The FABRIC Act Analysis

Up until the 1980s, the majority of the clothing and garments in the US were produced domestically. But, over the past several decades, clothing companies have been shifting to producing their products overseas as they can significantly cut down on manufacturing costs. Nowadays, only 3% of the clothing Americans wear is made domestically! This all may change soon with the FABRIC Act, a proposed bill that could have major implications for the domestic clothing manufacturing industry.

Read on to learn about the FABRIC Act and how it might improve American manufacturing and aid workers.

Main Takeaways

  • The FABRIC Act will help to establish the US as a leader in responsible apparel production through new workplace protections and manufacturing incentives.
  • The proposed legislation introduces a national registry for garment manufacturers to increase transparency and enforce compliance with labor laws.
  • The act seeks to abolish piece-rate pay systems, ensuring garment workers receive at least the federal minimum wage.
  • It introduces a national registry for garment manufacturers to increase transparency and enforce compliance with labor laws.
  • By promoting reshoring, the act also seeks to reduce transportation emissions and supports greener production practices in the garment industry.
  • The act encourages manufacturers to adopt sustainable and ethical manufacturing practices.

What Is the FABRIC Act?

The FABRIC Act (Fashioning Accountability and Building Real Institutional Change) is a proposed bill that was introduced to the US Senate in 2022. If passed, it will reform labor practices in the American garment industry.

U.S. Senator Kirsten Gillibrand introduced The FABRIC Act to the Senate in May 2022, and is currently under review by US legislators. There are many things that this act aims to achieve, but one of the main things is to amend the Fair Labor Standards Act of 1938.

It’s a groundbreaking piece of legislation that could have major impacts on the American garment industry. Some key things that the legislation could improve are wages, working conditions, and environmental impacts.

Background and Why We Need the Act

Over the past few decades, the US garment industry has been hit with several hurdles. Globalization and the ability for companies to pump out massive amounts of clothing at a low cost have given rise to “fast fashion.” Fast fashion clothing is generally low quality and only made to be worn for a single season.

Over recent decades, a shift to overseas manufacturing has led to a decline in U.S. garment jobs, with more than 700,000 jobs lost between 1995 and 2020. Additionally, the industry is notorious for poor labor practices, such as wage theft and exploitative piece-rate pay systems, particularly affecting immigrant and minority workers​​. 

So, poor working conditions, along with the fashion industry’s negative environmental impact, have inspired some lawmakers to write up legislation in the FABRIC Act.

What Does the FABRIC Act State?

As with most bills and legal documents, the FABRIC Act is pretty dense and difficult to read and understand if you don’t have experience reading legal documents. Below, we have summarized the key points discussed in the proposed act.

  • The act aims to eliminate piece rate pay schemes, where workers are paid per item produced rather than receiving an hourly wage until a minimum wage threshold is reached.
  • To ensure compliance with labor laws, the act also proposes the establishment of a national registry for garment manufacturers and contractors.
  • In an attempt to bring more production back to the US, the act includes a $40 million domestic garment manufacturing grant program.
  • By producing more garments domestically, the act also aims to reduce transportation emissions and promote greener production practices.
  • The FABRIC Act offers a 30% tax credit to companies that relocate their manufacturing operations back to the U.S., covering expenses related to establishing domestic operations.
  • The legislation includes a proposal for new liability measures for major retailers and brands to ensure they are complying with labor laws.
  • A $50 million per year support program is proposed to assist manufacturers with safety improvements, training, and upgrading equipment. 

How Does the FABRIC Act Help American Workers?

So, now you know the plans the FABRIC Act has to essentially revamp the US garment manufacturing industry. But how will the act actually help American workers?

Ensures Fair Wages

If passed, the FABRIC Act will abolish the piece-rate payment system until the federal minimum wage is met. It ensures that garment workers receive fair compensation for their labor. 

This change would address some long-standing issues in the industry, such as wage theft and low earnings.

Improvements to Workplace Protections

The FABRIC Act would promote and enforce transparency and accountability in the industry by establishing a nationwide registry for garment manufacturers.

This makes it easier to enforce labor laws and protect garment workers from exploitation​.

Supports Domestic Manufacturing

One of the most attractive parts of the FABRIC Act is that it proposes some major incentives for reshoring manufacturing to the United States. These incentives include a 30% tax credit for companies that relocate their production stateside and $30 million in grants.

This would help create more jobs for US workers and revitalize a shrinking part of the US economy.

