Impacts of a Fair Wage Factory

There’s an economic revolution happening in a small apparel factory in the city of Villa Altagracia, in the Dominican Republic. Three years ago, the Alta Gracia factory became the first apparel factory in the developing world to pay their workers a living wage, one calculated to meet a family’s basic needs. In Alta Gracia’s case, this living wage is 3.5 times the prevailing wage in other factories in the Dominican Republic and was calculated to provide adequately for a family of four. In US dollars, this amounts to a wage jump from $216/month to $759/month. Such a significant increase in income clearly benefits workers and their families, but there are upsides for employers as well. Although labor costs go up, paying a living wage helps attract a highly skilled and productive workforce, decreases training and oversight costs, reduces rates of turnover and absenteeism, and satisfies customer demand for ethically sourced goods. Furthermore, up until the Alta Gracia factory opened, there had been no employment opportunities in the surrounding town since 2007 when another apparel factory shut down in response to efforts at unionization. With the opening of the Alta Gracia factory, the town has been revitalized as this influx of wealth spreads into the local economy.