It can be hard to ignore the lure of Forever 21, where fall jackets go for $18 and a halter dress can be had for $9.
But U.S. Labor Department investigators contend that those deals are costly for people like Pedro Montiel, who said he makes $4.50 an hour putting the labels and other finishing touches on blouses for one of the retailer’s suppliers.
Montiel is not in a Mexican factory, or in China – he works at a company in the basement of a building in downtown Los Angeles.
“You can’t buy anything you need. Between rent and food, everything is gone, no money is left,” said Montiel, who lives with two roommates in Boyle Heights.
Forever 21 is one of several companies that have been supplied by independent Southern California factories that pay workers much less than the state minimum wage, the Labor Department announced Wednesday.
The department said that from April to July, it investigated 77 local garment companies that were supplying some of the biggest clothing stores in the nation.
Investigators uncovered labor violations in 85% of the cases, the department said, and found that the companies cheated workers out of $1.1 million. The retailers with ties to companies that had the most offenses were Ross Dress for Less, Forever 21 and TJ Maxx.
Workers were paid as little as $4 an hour, and they got $7 an hour on average — $3 less than the state minimum wage, according to the Labor Department.
This business model has shielded them from any legal responsibility.
The department said it has penalized the garment companies and some manufacturers that act as intermediaries between the factories and the retailers. Those companies were ordered to pay $1.3 million in lost wages and damages to workers .
But the retailers will avoid any repercussions for hiring factories that violate labor laws.
The Labor Department can only penalize companies that directly employ workers. Retailers keep their distance from the factory floors by working with several layers of suppliers, lawyers for the government and worker advocates said.
“This business model has shielded them from any legal responsibility,” said Ruben Rosalez, a regional administrator with the Labor Department. The problem, he said, is that retailers have not increased the rates they pay manufacturers in years.
“The retailers are setting the prices. They’re saying, ‘Make this shirt for this amount,’ but it’s the workers at the end of the chain that are getting screwed,” Rosalez said.
National department stores such as Macy’s and Nordstrom had ties to garment makers that did not pay minimum wage, the department said.
But the company that surfaced most often in the investigation was Ross Dress for Less, a Dublin, Calif., retailer with a deep presence in the region’s strip malls.
Labor Department officials said they met with executives of Ross and Forever 21 and asked the companies to step up monitoring and to pay their contractors more, so that the contractors in turn could pay legal wages.
Connie Wong, a spokeswoman for Ross, said in an email that the company is working with the Labor Department to make sure that suppliers understand the law.
“Ross Stores takes labor issues very seriously, and we require our suppliers to uphold our ethical standards,” Wong said.
In an email, a Forever 21 spokeswoman confirmed the company met with the Labor Department and said it is cooperating with the agency.
“Forever 21 takes these issues very seriously, and requires all of its vendors to comply with these laws,” she wrote.
Representatives of TJ Maxx did not immediately return a request for comment.
It is not clear whether the retailers are still doing business with clothes makers that underpay workers.
Rosalez said the retailers hire monitors to make sure their suppliers abroad are following the law but don’t do the same level of inspection in the U.S.
That has fueled more wage theft in Southern California over the last decade, as retailers try to put a lid on their prices while the minimum wage rises across the state, he said.
The stores “want to be able to meet demand on a quick basis. It’s cheaper to do it here as long as no one is looking,” he said.
Jose Garcia, 35, said he spends about 55 hours every week stitching the hems of blouses, dresses and women’s pants for a factory that supplies Ross. For each blouse he sews up, he earns about 22 cents, he said.
At the end of every week, he leaves his sewing machine, on third floor of a ramshackle building in downtown Los Angeles, with a check for about $320.
That means Garcia makes about $6 an hour, after subtracting 30 minutes a day for lunch.
“It seems unjust,” said Garcia, who immigrated to California from Puebla, Mexico, in 2000. “They say the minimum will go to $15 [an hour], but we keep earning $6 or $7…. The stores don’t want to pay more for the clothes.”
Garcia spends about $1,060 every month on the bare necessities, such as rent, food, car insurance and gas for his 2002 Ford Explorer.
That leaves him with about $200 of wiggle room every month.
“If you want to go out to eat, or go to the movies, or send money to your family, you’re left with nothing,” Garcia said.
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2:30 p.m.: This article was updated with comments from workers.
The original article was published at 11 a.m. on Nov. 16.