The Truth About The Fashion Industry's Living Wage

Behind the glitz of runway shows lies a harsh truth: millions of workers in the fashion industry earn far below a living wage. The majority of them are from the Global South, trapped in poverty despite the fashion industry’s trillion-dollar revenue. While brands tout environmental sustainability, they often ignore labor standards, paying pennies per hour. 

Stricter due diligence laws and consumer pressure are needed to ensure a living wage and ethical practices. This article exposes the industry’s hidden injustices and the fight for change.

TABLE OF CONTENTS:

What is the Living Wage?

A living wage, according to the Global Living Wage Coalition,  refers to the minimum income required for a worker to afford basic necessities, including food, housing, healthcare, education, transportation, and emergency savings. 

It is the remuneration received by a worker in a particular place for a standard workweek, sufficient to afford a decent standard of living for the worker and their family.

Additionally, note that the living wage exceeds the legal minimum wage. Minimum wage is the lowest amount of money a person can earn, as stipulated by law. The federal government sets the minimum wage rates at poverty levels, which means they are insufficient to cover basic needs.

Fair living wages ensure that workers receive dignity and financial stability, enabling them to lead a whole and satisfying life. So, how is the living wage calculated to ensure fair pay? 

According to IDH, you can achieve this by understanding the cost of a basic yet decent standard of living in a particular region. Then, calculate the total cost for a family and divide it by the number of working adults to know the earner’s contribution to family bills. The value obtained shows how much an earner needs to take home, but it is first adjusted for taxes and other deductions.

The Current State Of The Fashion Industry's Living Wage

The status of a living wage in the global garment sector is not something to be proud of. The fashion industry is notorious for its exploitative labor practices, which lack the decency of respecting fundamental human rights. There is a significant gap between the fashion brands that pay minimum wage and those that pay living wage rates. 

According to The Industry We Want, the gap between the minimum wage and the living wage is 41% in 2025. A vast majority of garment-producing countries are not paying living wages to the garment workers who make our clothes. They earn less than necessary, falling within the poverty pay range as they struggle to meet basic needs such as food, healthcare, and transportation.

To many workers, housing, education, and health care services are an expensive privilege, despite consumers paying hundreds and thousands of dollars for the clothes they purchase. Collective Fashion Justice emphasizes that only 2% of garment workers receive a living wage.

Furthermore, the rise of the fast fashion industry is heavily contributing to the low wages being paid within the fashion supply chains. It is primarily concerned with maximizing profits through excessive production and consumption.

Fast fashion brands are notorious for building supply chains in third-world countries to avoid paying living wages to their workers. This is why many garment factories are located in countries such as Bangladesh, China, Vietnam, Tunisia, and India. In fact, 14 out of 31 garment sector manufacturing countries studied by The Industry We Want have a wage gap of 50% or above.

They produce at a rapid pace to meet high consumer demands for clothes that don’t last or will go out of trend shortly. In return, they receive poverty-level pay as compensation for their hard work. The clothing production industry is akin to modern-day slavery, with sweatshop workers earning less than a dollar a day. 

Failing to achieve a living wage leads to a domino effect. In a 2019 Oxfam report, 91% of Bangladeshi garment workers 

Regional Variations in Wages and Working Conditions In The Garment Sector

Living and minimum wages vary in different parts of the world, with some being lower than others. Let’s examine the actual wages paid to garment workers in Africa and Asia. 

Asia 

According to reports published by the International Labour Organization, the garment, textile, and footwear (GTF) industries in Asia have a workforce of over 60 million people¹, which is comprised mostly of women. Gender wage gaps are also prevalent. 

Beyond wage gaps, the report also discusses gender-based violence. Women face occupational segregation, harassment, unsafe work, weak worker representation, and poor social protection.

Africa  

In Africa, Ethiopia and Morocco are the two countries from which international brands often source labor for their fashion supply chains. Ethiopia is one of the countries with low wages, where Ethiopian workers typically receive a monthly salary of $26, according to a report by the NYU Stern Center for Business and Human Rights. 

The research shows that many of the world’s best-known fashion and sportswear brands, like H&M, Tommy Hilfiger, and Calvin Klein, employ thousands of workers from Ethiopia.

Considering Ethiopia also has a low living wage of $110, the country’s status as the lowest poverty pay in the global fashion sector is understandable. Chinese companies usually outsource clothing production to Ethiopian factories. These factories attempt to justify their low pay by providing one workplace meal per person and other services, which, when calculated, still fall short of the average acceptable standard of living.

What is the true cost of paying below minimum wage?

Paying minimum wage is enough for the workers who make our clothes to cover their basic needs. Now, imagine the impact of paying below the minimum wage rates? 

