1). 2 and 3). Regarding economic factors, many of the experts we spoke with said that the intense price-competitive dynamics of the garment industry have fostered a willingness among manufacturers and contractors to break labor laws. WHD Has Acted to Coordinate Sweatshop Enforcement

WHD has made some progress in coordinating enforcement activities in garment industry sweatshops, but problems remain. Labor’s efforts are impeded because of legal and administrative limitations and the varying regulatory priorities of federal and state labor departments. However, IRS is starting to develop its enforcement efforts around certain market segments, particularly types of taxpayers or businesses. Although WHD officials say that they do refer some cases to IRS, they also report receiving little information in return. Coordination With State Labor Departments

We found that WHD coordination with state labor departments varied widely, depending on the emphasis the state placed on combating sweatshop working conditions. To address this and other compliance deficiencies, since March 1992, WHD has begun working with garment industry manufacturers to raise the level of voluntary compliance with federal labor laws. 4). WHD efforts involve educating the garment manufacturers on their own employment-related responsibilities and those of the contractors who depend on the manufacturers’ production orders. Conclusions

Sweatshop working conditions remain a major problem in the U.S. garment industry, according to the experts contacted. Such efforts minimize regulation and permit WHD to better allocate its scarce enforcement resources. A recorded menu will provide information on how to obtain these lists.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on sweatshops in the U.S. garment industry, focusing on: (1) the number of sweatshops in existence; and (2) whether the Department of Labor's Wage and Hour Division (WHD) has taken any action to enforce labor laws in garment industry sweatshops.

What GAO Found

GAO found that: (1) the number of sweatshops in the U.S. garment industry has increased since 1989 due to Fair Labor Standards Act enforcement and recordkeeping weaknesses, the lack of enforcement resources, and the price-competitive nature of the garment industry which gives manufacturers and contractors incentives to break labor laws; (2) although Labor has attempted to coordinate its enforcement efforts, legal and administrative limitations have constrained these actions; (3) although WHD refers some sweatshop operations to the Internal Revenue Service (IRS), it receives little information in return because IRS is legally prohibited from sharing certain information; (4) WHD coordination with state labor departments varies widely depending on states' emphasis on combatting sweatshop working conditions; (5) since 1992, WHD has attempted to supplement its enforcement efforts by encouraging garment manufacturers to voluntary oversee its contractors and educating garment manufacturers on their employment-related responsibilities; and (6) WHD voluntary compliance efforts could reduce the amount of regulation required and permit WHD to better allocate its enforcement resources.