BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON EDUCATION AND

THE WORKFORCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

HEARING HELD IN WASHINGTON, DC, SEPTEMBER 25, 1998

Printed for the use of the Committee on Education

and the Workforce

OPENING STATEMENT OF THE HONORABLE PETE HOEKSTRA, (R-MI), CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, US HOUSE OF REPRESENTATIVES *

OPENING STATEMENT OF RANKING MINORITY MEMBER PATSY MINK *

STATEMENT OF THE HONORABLE CATHERINE NOLAN, CHAIRWOMAN, STANDING COMMITTEE ON LABOR, NEW YORK STATE LEGISLATURE *

STATEMENT OF LARRY MARTIN, PRESIDENT, AMERICAN APPAREL MANUFACTURERS ASSOCIATION *

CONCLUDING REMARKS OF CHAIRMAN HOEKSTRA *

APPENDIX A – Opening Statement of Chairman Pete Hoekstra *

APPENDIX B – September 24, 1998 Letter to Chairman Pete Hoekstra from the National Retail Federation *

APPENDIX C – Written Statement of Ms. Catherine Nolan *

APPENDIX D – Written Statement of Mr. Larry Martin *

APPENDIX E – Apparel Manufacturer Association News Release: U.S. Apparel Companies Announce Launch of Plant Certification Program, September 25, 1998 *

APPENDIX F – Concluding Remarks of Chairman Pete Hoekstra *

Table of Indexes *

Friday, September 25, 1998

U.S. House of Representatives

Committee on Education and the Workforce

Subcommittee on Oversight and Investigations

The American Worker at a Crossroads Project

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:10 a.m., in Room 2175, Rayburn House Office Building, Hon. Peter Hoekstra [chairman of the subcommittee] presiding.

Present: Representatives Hoekstra and Mink.

Also present: Representatives Velazquez, Owens, and McCarthy.

Staff Present: Jan Faiks, Project Director

Arturo Silva, Media Relations Assistant

Stevan Johnson, Officer Manager/Financial Analyst

Stephen Settle, Counsel

Kimberly Reed, Professional Staff Member

Peter Wucetich, Intern.

Jay Diskey, Full Committee Communications Director

Mark Rodgers, Workforce Policy Coordinator

Cindy Von Gogh, Calendar Clerk/Advance

 

 

Chairman Hoekstra. [presiding] Good morning. A quorum being present, the Subcommittee on Oversight and Investigations of the Committee on Education and the Workforce will come to order.

The subcommittee is meeting today to hear testimony for the American Worker at a Crossroads Project. Under rule 12(b) of the committee rules, any oral opening statement at the hearing is limited to the chairman and the ranking minority member. This allows us to focus on hearing from the witnesses sooner and helps members to keep their schedules. Therefore, if other members have statements, they can be included in the hearing record.

Witnesses should be advised that any additional information or testimony that they would like to have entered in the hearing record may do so in the next 10 days.

I would like to make an opening statement, after which I will ask Ms. Mink to do the same.

Today, we are assembled to conduct the fourth of a series of hearings to gather pertinent information on the global competitiveness of the U.S. garment industry. This oversight hearing is being conducted under the auspices of the American Worker at a Crossroads Project. This project has been a year-long effort to gather information on the future changes likely to occur in America’s workforce. Using that information, the Project will analyze appropriate policy changes that may need to be made by the Congress to manage change.

Our hearings on the garment industry are part of a case study that will accompany the final report of our project. The garment industry was selected for this case study because globalization of the marketplace, technological advances, and the shifting demographics of the workforce have already had a major impact on this industry.

We believed – and our experience has proven this to be true – that the lessons learned from the problems faced by the garment industry could be used by policymakers to better manage global competition in other industries. So let me briefly summarize what we have learned so far in this case study.

We have learned that fierce, global competition has, to date, cost our economy the majority of jobs that were once held in this industry in the U.S. These jobs and the new ones that would have resulted from greater demand for garment production, in many cases, can now be found overseas.

We have learned there is one easy and effective method being used to meet overseas competition, that is, the resurgence of sweatshops in the United States of America. We have termed this the sweatshop equation – if other nations can out-compete the U.S. based on low wages, a sacrifice of safety and health protections or other tactics, we can simply do them one better by breaking U.S. labor laws.

Sadly, we have also learned that our government enforcement efforts have been ineffective in solving this equation. The Department of Labor tells us that in some areas, as many as 75 percent of sewing shops have been in violation of law.

In 1959, Congress extended to the garment industry unions a very special exemption to the law to combat sweatshops. Without this exemption, the tactics used by these unions would be illegal. The Department of Labor enforcement findings, however, strongly suggest that even this extreme measure has failed to address this issue.

So the primary protection envisioned by Congress – enforcement and secondary protections – workers blowing the whistle on exploitation in their workplace have been ineffective. Worst of all, we have learned that the sweatshop equation takes a toll on human lives.

I personally visited New York City’s Chinatown twice and saw the conditions in sewing shops. Workers told me about 130 hour workweeks. I was told about work-related physical ailments never treated by physicians. I was told about numerous exploitative practices in this industry that would shame even the worst of villains in a Dickens novel.

Remarkably, this hearing record is full of denial. Unions claim it is all big business’ fault. Employers complain about the unions collecting bounties in the form of liquidated damages for jobs sent overseas. The Department of Labor blames garment sewing contractors who evade detection. And contractors blame the manufacturers for letting contracts that economically cannot be performed without violations. Manufacturers blame retailers, and vice versa.

The objective of this case study is simple – to find ways to help this industry compete. The lessons we hope to learn are the ones that will enable jobs to remain in America through policies that will improve our competitiveness.

But there is no lesson to be learned from worker exploitation. Illegal conduct will never be an acceptable solution for meeting global competition. As a model for the future, the only lesson is that this nation must let everyone and anyone considering these tactics to gain a competitive edge know that they will be caught and punished.

In that light, we are here today to add to the final chapter in this story and hear from manufacturers and retailers. I must say that I am very pleased after reading the testimony we will receive today, because there are no excuses for unacceptable conduct, only descriptions of positive efforts that will be made in the immediate future to put an end to this situation.

Chairman Hoekstra. Ms. Mink.

Mrs. Mink. Thank you very much, Mr. Chairman. I am hopeful that these hearings that the subcommittee is conducting will help to focus on the remedies that are necessary to curb the problems in the garment industry and eliminate the egregious conditions under which workers must earn their wages.

I think it is easy to try to put blame on certain aspects of the industry. But I don't find that that's particularly rewarding in coming to grips with solutions in this instance. I think it is easy to point the finger at labor, for instance. But if one looks at the national situation, particularly on the West Coast where you do not have the presence of large organized labor, that the conditions in sweatshops exist probably even more severely than on the East Coast. So clearly, it is not the presence of the unions that have compounded the problem.

We look at the manufacturers and we see that they have made efforts to come up with voluntary enforcement proposals. These efforts have seldom produced the results that they anticipated.

I, too, Mr. Chairman, regret that the retailers have not come to the hearing today because I believe that they hold the key to many of the solutions that we are groping for.

But I do want to thank the witnesses, who are here today, because I believe that your expertise in these matters will be of great help to us in achieving some sort of definition of what needs to be done.

Mr. Martin, I appreciate the willingness of the American Apparel Manufacturers Association to acknowledge the problem of sweatshops, and I commend the Association for the steps it has already taken.

Assemblywoman Nolan, I am particularly grateful that you are here today. The legislative accomplishments that have been achieved in New York are very impressive and very much in line with those that we have been proposing here in the Congress. I am interested in your views about how the New York plan is working and what more, in your opinion, should be done by the Federal Government, as well as by the State.

The garment industry is gripped with many problems, such as the loss of much of its work overseas and the struggles that the companies, the workers, and the unions have been engaged in, in trying to prevent this movement overseas.

