What government regulations affect the fashion retail industry and retail clothing stores in particular?
Unfortunately, the history of the textile or garment industry, which includes the “fashion” sector within that broad category, is not pretty. In fact, the pejorative phrase “sweatshop” has its origins in the dismal working conditions to which employees of the garment industry were routinely subjected—conditions that can often still be found today in factories in less-developed countries producing goods for the American market. For this reason, government officials, with prodding from organized labor, imposed a series of regulations on the garment industry intended to improve those working conditions. Consequently, regulations that prohibited child labor, required safe working conditions, limited hours, and made overtime pay mandatory were implemented during the early twentieth century. These regulations did succeed in improving working conditions, but increased production costs, which convinced many business owners to relocate their factories to countries with less stringent or even nonexistent regulations.
In addition to regulating the working conditions in the garment industry, government regulations also extend to product labeling. The federal government requires garment manufacturers to label every item of clothing, and the label must list the nation in which it was produced. This “nation of origin” labeling requirement is intended to ensure that the government can track the quantity and value of imports into the United States from specific foreign countries while informing the public where its clothing was produced.
With respect to retail outlets, government regulations pertaining to product labeling also affect such businesses. Human rights and political activists seeking to shed light on a particular retail outlet’s questionable business practices use country of origin labeling to target those businesses that sell products manufactured in countries with poor regulatory systems and records of human rights abuses. Additionally, import tariffs or taxes on imports from certain countries affect retail outlets by increasing costs to consumers who purchase items from targeted countries. Outlets, therefore, might sell fewer items of clothing, which decreases revenue.
The retail sector is affected by overtime pay laws stipulated by the government. Thus, workers are entitled to compensation when they provide their services past their normal working hours. Without such regulations, some retailers would exploit their workers. Thus, this regulation increases the legal liabilities and expenses of the retailer.
The fashion industry is also subject to government regulations. The industry is restricted from using certain materials in their creations. For instance, use of fur from endangered species is highly prohibited; the creation and sale of clothing from such materials warrants serious fines and jail terms.
The fashion industry is required to comply with labeling rules that ensure the consumer is aware of the maintenance requirements of different garments.
The fashion industry is also required to disclose the materials used in their creations. The labels have to clearly state the type of materials used and the respective percentages of different blends used in creating the garment.
The government has a lot of sway when it comes to all industries, fashion included.
First, the government has the ability to control interest rates. If the cost of borrowing goes up, then many businesses will have a harder time and new ones may not have enough capital to start. Fortunately for us, interest rates are at a low point from a historical point of view. This is partially why businesses are doing fairly well.
Second, the government has the ability to set minimum wages. This could make the hourly wage higher. This may hurt some fashion retail stores, especially the stores that hire younger people at a lower wage.
Third, state governments can tax clothing. Some states do and some do not. For example, New Jersey does not tax clothing. This helps tremendously, as there is immediately a 6-8 percent discount. In Connecticut, there is a 6.35 percent tax on clothing. The fact is not negligible.
Government regulations affect many aspects of fashion retail. First, labor regulation affect how you can fire, hire, pay, and treat employees. Next, the Internal Revenue Service regulates and determines what sorts of taxes you need to pay. Many types of clothing must meet government flammability standards. Children's clothing must comply with child safety regulations. Since retail stores are public spaces, they come under the regulations concerning accessibility of the Americans with Disabilities Act, and must have no barriers to access for either customers or employees. Also, the retail space must comply with fire regulations concerning maximum number of people in a room, exits, fire detection, sprinklers, etc.