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Why This Top College Apparel Company Pays Living Wages

nayelli.gonzalez headshotWords by Nayelli Gonzalez

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As college football season drew to a close, fans were certainly more fixed on the final score of the championship than on the “made in” label on the back of their college T-shirts and hoodies. Take a closer look at your (or your kid’s) college sweatshirt, though, and you’ll discover a college apparel company with values at its core.

In an industry that manufactures most of its apparel in developing countries that pay garment workers a little more than subsistence wages, Alta Gracia Apparel – a clothing factory in the Dominican Republic that pays employees 300 percent above the legal minimum wage – is a one-of-a-kind social enterprise.

Through a partnership with Follet Corp., one of the nation’s largest campus retailers, Alta Gracia Apparel makes college T-shirts, sweaters and sweatshirts for more than 350 U.S. colleges. Alta Gracia gear is sold in more than 800 college bookstores across the country.

The four-year-old company, owned by South Carolina-based sports apparel giant Knights Apparel, is the only apparel factory in a developing country to pay workers a living wage, maintain high health and safety factory conditions, and negotiate a collective bargaining agreement with a workers’ union. And all of these accomplishments have been verified by the independent labor rights organization Worker Rights Consortium.

“Paying 300 percent higher wages certainly doesn’t make sense on face value, but from a business standpoint we think there’s a growing consumer base … that wants to know that their purchasing power is supporting to make positive change in the world,” said Joe Bozich, founder and CEO of Knights Apparel and Alta Gracia. “From a personal standpoint, I need to know that my business and life’s work is doing more than just make a profit.”

The average daily wage for a worker in the Dominican Republic is $8, yet Alta Gracia pays its employees $3 dollars an hour, a living wage that enables workers to provide food, housing, healthcare and education for their families. Consider that the average hourly wage for garment workers is about 24 cents in Bangladesh, 45 cents in Cambodia, 53 cents in Vietnam, and $1.26 in China, and you get the picture of how Alta Gracia’s unconventional approach compares with the global apparel industry.

While paying higher wages increases the factory’s production costs by 20 to 30 percent, the company is committed to this salario digno (“wage with dignity”) business model, because it meets workers’ basic needs and, in turn, workers are committed to the company’s success.

Case in point: The company has seen that workers are more productive, pay greater attention to quality control and remain at the company for much longer than the industry average. According to a 2012 Fair Labor Association survey of 39 supplier factories in 13 countries, the average annual turnover rate in apparel factories is 67 percent, whereas Alta Gracia’s turnover rate is about 6 percent.

The company also ensures that part-time and temporary workers also receive a living wage, and, unlike other garment factories, workers are not furloughed when purchase orders decline.

Breaking even in 2014, the company expects a profitable year to come. With a recent deal struck with the National Hockey League to make sports apparel for its teams, combined with a growing swell of college students asking for more socially-responsible apparel brands, Alta Gracia hopes to validate its business model and prove that paying workers a living wage and respecting workers’ rights is good for business.

 Image courtesy of Alta Gracia Apparel

Nayelli Gonzalez headshotNayelli Gonzalez

Nayelli is the Founder & CEO of Creators Circle, a nonprofit working to close opportunity gaps for future generations of impact changemakers. A trained journalist with an MBA, she also keeps the pulse on sustainable business and social impact trends and has covered these topics for a variety of publications over the past decade. She’s a systems thinker who loves to learn, share knowledge and help others connect the dots. Follow her on Twitter @NayelliGonzalez.

Read more stories by Nayelli Gonzalez