So I thank both witnesses for coming here today and look forward to your testimony. Thank you very much.

Chairman Hoekstra. Now, to introduce our panel, I would like to yield to Mr. Velazquez from New York. Our first witness is one of her constituents. I would also like to recognize Ms. McCarthy, who is here, and Major Owens, who is here.

Thank you. Ms. Velazquez.

Ms. Velazquez. Thank you, Mr. Chairman, for giving me the opportunity to introduce a colleague and a friend. I just want to stress the fact that she is my assemblywoman.

Cathy Nolan has represented the 37th Assembly District in the New York State Assembly since 1984. As chairwoman of the Standing Committee on Labor since 1994, Cathy has worked incredibly hard on many of the issues that this committee addresses, including job training, workplace health and safety, minimum wage, age discrimination, and of course, working conditions in New York's garment industry. She has been a leader in the fight against sweatshops. She was successful in improving the working conditions for garment workers by passing legislation in 1996, 1997, and 1998.

Cathy is tireless in her efforts to help improve the lives of the working families in New York. I have had the pleasure of working with Cathy on many important issues that affect the people of New York, and I am delighted that she is with us today to testify about what her committee and New York State are doing on this issue. I am certain that the committee will benefit greatly by her testimony.

Thank you, Mr. Chairman.

Chairman Hoekstra. Thank you.

Our second witness is Larry Martin, has been president of the American Apparel Manufacturers Association since January 1, 1995. He is responsible for overseeing all aspects of the Association. Mr. Martin, thank you for being here with us today.

As is customary for the committee, I would ask the witness to stand. We are going to swear you in.

[Witnesses sworn.]

Let the record reflect that each of the witnesses answered in the affirmative.

I just want to add an additional comment to that of Ms. Mink. I would like unanimous consent to insert into the record the letter from the National Retail Federation Association. We have talked with them for quite some time. We invited the National Retail Federation to join us today. We received a letter declining our invitation. The decline was based on the fact that the delegate chosen by the Association to appear before us today was unavailable. The Association, on behalf of each of its retail members, suggested that this hearing be postponed, which was not possible, and that if it were not, that the Association would gladly answer any questions for the record that either the minority or the majority might care to provide.

I have looked at the list of the board of directors for this Association, their advisory boards, the committees, and the members. I am very disappointed that they decided not to participate. I have looked at their membership list, their board of directors, and those associated with the organization, and find it difficult to believe that they could not find a single person who might be available for an hour and a half to testify in front of Congress. We have been talking with them for months and asked them to be part of this process. This was not something that was asked of them a week ago. I am very disappointed about their unwillingness to participate in this difficult process and take this as a signal that they are not that interested in working with us.

Mrs. Mink. I have no objection.

Chairman Hoekstra. Good. Thank you.

Chairman Hoekstra. Ms. Nolan, welcome. Thank you for being here.

Ms. Nolan. Mr. Chairman, thank you very much. It is a great honor and pleasure, and I do want to say really how pleased I was that Congresswoman Velazquez was able to introduce me. I see also two other colleagues from New York, Congresswoman Carolyn McCarthy and Congressman Major Owens. I feel very flattered that they would take time out of their busy schedule to be here and greet me.

This is the first opportunity I have ever had to testify before a congressional committee. We hold hearings, of course, at the State level, in the Labor Committee, but we don’t swear in our witnesses. I don’t know that anyone would come to a New York hearing, given the way we sometimes tend to speak with our rhetoric in New York.

[Laughter.]

But I am very pleased to be here, and I do want to give a very full commitment today to the committee to work with you in any way. Some of these solutions that we have attempted to put in place in New York at the State level, I believe do have the potential to work in a larger venue here at the national level. And I do think that the problem is severe in New York. I am very pleased you were able to visit some of the shops in the Chinatown section. I gather you have also been in my district, as well, in Long Island City, and we are very pleased you have had that kind of hands-on experience with the problem in New York.

I think that some of what we’ve proposed is still relatively new legislation, but we already can see a positive impact on this issue.

I will read my testimony, but I gather you are familiar with it, so I would like to perhaps paraphrase as I go along. Again, my sincere thanks to Congresswoman Mink for extending the invitation to represent some of my views today, and again, my colleagues from New York for complimenting me by being here.

As I mentioned, I am a member of the New York State Legislature, and I chair the Committee on Labor. My district, which is in Queens County in New York City, is a mix of working class residential homes and some manufacturing, including many knitting mills and garment factories. Many of my constituents work as bead braiders, sewing machine operators, merrill operators, and the like. Our committee has jurisdiction over statutory changes to our State's labor laws, including, as Congresswoman Velazquez said in her introduction, worker protection and safety, and wage and hour issues. Since my appointment by Speaker Shelly Silver as Chair, we have felt, in the five years I have chaired the committee, that we needed to relook at our laws in New York, as the committee is doing here at the national level, to see if they needed to be reviewed to combat this problem in a more effective manner.

We have held hearings where we’ve become familiar with some of the tactics that unscrupulous employers use. They don't register, for example, with the Department of Labor. They take advantage of workers by withholding wages. They provide dangerous working conditions, or they don't provide a safe working environment.

At those hearings, which we would be happy to make the transcripts available to the committee we issued a report. We have a subcommittee; Assemblyman Felix Ortiz of Brooklyn chairs it. And we have produced a report where he was able, because he is bilingual, to speak with different groups of people. We also had someone there translating in Chinese, so we really reached out to the new immigrant communities in New York as well to get the full story of what was happening in shops.

Because New York City is a very big place and there is the anonymity of a large city and different language difficulties and the ability to sort of hide the shop, we felt we could approach it by coming up with legislation that would address it in an effective way.

We built on prior efforts. In 1986, when I first came to the legislature, New York had established a task force for the apparel industry that did look at it in sort of a bureaucratic or agency-pressured way. And I was mindful of the chairman’s comments that that is not always the only solution, creating a bureaucracy to investigate and inspect. The question is, how do you get beyond the limitations of that?

We do think that agency inspection, limitations noted, plays an important role. And so the laws that we crafted built on the agency's Special Apparel Task Force and gave some additional powers to the Commissioner of the Department of Labor, as well as the New York Attorney General, to go in and review what was happening.

The first important piece of legislation that my testimony references was what we call New York State's version of the Federal Hot Goods statute. You may remember this received a lot of notoriety when Kathie Lee Gifford, the entertainer, was sort of portrayed in perhaps an unfavorable light and there was a big to-do over it in the New York media.

We made that an opportunity to pass something that we thought was viable, with very strong bipartisan support. We worked closely with the retailers in New York to come up with language that everyone could live with, but we did push through something that we felt would give the Attorney General the ability to restrain goods made in violation of the labor law.

And that hits an unscrupulous employer where they live, because the goods that are produced on the sweat of those workers is now not available to be sold in that area. And we talked a little bit about how retail liability will not attach, if they acquire the apparel without proper notification, and we wanted to make sure that we took care of that.

But I do feel that that was a very important step forward, to give the Attorney General the ability at the State level to do what the Federal Hot Good statue does nationwide.

In 1997, we passed, and Governor Pataki signed the Unpaid Wages Prohibition Act, which made it easier for the Department to go in and reclaim lost wages, and also penalize the real wise guys, for want of a better word, who continually set up shop and steal wages from their workers. We actually made that a felony in New York.

And we don’t expect to get into the issue of will there be a lot of people tried under this statute. One would hope not. But it sends a signal throughout the State that we take it seriously, and that there will be some people who will be found by the Attorney General and by the Agency who are tremendously in violation of the law and they will have to pay some penalty for that.

We felt that was important, and again, we passed it with bipartisan support in our Republican Senate, and in the Assembly, of course, the Democrats are in the majority.

