with her daughter during leave and said the ad was like “seeing a glass of water when you’re thirsty.”
President Joe Biden has committed to making vaccines available to everyone in May and colleges appear set to open full time in the fall. John Allen is buying time. She is hopeful that students will return to their campuses and want to show off their college clothes.
But as the company continues to hold out on little money, the pandemic has taught it how quickly things can change. So you are monitoring the situation day by day.
As he works toward a groundbreaking new deal to help jump-start distribution, many will no doubt pray that Alta Gracia can rise from the ashes. No less important than all the factory workers in the Dominican Republic.
George is Digismak’s reported cum editor with 13 years of experience in Journalism