Paying below a living wage traps workers in a cycle of poverty by forcing them to survive on incomes that don’t cover basic needs. Many clothing factory workers are already earning less than the legal minimum wage, which forces them to take on excessive overtime, borrow money, or pull children from school to work. It deprives families of education, healthcare, and savings, keeping future generations in poverty. 

Low wages also suppress local economies, as workers can’t afford goods and services. Meanwhile, brands profit from cheap labor, reinvesting little into wages or communities. 

Furthermore, workers remain stuck in exploitative working and living conditions because they are trying to survive. They accept excessive overtime, unsafe workplaces, and verbal or physical abuse to keep their jobs. Many fear reporting violations due to potential retaliation, such as wage theft or termination. 

In countries with weak labor laws, fashion companies exploit this vulnerability, prioritizing profits over respecting labor and human rights. 

Sub-poverty wages also perpetuate child labor and debt bondage, as families struggle to make ends meet. This systemic abuse thrives because corporations prioritize cheap production over human rights, leaving workers powerless in a cycle of exploitation.

Another consequence of not paying fair wages is a lack of motivation among workers, which leads to a reduction in productivity. Workers dealing with poverty endure so much stress, malnutrition, and exhaustion, which reduces focus and efficiency. 

It also breeds resentment, leading to disinterest and acts of passive resistance such as slow work. Poor pay leads to a higher number of absences from work, as sick workers are unable to afford healthcare. Their innovations are also stifled because they can't afford to invest their time, money, or energy in skill development. 

How does paying below the living wage affect the global economy?

Paying below the living wage harms the global economy by promoting poverty, reducing workers' purchasing power as potential consumers, and increasing inequality. When the workers who make our clothes earn too little, they cannot contribute meaningfully to their local economies, which stifles growth, especially in developing countries. 

Low living wages also increase reliance on government aid and remittances, thereby draining federal resources more quickly than necessary². Fast fashion’s reliance on cheap labor promotes a race to the bottom, where companies prioritize cost-reduction within their supply chains over social and environmental sustainability. 

It harms long-term economic sustainability. Furthermore, low-wage systems reinforce wealth disparities. Profits become more concentrated in wealthy nations while countries that house entire supply chains remain trapped in low-wage cycles³. Fair wages, by contrast, stimulate local economies, reduce dependency on aid, and promote sustainable growth. 

Why are fashion brands and factory owners against paying garment workers fairly?

Fashion companies have various stages in their supply chains that require a large number of suppliers. These factories often resist paying higher wages for several reasons, one of which is a prioritization of profits and cost reduction. 

Most of the time, these companies are aware that their suppliers are paid below the living wage, and they allow it to happen because they prioritize making a profit to satisfy their shareholders. They believe raising wages will reduce profit margins, unless retail prices increase, which is a risk in the global market where consumers demand ultra-cheap fashion products. 

Also, factories compete in the global market for contracts by offering the lowest prices. Increasing wages would mean increasing their prices, which could chase companies away to cheaper competitors. 

This is the opposite of the beliefs promoted by sustainable manufacturing.

Initiatives Set Up To Ensure Fair Pay In The Garment Industry

1. The Asia Floor Wage Alliance 

The Asia Floor Wage Alliance (AFWA) is a coalition of unions across Asia that advocates for a standardized regional living wage. They calculate living wage benchmarks and negotiate with brands and governments. The AFWA empowers workers' unions to lead wage negotiations and file legal complaints against exploitative fashion companies. 

2. #PayUp Campaign

This was a global movement led by Remake to pressure brands into paying $22 billion in wages for canceled orders during the COVID-19 pandemic. The campaign shed more light on wage theft and created sufficient awareness to mobilize consumers across various social media platforms, prompting them to demand accountability. 

3. The Clean Clothes Campaign (CCC)

The Clean Clothes Campaign, established in 1989, is a global network of labor unions, NGOs, and activists advocating for transparency, fair wages, and safe working conditions in the textile industry. They organize protests, lobby governments and brands, and support worker strikes. 

4. Fair Trade Certification 

Fair Trade Certification ensures that clothing factory workers receive fair wages, safe working conditions, and access to community development funds. Brands pay a premium (e.g., 1–10% per item) to support living wages, healthcare, and education. Factories undergo audits by organizations such as Fairtrade International or Fair Trade USA. While not perfect, it offers transparency, unlike fast fashion, with brands like Patagonia and People Tree leading adoption. Critically, it bans child labor and empowers unions.  

Conclusion 

The fashion industry must practice CSR to ensure workers are paid fairly and that living wages become standard. Transparent supply chains, ethical pricing, and accountability are essential to ending exploitation. 

While higher product costs may follow, they reflect the actual value of dignified labor. Beyond wages, addressing the environmental impact of fast fashion is crucial. Only systemic change can create an industry that respects both people and the planet.