And this year, in 1998, we passed, and the Governor signed an Omnibus Apparel Industry Protection Bill, which established dual liability for manufacturers who should have known, with, of course, the exercise of reasonable care or diligence, that goods which they had contracted out were made in violation of those wage and hour laws.

We have the text of those laws with us, and we certainly would be happy to work with your counsel in drafting a comparable bill for your committee. I have my counsel here, Gerry Reilly, Geraldine Reilly, who is the counsel to the New York State Labor Committee, and I am very pleased that she was able to travel from Albany to be here. We really look forward to having a dialogue with the committee, both the majority and the minority, to really see if we can resolve some of these issues.

By establishing some type of retail liability, New York is beginning the process of recognizing that it is often the larger retailer who acts as a manufacturer through the use of private labels or brands. The retailer, of course, is not a stranger to the manufacturing process. They often actually have people in the shops making sure that the line of production is done in the way that they want it manufactured.

Our committee has solicited input from the Retail Council, as I mentioned, and our retailer groups, as well as other industry groups, and of course, union groups such as UNITE and the State AFL-CIO. We have tried to form a consensus in New York that the laws did need to be strengthened and enhanced to deal with the growing problems of sweatshops in New York.

And, of course, I am very pleased to note that the Attorney General and the Department of Labor recently conducted investigations of three knit goods manufacturers in my own district – not at our prompting, I might add; it’s just that we have so many of them – and the Department did single three out for some really horrendous working conditions and violations of the wages and hour law. Some people were working six weeks and never getting a check.

So these new laws have made that detection possible. They restrain the goods; they seize the sweaters. And it gave them something that they could then use as a club so that the unscrupulous contractor would hopefully not do such a thing again.

I would be very happy to respond to any of your questions regarding my knowledge of the garment industry in New York. As I said, we would be happy to make the legislation that I sponsored available to you. We have brought our committee's annual report for your counsel's review. If there is any way we can be of assistance, we would like to.

Chairman Hoekstra. Thank you very much.

The other issue we are working on is to protect jobs in the garment industry in your area. This bill which I am working on with Ms. Maloney is the Prison Industries Bill. UNITE and the garment workers have been hit extremely hard by production of garments in Federal prison industries.

Ms. Nolan. We would be happy to review it. I would like to add, if I could, there was a statement I caught in your comments about the global industry. I do want to share with the committee that the 11,000 or so jobs in the knitwear apparel industry in my district have pretty much stayed stable. They have fluctuated, I think, from a high of 13,000 in the 1950's, and they were down to about 8,000 in the 1970's, when offshore production sort of started. But it's now moved back up to probably 11,000 or 12,000, and many of those jobs are not under sweatshop conditions.

So in an atmosphere of global competitiveness in a district like mine, the domestic garment industry has sort of bounced back because of things like time-sensitive apparel and the fact that the whole envelope of clothing has enlarged. There was recently a baby born in my family, and you know, 20 years ago, a baby got a blanket and a little onesie, and that was about it. This baby has clothes – you know, you laugh. People buy more for their children.

And children’s wear in particular, I was very shocked to see all the little labels where these garments came from, and recognize that some of them, bought as gifts, probably were produced under sweatshop conditions. And they are things that weren't even available 20 years ago. But the domestic jobs have stayed, because right now in my district people are making little McGwire or Sosa T-shirts by the thousands, because that is what’s in demand right now, current, and you couldn’t go to Sri Lanka for that. You've got to have that right in Brooklyn or Queens and ship them over to Macy’s or out to Chicago as quickly as possible.

So there will always be a market for the domestic garment industry in a district like mine where you have a lot of people who will take jobs as sewers and beaders and braiders. The issue then becomes how do you make sure that the floor for the standards of the jobs, that the wages are paid, and things like that, is best enforced.

Chairman Hoekstra. If you’re from New York and the Yankees or the Mets are in the playoffs, you don’t talk about baseball to long-suffering Detroit Tiger fans.

[Laughter.]

Their claim to fame this year is that they will not lose 100 games again. All right, thank you, Ms. Nolan.

Ms. Nolan. Thank you.

Chairman Hoekstra. Mr. Martin.

Mr. Martin. Thank you, Mr. Chairman. It’s a pleasure for me to be here, and I would like to commend you, Ms. Mink, and the entire subcommittee for addressing this very important subject. I also would like to commend you for the legislation you drafted on the FPI situation. We think that you have the best solution to a very difficult problem and we are hopeful Congress will move on that legislation in the next session.

AAMA is the central trade association for U.S. companies that produce clothing. We are responsible for about 85 percent of the $100 billion worth of clothing sold at wholesale in this country every year. We believe that our members are in the vanguard of those companies working against abusive practices in the workplace.

The Association believes that the existence of sweatshops at home or abroad is deplorable. Not only is the practice immoral and dishonest, but it gives our industry an undeserved bad name, and it constitutes unfair competition for the thousands of apparel manufacturers who obey the law and treat their workers with dignity and respect.

It is the responsibility of the industry to make certain its own house is in order. It is the responsibility of the government to find and prosecute those few who break the law. Among other things, the Association has published this guide to labor laws in the United States and large supplying countries, along with guidelines for assessing compliance with those laws. We have provided AAMA members with a means of checking the wage and hour performance and OSHA compliance of contractors they may hire. We have co-sponsored a series of compliance seminars with the Labor Department, and we’ve opened our meetings to former Secretary Reich and other Department officials to speak to our members.

The Association in the past has supported increased penalties for willful violations of the wage and hour laws. We are prepared to support such legislation in the future. The Labor Department says it is woefully undermanned in its inspection effort. If more funds are needed for inspectors, AAMA is willing to work with the Department to obtain those funds from Congress. We also have worked with the governments of several Central American countries to improve their enforcement efforts.

AAMA believes that the U.S. government should develop a comprehensive enforcement program employing the use of the Immigration and Naturalization Service and the Internal Revenue Service, as well as the Department of Labor. In nearly every case where a sweatshop has been revealed, two other factors have been present: an undocumented workforce and tax evasion. Yet it is our understanding that there is little cooperative effort among these three agencies. We believe a formal cooperative agreement would go far toward improving enforcement of wage and hour standards.

That’s a bit of our history on this difficult subject. It is a great pleasure for me now to describe a new program on which we are working.

As a result of the ongoing interest in the subject of sweatshops generated here in Washington and throughout the country, a number of our members asked AAMA to create a meaningful and comprehensive program to address workplace conditions in the United States and around the world.

These companies were dissatisfied with the scope and pace of existing initiatives and felt the time had come for apparel manufacturers to play a leadership role. We created a task force which retained first rate consultants and is reaching out to critical audiences, including retailers, universities, other trade associations, U.S. government agencies, international government organizations, public interest groups, including many of the most outspoken organizations on these issues.

In consultation with these diverse and interested parties, we have developed a set of minimum standards for apparel production that addresses labor practices, factory conditions, and environmental and customs compliance. The AAMA Board of Directors at its meeting on September 10 unanimously endorsed a set of Responsible Apparel Production Principles. Those principles are spelled out in my written testimony, and they appear on the easel over here.

These principles address the most important problems in the workplace with which we are all familiar. But they also go further. They deal also with violations of customs law and efforts to prevent the movement of illegal drugs in shipments of apparel. These principles form the core of a comprehensive compliance program that we are currently developing.

The voluntary Responsible Apparel Production Certification Program will have three critical elements. The first is clear and verifiable standards. These are the principles that we have endorsed.

The second is the evaluation of apparel production facilities by independent monitors. Our task force and its consultants are working on the necessary tools to ensure effective independent monitoring by respected organizations that know our industry. And this is the document that we are working on for the inspectors.

These monitoring tools will enable an independent monitor to go into an apparel plant anywhere in the world and determine whether the principles are being observed. No mere checklist, the monitoring and reporting procedures will provide detailed instructions to assess compliance with each item in the principles.

