Is This Why Ethical Fashion Is So Expensive?
Being ethical with your fashion is thought to be expensive, but why? We explain that the answer is fairly complicated.
As consumers, you are faced with difficult decisions every day. All consumers seek to maximize their preferences while fitting their budget, desires, and ethical values. However, some people are genuinely concerned with things like climate change, workers’ rights, gender equality, and the sustainability of supply chains and about how their buying behavior affects the planet and those in the supply chain of the fashion industry. However, the majority of people are disincentivized to purchase from ethical clothing companies because of the high price tags in comparison to fast fashion labels and given that the issues concerning the impact of fast fashion are often not at the forefront of peoples’ perceptions, they opt to go for the best deal rather than the most ethical choice. Oh, and it’s not just fast fashion either. Ethical consumerism is noticeably more expensive as the goods produced by sustainable companies often have a higher price tag too.
Why Is Ethical Fashion So Expensive?
The answer is actually fairly simple economics. It is a well-documented phenomenon that the larger the company, the greater the disparity in pay between those at the top of the hierarchy and those at the bottom of the hierarchy. This is not just true in the fashion world but true in virtually every sector of the economy too.
Those at the very top usually see the highest salaries. For example, the CEO of Ralph Luren Patrice Louvet is compensated over $23 million a year. Similarly, the CEO of Walmart Doug McMillion gets a pay package of over $23 million every year. That is not even counting the millions and potentially billions in ownership that higher-ups in the company have.
After the CEOs and execs, marketing and public relations have the highest pay scale. The goal of these departments is to make sure that consumers want to buy the product, so you can imagine that they get a hefty payout.
Next down on the pay scale are all the office workers and logistical managers who make sure that the company is running smoothly at a top-level. Next comes the workers in the actual retail stores, and lastly, the people who actually put together the clothing are usually paid the least.
Now in one sense, this pay scale makes sense. After all, the highest skill jobs usually deserve the highest pay. No one would argue that all workers should be paid exactly the same, but at the very least, those at the bottom of the chain, so to speak, deserve a living wage.
Low Wages and Living Wages
Most multinational corporations manage to keep costs so low because they outsource manufacturing to countries where the cost of labor is the lowest. Thanks to globalization, a US-owned fashion company can pay workers in Thailand, for example, just a few dollars a day to make garments. If you were a company, would you rather pay workers $20 an hour in a country like Denmark or pay them $2 an hour in someplace like Bangladesh? From an economic standpoint, outsourcing labor to countries with minimal protections and low mandated pay just makes sense.
It is generally assumed that one necessary component of an ethical company is that it pays its workers a living wage. Now, the exact amount that constitutes a living wage might be different from country to country, but a living wage is normally defined as an amount sufficient to cover a worker’s basic needs. “Needs” are commonly understood to include things like housing, food, and other essentials like clothing,
So, if a brand is ensuring that its workers have a living wage, then they are paying their workers more. So naturally, the price of the goods that they produce will increase. That is, the consumer ends up paying the difference. Additionally, ethical companies that give their employees things like proper working conditions, safety standards, sick days, paid vacations, and the like all contribute to the higher price of goods.
More Than Just Wages
Of course, the average higher price of goods from ethical fashion companies is a consequence of more than just higher wages. Many companies rely on supply chains that, while efficient and cheap, have extremely detrimental environmental impacts. One can look at the global cotton industry for an example of unsustainable practices in supply chains. Sustainable techniques and materials in the supply chains are more expensive, and this cost is reflected in the higher price of consumer goods.
Additionally, companies that are large in scale can usually produce a much higher volume of goods for a cheaper price per unit of volume. This is why the exact same products at a big-box retailer and a mom-and-pop store can vary in price. In other words, the smaller the business, the higher the cost.
As it stands, sustainable fabrics are often more expensive and made especially to order. However, there is a silver lining here. As sustainable goods become more popular, the demand for them will increase and competition between brands will hopefully drive down prices. So the more people that buy into sustainable fashion brands, the more affordable they will become.
So to sum up our findings, here are the major reasons why ethical fashion brands are more expensive.
- Fairer wages for workers and laborers
- Better working conditions and worker benefits
- More expensive materials and supply chains
- Smaller volume of goods
- Lower demand
Fortunately, more consumers than ever are starting to turn an eye towards ethical fashion companies. As the demand for ethical goods and products increases, it is likely that we will see the price of these goods decrease. Additionally, advances in technology could drastically reduce manufacturing costs, thus lower the price of clothing. So here is to hoping that 2020 will be the most ethical and sustainable decade on record.