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  • Writer's pictureAmelia Parke

What does ‘living wage’ actually mean?

Let’s talk about the phrase “living wage” for a second here. This is a phrase we see so often when sustainable brands talk about how they treat their employees in foreign countries and fair wage standards. It’s something that we, as consumers, trust as a baseline that employees in foreign countries are treated fairly, not being exploited for their labors and are provided with a safe working environment.

The reality is, this is a very murky and undefined term that’s fairly hard for a consumer to really understand what they’re getting without full brand transparency. Instead of being a brand’s responsibility to give consumers information on what this “living wage” is, more often than not it becomes the consumer’s responsibility to research supply chains and factory owners. To combat this, fair trade companies have started to label products as fair trade certified, promising that sellers are offered fair compensation for products.

For a product to be labeled fair trade, it needs to follow basic guidelines:

  • Sellers are guaranteed market pricing

  • Sellers have protection against “off years” or “off months”

  • Sellers have the right to basic quality of life through a living wage

  • Sellers have the right to good working conditions

Through these basic standards, a company theoretically could be able to be called a “fair trade company.” There are two major sources for a company to be certified as a fair trade company: Fair Trade International and Fair Trade USA.

Fair Trade International is a mainly food based certification. This is the logo that you will see on your Lush containers and imported coffee. They have recently started certifying textiles and cotton to help with the growing movement towards green fashion. They follow the standards listed above along with additional requirements: a brand must move their wage from a minimum wage to a livable wage within 6 years of certification, allow workers to unionize and create a board of workers, and limit working hours. Fair Trade International cotton allows farmers to have environmental protections as well, so that there are less pressures to kill land to meet the demand of production. Fair Trade International is a credible organization that works directly with International Labor Organization standards to maintain a healthy working and living environment for farmers, fishermen and textile workers.

Fair Trade USA was previously an extension of Fair Trade International, but parted ways in order to create their own standards. They decided that there was a better way to regulate fair trade standards while also giving back to the community. Initially, like Fair Trade International, their main focus was on foods and imported ingredients. But, as a demand for a more ethical fashion market became prevalent they decided to pilot their apparel program. Fair Trade USA started their flagship apparel program in 2010, looking to certify clothing brands for meeting fair trade standards. While their testing showed that over 50% of brands were opposed to signing onto Fair Trade USA’s new program (because of a lack of a market for fair trade clothing) they were still able to break into the market through companies like REI and Patagonia. With these companies backing them, Fair Trade USA has been able to build their apparel program since also certifying multiple other brands (J.Crew, Obey and Madewell, just to name a few) as fair trade companies. Fair Trade USA uses a 200 point checklist to assure brands working with them are meeting environmental and ethical standards before certifying them. They also require brands asking for certification to pay a premium yearly, based on the applicable wage standards, that is then given back to communities through a worker based board. For example, if a company pays their workers minimum wage based on country standards, they would pay a 10% premium to Fair Trade USA that would then be put in a community based bank account. Local factory workers are then able to decide where the premium would best serve the community whether it be schools, infrastructure or health care. Through this system they are able to assure that workers are paid fairly, certain environmental standards are being met and communities are benefitting from company production.

While this all sounds great on face value, there are a few things consumers must remember. Firstly, fair trade and sustainability are NOT mutually exclusive. While fair trade companies like Fair Trade USA regulate environmental standards, they may not meet full sustainability standards. Fair Trade is focused on worker rights and compensation, while sustainability is typically viewed as an environmental concept. Second, a garment can be registered as fair trade by only using fair trade materials to make the clothing. Just because a garment’s cotton is fair trade certified, it does not mean that the article of clothing itself is fair trade. When just the cotton is certified that means that the producers of the cotton have been treated fairly however, the entire garment could be made absolutely anywhere. This is common for companies with green washing tactics that may be purchasing fair trade cotton while still producing in sweatshops. Finally, fair trade clothing is NOT COMMONPLACE. Fair trade apparel certification only made headway in the mid 2000s and many corporations that may support fair trade, are not certified due to lack of market interest. So, your favorite brand is not fair trade certified but maintains that they pay a living wage - what does this mean? Brands are still subject to fair labor laws, which are basic standards factories need to maintain to operate. Beyond these standards companies have their own discretions as to what a “living wage” is.

Existing focus on living wage standards however, do not always consider the basic quality of life as we, in western cultures, view it. Oftentimes, meeting the basic standards does not include education, health care, running water in a home or even just clean water. What we’re seeing currently in the sustainable fashion industry, are companies stating that workers are receiving a living wage without full wage transparency. To put this into perspective, we can look at Indonesia. Bali is one of the newest grounds for “sustainable” manufacturing for their higher environmental standards, good working conditions and an overall good image for consumers. However according to the Fair Labor Association, the average “living wage” for Indonesia should fall around 2.3 million rupiah, or $165 a month. In actuality, a household in Indonesia typically makes around 1.2 million rupiah, or $82 a month (Fair Labor Association). While Indonesia does offer a much cheaper lifestyle than western societies, rent typically ranges from about $300 - $1000 a month. When taking into account other living expenses, a “livable wage” in Bali of $82-$165 a month, is a stretch.

Typical household in Bali for multi-generational families (7+ people)

As consumers, this means we need to be holding brands accountable to wage transparency, higher quality of life for workers and proof of workers’ rights. Before purchasing, take the time to review a company’s supply chain (Good on You is a great resource for this). Call on brands to be transparent on their “living wages” and what that truly means. Help support efforts made by Fair Trade International and Fair Trade USA by using their websites to find brands that are certified and asking new brands to get certified as well. Take time to be aware not only of where your clothing is coming from, but who is making it. Remember: shopping sustainably means shopping ethically, giving workers not only a safe space to work but also a stable livable home.

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