The third element is oversight of the program by an independent entity representing diverse stakeholders. An independent certification agency comprising a board and staff will be responsible for the ongoing administration of the program.

The board will be composed of outstanding individuals from the industry, from non-governmental organizations, from academia, and elsewhere. A certification agency with the participation of manufacturers, but independent of the AAMA and the industry was a key recommendation to ensure the credibility of the program.

The independent certification agency would approve independent monitors to conduct plant inspections and certify, or refuse to certify, facilities as compliant with the principles. It also would modify, as needed, the principles and the monitoring tools. Charging a certification fee to the plants that are inspected would provide funding for the program.

Our conversations with interested parties are continuing and we hope that many organizations will become formally involved by endorsing this approach and working with us to finalize and implement the program. We are also working with interested parties to launch a pilot project to test the program framework and make any necessary adjustments. We anticipate inspecting about 30 apparel plants in the United States, in Asia, in Mexico, Central America, and the Caribbean. We already have a number of companies who have volunteered to participate.

We are keenly aware that there are other codes of conduct developed by other organizations. We congratulate each of them for their well-meaning work and their dedication to a worthy cause. Indeed, in some cases, we have drawn from their experience.

But we believe the program we have outlined has two key advantages. First, it has a statement of principles that has teeth and goes beyond working conditions. And it is a statement that can be endorsed and adhered to by apparel companies operating or contracting literally thousands of plants throughout the world.

And second, we are ready to go. We have the principles approved. The Indicators of Compliance are undergoing final review and we will be in the field with a pilot program this fall. We anticipate that the full program will be ready for implementation in 1999.

Once again, I thank you for the opportunity to be here today, and I would be please to answer any questions you may have.

Chairman Hoekstra. Thank you. For those of you who were wondering what the buzzers were, it means that we need to go vote. We have a 15-minute vote and a 5-minute vote, so we should be back soon. The subcommittee will be in recess.

[Recess.]

Chairman Hoekstra. We will now go through the process of questioning. Ms. McCarthy and Mr. Owens may be back. They are not members of the subcommittee, but we will allow them to ask questions.

Mr. Martin, let’s begin with you. You are aware that industry self-monitoring programs have been criticized as being self-serving; these programs are used to cover up violations by appearing to take action to stop them? How does your program address that issue? Will your program be effective?

Mr. Martin. The program we are working on is not a self-monitoring one. An independent board composed of outstanding individuals monitors it.

I do have to add, though, that a number of our members do self-monitoring and do a good job of it. It is not a failure to self-monitor.

Chairman Hoekstra. Yours will monitor independently?

Mr. Martin. Ours would be an independent monitoring program.

Chairman Hoekstra. Are you going to have former Secretary Reich on it?

Mr. Martin. We have yet to cross that bridge Mr. Chairman.

Chairman Hoekstra. Does the program address both domestic and foreign operations?

Mr. Martin. It does, indeed.

Chairman Hoekstra. Fully operational in 1999, or pilot program in 1999?

Mr. Martin. We expect to finish the pilot program before the end of this year and have the whole program in operation in 1999.

Chairman Hoekstra. And 85 percent of the garments that are in this nation are manufactured by companies that are members of the American Apparel Manufacturers, is that correct?

Mr. Martin. Our members are responsible for 85 percent of the garments sold at wholesale, which includes garments both made domestically and imported by our members.

Chairman Hoekstra. Is that dollar volume or units?

Mr. Martin. That’s dollars.

Chairman Hoekstra. Dollars. And yours are middle to upper end, or the full range?

Mr. Martin. The full range. Our members manufacture every kind of garment there is, from socks to wedding gowns and they are located in every State except Alaska.

Chairman Hoekstra. If it’s 85 percent of the dollar volume, then it’s 85 percent of the units sold, correct?

Mr. Martin. I’m sure.

Chairman Hoekstra. Okay. Is there any difference between the percentages of domestic or international production? When you say 85 percent, your members account for 85 percent of domestic production and 85 percent of international production, as well?

Mr. Martin. There are 740,000 apparel workers in the United States and our members directly employ about 575,000. Indirectly, through contracting arrangements, they actually employ much more than that.

Chairman Hoekstra. Will this independent group be responsible for developing credentials, standards, or implementing the credentials and standards that you have developed?

Mr. Martin. Yes. They will implement this set of principles.

Chairman Hoekstra. They are outlined further in this binder?

Mr. Martin. This is the book tells you how to make certain a plant is observing those principles. The independent board will select entities to do the monitoring – the inspections themselves.

Chairman Hoekstra. Can this be an independent board if the members are paid the Apparel Manufacturers Association?

Mr. Martin. Each plant wanting to be certified will pay a fee for that certification which will fund the program. We have not determined how much the fee will be, but, hopefully, we can keep the fee small.

Chairman Hoekstra. What is the incentive for a plant to pay to be monitored?

Mr. Martin. The incentive is to satisfy in your own mind that you are doing the right thing in terms of treating your workers properly, obeying customs and drug law. The second incentive is to assure our customers that we are, in fact, doing the right thing.

Chairman Hoekstra. Ms. Nolan, how does a plant’s certification of compliance affect the Hot Good provision in your legislation?

Ms. Nolan. I don’t think we…

Chairman Hoekstra. Ms. Nolan, she is welcome to be at the table and help answer the question.

Ms. Nolan. That would be great, because I want to make sure. As I said, since you swore us in, I don't want to get even one particular wrong. But in New York, this voluntary group is not up and running yet, so we came up with language that said compliance, if they certify that there is compliance generally with New York's labor laws. So we did give them something to work with. But there is no actual group or formal group that meets yet with these independent monitors.

Chairman Hoekstra. How will your labor law work? Will you look at this program? How are the two going to work together?

Ms. Nolan. Let me let Gerry answer it.

Ms. Reilly. I think what will happen is that the retailer will deal with contractors who can provide the assurance. Our law states that if you assure the retailer or the manufacturer that you are in compliance with all labor laws, then you are not liable. So it seems that this code of conduct will be perhaps a model that retailers can have their own assurance and manufacturers can have their own assurance about escaping or evading potential liability, if they have the assurance.

Chairman Hoekstra. Just for the record, will you state your name?

Ms. Reilly. Geraldine Reilly, R-e-i-l-l-y.

Chairman Hoekstra. Thank you. Just one question and then we will allow Ms. Mink an opportunity to ask questions. How does your compliance program deal with retailers and how do you impact with retailers?

Mr. Martin. We would hope that retailers and others would see fit at some point to endorse these principles and participate in our program.

We have met with a number of large retailers and discussed our program and been encouraged in every case by them to proceed and to keep them current with how far we are going. We are optimistic that this program will reach far beyond just the members of AAMA.

Ms. Nolan. The biggest problem, as I see it, is the integrated nature of the garment industry. It is very hard sometimes to tell who is the retailer and the manufacturer and the sub and then three subs down the line. So the voluntary compliance is important, whether they are independent or whether you appoint them, that is all fine. But the issue has to be there has to be somewhere, some accountability that these subcontractors who you saw when you came to New York, and I am sure on all your other travels, who are making a quick buck off the backs of these poor people so that they can get those T-shirts to the large retailer as fast as possible.

Somebody has to, at some point, claim some responsibility at some level and say, well, when we checked to make sure that the seams were all done the way we wanted, or the color dye was the right color for the Detroit Tigers or whoever, that we also made sure the people were paid their wages. You know, that they weren't getting stiffed, and that the employer, the contractor, was paying for worker's comp, so that if somebody burns their hand on the merrill steampress they can get a worker's compensation benefit.

In New York, we felt that as long as there was some self-certification, that the buck eventually stopped somewhere, that was a step forward. Maybe it wouldn't be perfect, but it would be a step forward. So we would be very willing to see if the industry does do some type of voluntary monitoring and we would be happy to look at legislation again that maybe incorporates that in some way through the Department of Labor at the State level. But right now, they don't have it in place, so we had to come up with something that gave us some assurances.