Increases Industry Accountability

New requirements would hold fashion brands and retailers, along with their manufacturing partners, jointly accountable for any workplace wage violations. 

According to the FABRIC Act, all parties involved in the garment production process must adhere to ethical labor practices.

How Does the FABRIC Act Affect Manufacturing?

It is obvious that if the FABRIC Act passes, it would have some major impacts on the US garment manufacturing industry. So, what exactly will the act change?

Shifts to Hourly Wage Payments Could Raise Production Costs

As mentioned earlier, the FABRIC Act mandates that garment industry employers pay workers at an hourly rate rather than by piece rate. 

This significant change can affect manufacturing operations by potentially increasing labor costs, which may lead manufacturers to improve operational efficiencies or invest in automation.

Increases Regulatory Compliance

The FABRIC Act imposes stricter compliance requirements on companies. 

Manufacturers will need to register with the Department of Labor and ensure greater transparency and accountability in their operations. Although this will likely increase the administrative burden on manufacturers, it aims to curb labor abuses and promote fair working conditions​.

Encourages Domestic Production through Financial Incentives

To combat the trend of offshoring, the FABRIC Act includes a Domestic Garment Manufacturing Assistance Program, allocating $40 million to support U.S. manufacturers.

The program offers financial aid for equipment purchases, safety improvements, and workforce training. Additionally, a 30% tax credit for reshoring activities is provided to further incentivize manufacturers to relocate operations back to the U.S. 

These incentives are designed to make domestic production more financially viable and attractive to manufacturers who are currently producing abroad,

Focuses on Sustainable and Ethical Manufacturing

One of the most ambitious aspects of the act is that it encourages sustainable and ethical practices in the industry.

This may lead to changes in how manufacturers approach production processes, potentially increasing costs initially but aiming for long-term gains in sustainability.

Improves Workforce Development

The FABRIC Act emphasizes the importance of skilled labor by funding training and development initiatives. The act is expected to improve the quality of the garment manufacturing workforce.

Is the FABRIC Act Effective?

The FABRIC Act is yet to be passed into law by lawmakers, but it does have some significant potential to increase American garment manufacturing.

One of the main focuses of the act is to breathe new life into the domestic textile and clothing industries by returning more production jobs to the United States. In turn, the increase in job opportunities will help Americans find stable employment and support their families.

The act also addresses the fact that many manufacturing companies are producing overseas for a reason: it’s cheaper. So, there is a need to incentivize manufacturers to bring their manufacturing back to US soil with tax breaks and financial assistance. 

Employment regulations are lacking in the garment industry, and another effective plan the FABRIC Act has in place is establishing standards for worker safety and wage fairness. 

Areas for Improvement

While the FABRIC Act is on the right track in a lot of regards, there is still a lot of room for improvement. Here are some places we would love to see lawmakers expand on the act.

1. Comprehensive Enforcement

The act could benefit from stronger enforcement mechanisms. Detailed guidelines on how the Department of Labor should handle non-compliance and clearer penalties for violations should be made clear.

2. Support for Small Businesses

One weak part of the act is that it heavily favors large-scale manufacturers with the capacity to absorb new financial burdens. Small and medium-sized enterprises (SMEs) may struggle with the costs associated with higher wage standards and compliance with new regulations. 

Specific provisions to support SMEs, perhaps through grants or lower tax rates, could help them transition smoothly to American manufacturing.

3. Expanded Worker Education

While the act proposes several changes in payment structures and introduces new regulations, it is important that workers are fully aware of these changes. Historically, leaving worker education completely up to individual companies has never been a good idea.

One way to ensure companies educate workers is to install programs in which workers can learn about their expanded rights and the details of the new protections. This empowers employees to advocate for themselves and recognize when their rights are being infringed upon.

4. Adaptation to Technological Advances

As the garment industry evolves, the act should also consider the impact of technology. As we mentioned, a move to US manufacturing will probably increase production costs, so companies will likely look into optimizing and automating manufacturing. 

Provisions to handle these future changes, like training for workers in new technologies, could make the act more forward-looking and allow it to continue being relevant.

5. Environmental Considerations

While the act promotes the reshoring of manufacturing, additional measures could be included to ensure the sustainability of these domestic operations. 

One way to do this is to use incentives to adopt environmentally friendly and sustainable manufacturing practices.


About The Author



Mike leads research on the team, writes, and manages the YouTube channel. He’s been buying products made in the USA for as long as he can remember. It’s in his blood, growing up working in American manufacturing.