Mr. Martin. If I may, I tend to agree. After all, we are talking about law enforcement. It is incumbent upon the States and the Labor Department, INS, and the IRS to enforce the law and put these guys out of business. That is step one.

This will help in that direction, but you are still going to have to deal with the people that are going to break the law. I think governments ought to be doing a better job in that regard.

Ms. Nolan. If I could just clarify one point, because I don’t know how often these hearings become a dialogue. It’s not just an issue for Immigration and Naturalization. I want to stress something that I mentioned to your counsel prior to reconvening. In a district like mine where there are many legal immigrants, particularly from Eastern Europe. Many have come here as refugees from the Cold War, they came from Romania and Bulgaria, and they are working in these knitting mills.

They are not illegal. They may not speak good English, but they are here legally and protected either as citizens or as legal resident aliens. They came often, as I said, escaping Ceausescu and persecution in Romania and places like that. It isn't just an INS issue. There has to be some accountability on the part of the people who are contracting these jobs out to make sure they know they have a vulnerable workforce there and to make sure they don’t take advantage of these people.

So we feel there has to be some middle ground here between a bureaucratic process just saying the industry will take care of itself, because the industry didn’t take care of itself. I have seen a steady deterioration of conditions in knitting mills in my district. I have lived there my whole life, over 40 years, and what has happened, isn’t just because of global pressure, it is because some employers are getting away with it and then other guys say, well, gee, if they are getting away with it, I can get away with too.

So we do need some strong laws, though the voluntary piece has an important part. But I also want to stress it isn't just an INS issue; it's an issue that affects a vulnerable workforce. And many of them, at least in my district, are here legally.

Chairman Hoekstra. We break down into dialogue every once in a while. We don't strictly adhere to the formal rules of how we are supposed to run these things, so that is not a problem. The law should take care of these issues. Maybe the compliance program from the manufacturers, if they self-police, could take care of the problem?

If that doesn’t work, then we have the union who may be able to take care of the issue. The issue is that we go into your district, we see a steampipe coming out of a window, and when we go up to the third floor to inspect, we see the deplorable conditions existing and say, this isn’t right.

Can I ask one more question?

Mrs. Mink. You may.

Chairman Hoekstra. Thank you. How does your compliance program apply the little 400 or 500-square-foot third floor sweatshop? I can’t believe they are part of the AAMA. Are they making clothes for a manufacturer? Or a subcontractor? If there are subcontractors to one of your organization’ members, will the compliance program go to that shop and validate it or not?

Mr. Martin. We are hopeful that this program will lead to a situation where apparel manufacturers and retailers will not buy garments made in plants not certified under this program.

Chairman Hoekstra. There isn’t a loophole that says we are only going part of the facility and if you use subcontractors, then we’re not going to inspect them?

Mr. Martin. No, there is no such loophole. We think peer pressure will force a lot of that. Make no mistake, there are still going to be people breaking the law, and they need to be punished. I think this is a program that will create heavy peer pressure on both manufacturers and retailers to participate and use certified plants.

Chairman Hoekstra. Great. Thank you. Ms. Mink.

Mrs. Mink. Mr. Chairman, I yield to my colleague, Mr. Owens, if he would like to ask some questions.

Mr. Owens. Yes, thank you very much. I missed a few questions, so I hope I am not redundant. But I was interested in asking first what Mrs. Nolan’s reaction is to the proposal by Mr. Martin. Maybe you’ve been asked that already?

Ms. Nolan. No, I haven’t. I think the proposal could play a positive role. I think it’s not the only answer, but I think it can play a positive role.

Mr. Owens. This has just been introduced in September of this year? When was this program begun?

Mr. Martin. Mr. Owens, this is a work in progress. We are not done.

Mr. Owens. You start it in 1999, you said.

Mr. Martin. We started early this year.

Mr. Owens. But it was passed by your Association, when?

Mr. Martin. We endorsed the principles on September 10.

Mr. Owens. September 10 – I thought I saw a September date there.

Mr. Martin. Yes.

Mr. Owens. How do you propose to deal with the monitors? How are the monitors going to be accredited and how will monitors be selected?

Mr. Martin. An independent certification board that will operate the program will select them. Once this board is created, AAMA will step back and an independent board will operate the program.

Mr. Owens. Will there be any role for local human rights and other nongovernmental organizations in this process?

Mr. Martin. We anticipate that there will.

Mr. Owens. Do you have any record of any history of anything similar to this being tried before by the Association?

Mr. Martin. No, sir. Frankly, I don’t know of anybody that has ever tried this in any industry. This is the first of its kind.

Mr. Owens. You made an interesting comment during your testimony that the Department of Labor needs more people and the Association would be willing to help get those people. Did I hear you say that?

Mr. Martin. We would.

Mr. Owens. Do you have influence on the majority party, I hope, in terms of appropriations? Have you tried that already?

Mr. Martin. No. We would be willing if asked by the Labor Department.

Mr. Owens. You suggested greater use of the Immigration and Naturalization Service and Internal Revenue Service to discourage sweatshop production. As I heard it, Ms. Nolan, you don't think that’s necessarily going to be productive, or would be harassing more legal immigrants.

Ms. Nolan. I just think in a district like mine, it’s not as relevant as some might think.

Mr. Martin. We are not suggesting that that is the whole problem, by any means, but it is a part of the problem in some cases and needs to be addressed more systematically.

Mr. Owens. Do you think, Ms. Nolan, that there are some characteristics that you find of industries in the garment business that really make this whole business of collecting wages a uniquely difficult kind of thing?

Ms. Nolan. Well, it deals with a large workforce that is semi-skilled, in terms of knitting mills, knitting machines, and sewing machines. And of course, I could do 10 minutes on why it's an industry dominated by a lot of female workers and why they are more often victimized, but we don't want to get into that right now.

But I think that does play a role. You have a lot of women that come here as immigrants; they can sew, they get a job in the garment trade, and they don't want to make a lot of trouble because they are trying to support their families and help out. So it is not a workforce that is really going to speak out.

I mean, I had many friends in school whose moms worked in knitting mills. My mother was more educated; she was a secretary. She was more outspoken and that’s why I’m here in politics. But that's not always the case, and sometimes you have a group of workers that can be bullied.

But I think that the nature of the fact that you don’t have to spend a fortune to capitalize on the industry makes it more difficult to regulate. You buy those knitting machines and those merrill presses and you set them up on the third floor, as the chairman said, make it a little bit portable too, the fly-by-night type of thing.

And you have in New York City, as you know, a lot of older manufacturing buildings and you just go up to one of those fifth floor buildings and you hope nobody notices that you're there. So it is unique.

It’s different than a big manufacturing plant in the furniture industry, for example. In my district we also have some steel and food preparation plants that just need more capital; they need more machinery on site that needs to be maintained at a higher level. We have a big bread baking company. You can’t really hide a thing like that. But a knitting mill or a sweatshop can do that. So I think this industry needs some unique protections.

Mr. Owens. I think you offered to make your transcripts from your committee available to this committee.

Ms. Nolan. Yes. And the counsel – I want to say Mr. Settle has been very gracious. They have everything off the Internet, but we would be happy to share it with you and anybody else who is interested. I think it would be productive, and we would be happy to do that.

Mr. Owens. What did your more extensive hearings – I am sure you talked more with workers than this subcommittee does – what these hearings show about the workers’ attitudes towards the unions and the unions’ protection of them?

Ms. Nolan. Well, we heard from a lot of people who felt that the union was the only voice that they had to obtain any justice. We had a lot of people who came out together with their labor union representatives who translated for them. But there were also a lot of people who also spoke English who felt that the union was an important thing for dignity and for their rights.

In my district, the union shops tend to be the better shops. Those are the shops people want to get into. We also heard from people who were not in union shops and who were very afraid. Those people tend to be more afraid.

The union gives you a little courage to be nervy and come forward and speak, because you feel you have that protection. But when you don’t have that, you are, I think, more afraid. We had a roundtable in Brooklyn. A lot of those people were undocumented and there were some illegal people who came who were very frightened. And there were people who were in nonunion shops who were very frightened of the boss and the boss’s ability to impact them. I think we had one person not show up, too, as a matter of fact. Yes, we had a woman in the audience who refused to testify at the hearing in Brooklyn because she thought she saw her employer.

Mr. Owens. In Brooklyn?

Ms. Nolan. In Brooklyn, yes. It’s not beanbag in Brooklyn. They were a little afraid and they didn't come forward.

Mr. Owens. If I may, Mr. Chairman, just one last question to Mr. Martin. Mr. Martin, were you part of or are you familiar with, and what is your opinion of the White House Apparel Industry Partnership and its work in this area?

Mr. Martin. We are not part of it; we are familiar with it. I applaud the efforts of those who have participated in the Partnership. They adopted a code two years ago and to my knowledge, haven’t moved any further.

Mr. Owens. You think they are ineffective because they don't have industry support?

Mr. Martin. Well, my understanding is there are disagreements between the various participants on how to proceed. I am not on the inside, so I am not familiar with the details.

Mr. Owens. So you have seized the moment and you are going ahead.

Mr. Martin. That’s right.

Mr. Owens. Thank you. Thank you for your indulgence, Mr. Chairman.

Chairman Hoekstra. Thank you. Major, are you going to be here for a minute yet?

Mr. Owens. Yes.

Chairman Hoekstra. Mr. Martin, what are you going to do if you find that companies are in violation? Whether the violations are back wages or OSHA, are you going to report the violations to the appropriate government agencies?

Mr. Martin. We will allow the independent certification agency to make that decision.

Chairman Hoekstra. Our good friend, Mr. Ballenger, worked diligently on n OSHA reform bill. The bill from what I remember is whether or not companies who keep records could keep them secret? Under the audit bill, they could be. What’s the status of the audit bill?

Mr. Owens. It sets the wrong precedent.

Chairman Hoekstra. I was going to say, that is a bill that you are opposed to.

Mr. Owens. I am opposed to allowing employers to keep secret information on how it has violated worker health and safety laws.

Chairman Hoekstra. Right, I know. I don’t want to debate that issue now. With the audit bill and the independent compliance board, who will keep the records? Who will have access to those records?

Mrs. Mink. A special independent counsel.

[Laughter.]

Chairman Hoekstra. I am trying to figure out the dynamics. What I am worried about is whether keeping the records creates, perhaps, an Achilles heel in what Mr. Martin and the American Apparel Manufacturers Association are trying to do? Have thought about that?

Mr. Martin. I am unclear on the question.

Chairman Hoekstra. The question is if you go into Company X.

Mr. Owens. Your certifying agency.

Chairman Hoekstra. Your certifying agency goes into company X and you are checking to see whether they are meeting this code of conduct. You walk into one of the shops that is in Ms. Nolan’s district and see garments piled from the floor to ceiling. The windows are locked. The windows are barred. The entry door is locked, obvious OSHA violations. Your inspectors ask to take a look at timesheets and find out that these people are working 12, 13 hours a day. Maybe you go as far as asking for a check stub and you find out that they are not being paid overtime. You now have a lot of damning evidence. The independent certifying agency may or may not identify to a government agency this person that is violating the law.

Documentation exists that if OSHA goes in there and discovers this, you may have to turn over this documentation.

Mr. Martin. Well, we have been wrestling with that question for some time and have yet to come to an answer. Whether the information should be protected or even, if there is a way to protect it.

Chairman Hoekstra. I’m not sure there is a way to protect it, is there?

Mr. Martin. We’ve not resolved that issue.

Chairman Hoekstra. Major, I think we may disagree on the audit bill, but it may stop AAMA from doing what they would like to do. I think the intent is to go in, point out the violations, and get these people to step up to the standard. In reality, you may be creating a track record or a paper trail that will expose these companies to future liability.

Mr. Martin. That is a concern to us. We are concerned that we don’t create a disincentive for people to clean up their own houses.

Mr. Owens. The best evidence that they are serious about cleaning up their own house would be their agreement to an open record situation. I would doubt the sincerity of the program if they are not willing to cooperate.

Ms. Nolan. If I may…

Chairman Hoekstra. Ms. Nolan, Have you thought about this?

Ms. Nolan. In New York, it depends on what your profession is. If you are an engineer, you are a licensed professional in New York, and you have an obligation. If there is an engineer in that group and they go in and they see working conditions where the restraining guard is off a machine and this person is an industrialized licensed engineer in the State, she has an obligation. The engineer could lose her license if she didn’t come forward and report that.

So it is a difficult area if you are going to have licensed professionals on the certifying team. I don’t know if a lawyer sees something wrong, if he is supposed to go forward with it. I don’t know, I am not an attorney.

Chairman Hoekstra. We’re trying to figure that out too.

Ms. Nolan. I’m not an attorney, I don’t know. They may be exempt. But I think in New York, if you're a licensed engineer or licensed architect, and you see something that reaches a level that you in your professional capacity feel you must report, you have to report it or you could be in trouble.

So there is an interesting sort of thing there. It depends on who you put on your board. Now, I don’t know whether a fashion designer who goes in and says, I hate the color has any obligation. It’s a different level of identity there on whether they like it or they don't like it. So it depends on who you put on your group.

Mr. Martin. The plants that are potential participants in this program will be given a tool called a self-assessment guide, which would enable them to look at their own operations first and make sure that they are in order.

Chairman Hoekstra. I am going to go back and take a look at this issue. Some companies have had a problem with the self-assessment guide only because it creates a paper trail. Even if the company is moving towards improvement, it potentially holds them up for future liability.

This is something that we need to continue to talk about. With what they are trying to get done, is there common ground on how to deal with this audit issue and information in a way which enables this program to move forward.

What I would hate to have happen is for the pilot program and the implementation phase to have begun and then have people say, we don’t want this. Or worse yet, rather than the objective of moving this program forward and ensuring compliance, the inspectors have the responsibility to identify to the appropriate agencies that these people are breaking the law.

Ms. Nolan. It would depend on what their field was, at least in New York. As I said, I joked about a fashion designer who isn’t licensed. But we have groups like interior designers want to be licensed. But then they are held to a higher standard.

Chairman Hoekstra. Yes.

Mr. Owens. Mr. Chairman, please don't frighten them. Encourage them to go forward and be trailblazers. We look forward to watching your program in its implementation.

Mr. Martin. This is one of the reasons that we are doing a fairly major pilot program – to uncover these sorts of problems.

Chairman Hoekstra. I am not trying to frighten them. We as policymakers have to look at whether we’ve created an environment where innovative people who want to be trailblazers actually can be trailblazers; and that we haven’t created impediments for them to do what we collectively think might be a pretty good idea to do.

I know you have been active on this issue and you have been on the opposite side of Mr. Ballenger. As I was listening to Mr. Martin’s testimony and I has an additional question that connects to the audit bill. Are you going to notify government agencies when you find violations? We have differences of opinion, which may jeopardize what they want to do. I haven’t reached a conclusion on it. No, I am not trying to scare them. I hope they can go forward and do it and I hope it makes an impact.

Ms. Nolan. Respectfully, health and safety laws always need some teeth. That’s why we license engineers. Maybe their committee should get some guidelines from your committee, Mr. Chairman, about who ought to be on the panel. But if you have somebody there who is a health and safety expert who sees imminent danger – a building that is really a fire trap – you wouldn’t want your people to leave there and God forbid, a week later, there’s a disaster, because then people say, wow, we were just there and didn’t do anything about it.

I know OSHA is a controversial word for some of the members in the majority, but I think there has to be some trigger where, if health and safety is in imminent danger, some mandatory workers’ protection has to be invoked.

Whereas, with the wage issue, it’s a terrible thing for someone not to get a paycheck, but you can create a vehicle where that worker will eventually get the compensation. It’s not as immediate a danger. Maybe that’s a guideline, which we would look at. We’ve tried to look at health and safety as our overriding…

Chairman Hoekstra. Somebody gave you files on the majority?

Ms. Nolan. We looked it up on the Internet

[Laughter.]

Chairman Hoekstra. Oh, wow, I thought these were the secret files that they are developing.

Ms. Nolan. No, we looked up everybody’s quotes so we could become a little more knowledgeable of who we were going to be meeting. That’s how I found out you were from Holland, Michigan.

Chairman Hoekstra. I was thinking, if you’ve seen those, can you send me mine, so I could read it too.

[Laughter.]

Ms. Nolan. I always want mine, as well. I know the feeling in New York State. We just wanted to see where people were from and things like that. But it was interesting to read, I think, Mr. Ballenger, is it?

Chairman Hoekstra. Yes.

Ms. Nolan. He had made a lot of statements on this issue.

Chairman Hoekstra. That’s correct. That’s a mild way of putting it.

[Laughter.]

Ms. Nolan. So it was pretty easy to find. But I must say, I don’t think I have been in his district. I’ve been in Holland, Michigan, but not some of those other places.

Chairman Hoekstra. All I can say is I have read Mrs. Mink’s file and it’s a whole lot more interesting than mine. Do you have any questions?

Mrs. Mink. Of course, I do. This is a very interesting discussion this morning and I have benefitted a great deal by hearing all the comments.

My questions in my limited time are to Mr. Martin. In everyday experience in our various activities, we strive to comply with the law. We seek ways in which to be law abiding citizens, and manufacturers should be no different. Retailers should be no different; producers in the bottom end should be no different. The whole objective is to encourage law abiding conduct.

In this field of the garment industry, we are struggling to find ways in which we can one, encourage it voluntarily among industry participants; and secondarily, to see if there are ways in which the government can be of assistance in stimulating greater adherence.

So your efforts in the voluntary field are noteworthy and important. But it is no different than an individual saying I am going to abide by the law; I am going to make sure that what I do is in compliance with the law. So to that extent, it has to be encouraged.

But if you are going to go one step further and say this is a certification process--which is, I believe, the way you have described it--then to whom is it being certified? Is it being certified to the government? Is it being certified to the consumer? Is it being certified to the worker who is in the industry and aggrieved because of sweatshop conditions?

And if this is a certification process and I am a consumer, how will I find out? And what is the interrelationship then between me as a consumer and me as a government official interested in finding a solution to the sweatshop conditions?

Mr. Martin. That is a good question and a difficult one that we are now struggling with. We want to find a way commensurate with good business practices that we can somehow let people know that the clothing is made in a certified plant. The easy answer is to ask the retailer. Right now, it seems to be the best answer. But that is something we are going to have to work on as we move along.

Mrs. Mink. So internally then, what you are saying to this committee is that you are going to have the certification process, but it’s going to consist of information available only within the industry. The consumers are not going to know; the government is not going to know.

Mr. Martin. Well, it’s not the intent to hide it. It is my anticipation that a number of people, number of companies, both clothing manufacturers and retailers, would use the fact that all their clothing was made in a certified plant as a positive approach to consumers.

Mrs. Mink. This is like another industry incentive program of Trendsetters, Mr. Chairman?

Mr. Martin. No, the Trendsetters was unfortunate.

Mrs. Mink. Well, I don’t see that there’s any difference, because what you are doing is establishing a code of conduct, calling upon your industry participants to abide by the code of conduct, establishing an independent committee to analyze whether there is adherence to the code of conduct, and letting the individuals know whether they comply or not or how they scored, and that's the end.

Where is the benefit to the sweatshop worker? How is that sweatshop worker going to be assured that there will be improvement in her lot? And how is there going to be a connect, other than this sort of spiritual kind of good feeling?

Mr. Martin. Well, we believe that there is going to be peer pressure that in the ultimate end is going to require most retailers and most manufacturers to buy garments only from plants that can pass this certification. By definition, those are not sweatshops.

Mrs. Mink. So this will then be published? The only way for peer pressure to have that impact is if the information is generally known in the industry, as well as by the consuming public.

Mr. Martin. Not necessarily. The business entity buying the garments can make it a condition of doing business that you be certified.

Mrs. Mink. So within the industry it will be disclosed, as to whether the manufacturer is purchasing garments from certified producers.

Mr. Martin. We anticipate that the board would respond to questions from anybody on whether a specific plant is certified. It is not information you would want to hide. It’s information you want made available.

Mrs. Mink. So then my question is, how does all of this get into the enforcement, and especially the Hot Goods issue. If you are going to say that a producer is not certified, are they then automatically producing Hot Goods?

Mr. Martin. No. The fact that they are not certified means just that, that they are not certified. That doesn’t necessarily mean that they broke the law in any regard.

Mrs. Mink. What does it mean?

Mr. Martin. It means that they were not certified according to this standard.

Mrs. Mink. So the lack of certification…

Mr. Martin. They either were not inspected or they were inspected and denied certification.

Mrs. Mink. So if they were inspected and denied certification because they were not paying their workers’ wages, does that automatically make them subject to the Hot Goods provision?

Mr. Martin. That is a law enforcement question.

Mrs. Mink. But you said within the industry there would be this flow of information, at least within the industry, so that the purchasers would know whether they were buying goods from a certified plant or not; or if it was not certified, what the reasons for the lack of certification were. And if that purchaser knew that information, would they not be then engaged in the trade of Hot Goods?

Mr. Martin. I don’t believe so. They would not know the reason that the plant was not certified. The fact that the plant is not certified does not necessarily mean they are breaking the law.

Mrs. Mink. I would like to ask the same question to Assemblywoman Nolan, if she could respond, how this voluntary program might interact with the Hot Goods statute that is currently in effect in New York.

Ms. Nolan. You see, our bills don’t speak to this issue because none of these programs are in effect yet. So we would be willing, as I said to Major…

Mrs. Mink. Can we take the hypothetical: if this were in place and there were, to your knowledge, a producer that was not certified, and the lack of certification was because of violations of the Fair Labor Standards Act.

Ms. Nolan. Well, then it would be a Hot Good. If they are violating the law in that way, they are dealing in Hot Goods.

Mrs. Mink. So in a way, the formation of this voluntary program would be of some assistance in helping the consumers and the law enforcement agencies to know where to look for Hot Goods.

Ms. Nolan. I think so, yes.

Mrs. Mink. So in that way, it could be a compatible relationship.

Ms. Nolan. Yes, we would be open to seeing what would happen in New York. I think it could work with our statutes. It could be an assistance in targeting, as you said, manufacturers that aren't certified, you know, if they are coming out of Brooklyn or wherever.

Mrs. Mink. Now, Mr. Martin, I have one final question. For the success of your program, to what extent is it required that you have the cooperation of the larger retailers?

Mr. Martin. Obviously, that is why we have been visiting them. We are optimistic about obtaining that cooperation. In fact, a retailer has already agreed to participate in our pilot program. We regard that as a very good sign.

It is very important to the AAMA that they participate. I am optimistic that they will.

Mrs. Mink. How many retailers are really manufacturers?

Mr. Martin. Almost all of them, I believe.

Mrs. Mink. So are they members of your association?

Mr. Martin. They are not. We are strictly apparel manufacturers. The lines blur both ways.

Mrs. Mink. If they are apparel manufacturers…

Mr. Martin. We have members who are also retailers.

Mrs. Mink. Pardon?

Mr. Martin. We have members who are also retailers.

Mrs. Mink. What's the difference between those that are not in your organization and the manufacturers who are retailers that are in your organization?

Mr. Martin. The people who are members of our organization sell most of their product to retailers at wholesale, rather than retail it themselves.

Mrs. Mink. But there are some in your organization that manufacture and retail at the same time?

Mr. Martin. That’s true, usually in the form of outlet stores.

Mrs. Mink. Thank you, Mr. Chairman.

Chairman Hoekstra. Thanks. You said retailers were also manufacturers, or many retailers are manufacturers?

Mr. Martin. In the sense that many retailers contract to have garments made for them, they are similar to our members who also contract to have garments made for them.

Chairman Hoekstra. Okay. But the people that they contract to, they are not members of your organization?

Mr. Martin. They might be. There are contracting arrangements all over the world and those located in Asia are less likely to be members.

Chairman Hoekstra. Does that account for the remaining 15 percent?

Mr. Martin. That’s right.

Chairman Hoekstra. Even though some of the really large retailers may actually serve as manufacturers in your definition, but is only comprised of about 15 percent.

Mr. Martin. That is why we are very careful to say 85 percent of the goods sold at wholesale, because that excludes garments that are imported directly by retailers.

Chairman Hoekstra. Or garments that are made by retailers directly here in the U.S?

Mr. Martin. That’s right.

Chairman Hoekstra. If you threw that in, how much do you cover? Does it go down to 50 percent?

Mr. Martin. We don’t know exactly. We believe it’s in the neighborhood of two-thirds.

Chairman Hoekstra. So the 85 would go down to about 67?

Mr. Martin. Yes.

Chairman Hoekstra. Okay. I think it was Ms. Nolan who said that your certification and noncertification list might be a good shopping list for targets to go to. Did I hear that correctly?

Ms. Nolan. Well, I think the Attorney General in New York--there is an apparel task force that has local police, fire, health and safety, so there is not a lot of these inspections. I wish there were more. There are not as many as we would like. But theoretically, they would look – I don’t know exactly what their workday is like, because I am in the legislature, not in the executive side, but I think they would look at lists like that, they would be out talking to the industry.

So yes, it probably could provide some basis. I mean, one would hope that the industry might want to identify some rogue manufacturers, because it just gives everybody else a black eye anyway. So they might want to share that with law enforcement.

Chairman Hoekstra. If Mr. Martin’s program is successful and if they use that list, you might end up scared facing the job of law enforcement, which is something you don’t want to do. That’s not your job, right?

Mr. Martin. That’s right. We don’t want to do law enforcement.

Chairman Hoekstra. Yes.

Mr. Martin. The fact is this program exists. I think there has been some experience in this on the local level in California making law enforcement an easier job. A fair assumption exists that accreditation means obeying the law. It narrows the scope of who might want to look at in a first cut in law enforcement.

Chairman Hoekstra. And if that works, it may lead to more people wanting to be certified by you.

Mr. Martin. Exactly.

Chairman Hoekstra. Which means that Ms. Nolan doesn’t look at them.

Ms. Nolan. Well, not me.

Chairman Hoekstra. Or your executive agency. The State doesn’t look at them.

We met with Professor Kwong who spoke at length about the smuggling rings into the garment industry. Many garment workers are smuggled into the nation illegally, making this a labor issue.

Ms. Nolan. This is the Hunter College professor? Yes.

Chairman Hoekstra. Have you taken a look at that at all in your work on this issue?

Ms. Nolan. Only in that, as I said to Congressman Owens, one or two witnesses at our Brooklyn hearing were afraid to step forward because they thought the employer was there and they weren't union workers, so they felt they had no help or protection.

Now, we didn't quiz these people as to whether they were here legally or not, so we didn't get into that aspect of it. But they were afraid to come forward, so it could be that there were reasons relating to status as well. But it seemed to be primarily because they thought the employer was in the room and they were afraid to speak out about working conditions. We've not done anything on immigration per se.

Chairman Hoekstra. Okay.

Ms. Nolan. I am somewhat familiar with his work, and I would imagine we can get you some information from the New York Apparel Task Force. They may have worked with him to identify certain notorious practices with certain people or certain rings. But we really focused on the worker aspect, not the immigration status, as I said before.

Chairman Hoekstra. Okay, I think from our work, that is something that you may want to take a look at as well, or refer to some of your colleagues.

Ms. Nolan. Perhaps we’ll have him at one of our hearings. I am familiar with his work just from reading in the New York papers about some of the work he has done, but perhaps he’d be an insight for us.

Chairman Hoekstra. I think that is an intriguing issue and part of the problem is what the working conditions and the pay are. There could be exploitation of illegal workers.

Mr. Martin, have you met with the Labor Department on compliance seminars?

Mr. Martin. Yes, we have participated in a series of four or five seminars around the country on compliance.

Chairman Hoekstra. Do you have a good working relationship with the DOL? Were they eager to have you?

Mr. Martin. I think so. We found the seminars to be very helpful. We are talking about doing more.

Chairman Hoekstra. Okay. Ms. Mink, you talked about the Trendsetter List. The difference between what AAMA is doing and the Trendsetter List is not only do you have a code of conduct – a three-ring binder full of measurements – and an independent auditing group to measure compliance. I think our discussions on Trendsetters with the Department of Labor might have been a little different if they would have brought in a three-ring binder and told this committee that we went through these companies with these tests and the companies complied. We didn’t’ see that type of initiative with the Trendsetters List.

Do you have any additional questions or comments?

Mrs. Mink. No.

Chairman Hoekstra. This is our last hearing on this subject. And somewhere I have a closing statement. I have a three-ring binder too, but it’s not nearly as thick as yours.

Before I do begin my concluding remarks, do either of you have anything to add?

I want to express my appreciation to the two of you for being here today. Ms. Mink and I have seen the garment industry. We have talked to the workers, and it is the workers we want to protect and focus our attention upon; eliminating the horrible working conditions that exist. The two of you share the objective of getting rid of those types of conditions and creating a garment industry that can grow and thrive in the U.S.

A lot of the workers that we talked to said, we talk to people and all we get is a bunch of talk and no action. I hope that we can move forward on this and continue talking, but also start taking action. We are working on a package, and we will work with Ms. Mink on this, trying to deal with an overall package of legislative initiatives that will deal with this. It may include more enforcement.

We must take a look at the audit issue that Major Owens, Ms. Mink, and I were talking about so that Mr. Martin will be able to determine what the liability may be under these circumstances.

We also need to focus on enforcing the laws that we have – increasing consumer awareness. There is a responsibility by the Department of Labor, both at the Federal and the State level. That is the number one safeguard. We have the laws in place; we just need to enforce them.

We need to look again at the industry proviso for the unions and make a decision as to whether or not the proviso is having a positive or a negative impact on the garment industry. Mr. Martin, what you are doing with the AAMA by recognizing that the garment manufacturers bear a responsibility to try to clean up their own industry is commendable. Like you said, maybe again for a smaller percentage of the total industry, they end up giving the whole industry a black eye, and that’s not what you want to do.

So we are going to take a look at that. We want to make sure that we don’t encourage the sweatshop type of phenomena because we have laws which make it difficult for people in that industry and other industries to compete, and the only way they can compete is by cheating. If we can streamline it and take costs out of their business and still meet our objectives, we ought to do that.

So we look forward to working with both of you on these initiatives and actually being able to confront this issue. We are glad you were here and that we had the opportunity to meet you and build this relationship. We look forward to an ongoing relationship in the future.

Thank you very much.

Mr. Martin. Thank you.

Ms. Nolan. Thank you very much.

Chairman Hoekstra. The subcommittee meeting will be adjourned.

[Whereupon, at 12:08 p.m., the subcommittee adjourned subject to the call of the Chair.]