My Worst Moment

Why This Fashion Company That Pays Its Workers Above-Average Wages Teaches Money Management

The co-founders of the socially conscious shoe seller Nisolo realized that increasing their producers' incomes was just the beginning of improving their lives.
Why This Fashion Company That Pays Its Workers Above-Average Wages Teaches Money Management
Image credit: Nisolo
4 min read

In the Women Entrepreneur series My Worst Moment, female founders look back on the most difficult, gut-wrenching, almost-made-them-give-up experience they’ve had while building their business -- and how they recovered.

Zoe Cleary says that her business partner co-founded Nisolo, a shoe manufacturer and direct-to-consumer retailer, with the aim of being “a profitable fashion company while treating producers, consumers and the environment with dignity.” Nisolo prides itself on providing stable, well-paying work to its 500-plus Peruvian, Mexican and Kenyan artisans and factory workers: The average salary of its 500-plus producers is 27 percent higher than fair-trade wage requirements, the company reports. After its first year in business, Nisolo calculated that its producers were earning 300 percent more annually, on average, than they had in previous jobs. But this was only one marker of their financial well-being, the co-founders discovered. While their producers were making more than ever before, they weren’t saving a dime of the money and, in many cases, had gotten themselves deep into debt.

“I traveled to Trujillo, Peru, excited to converse with our shoemakers about how well Nisolo was being received in the U.S. and the potential for us to grow. We had assumed that paying our workers really well and providing a consistent job would enable them to cover living expenses and save for the future.

I visited the home of one of Nisolo’s founding shoemakers and learned about a loan that he had recently acquired from a loan shark. Not only had he acquired this high interest rate loan, but he had spent it all on a home remodel that he could not afford, he was 50 percent through the renovations, and now, he could not pay the monthly payments.

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So many fundamental questions ran through my mind: Are we actually doing any good? Or rather, have we negatively impacted this community by providing new and consistent income without providing education on financial management practices? We felt like we were not fulfilling our mission. I felt defeated.

It takes time to make saving a habit when you’re used to spending everything you’ve earned for basic necessities like food and housing. Our producers assumed that large increases in income meant they could take much greater risk.

It took some time to overcome the initial feeling that all of our hard work had been done in vain. We had to make a choice between giving up or leaning in further, and we chose to lean in.

We had never articulately measured our social impact until we were two years into the business. We realized we needed to know our producers -- their challenges, needs, patterns, habits, desires and dreams -- on a much more intimate level, so we asked them if they’d be willing to allow us to visit their homes, meet their families and conduct a survey on how their work with us had been impacting their lives. They received us warmly, and we’ve been conducting these assessments every six months ever since.

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We also partnered with organizations on the ground. Together, we host livelihood trainings on topics ranging from how to budget effectively, save and solicit healthy loans for medium- and long-term expenses. Our programming has evolved to offer trainings on healthy eating, how to utilize the company-sponsored healthcare plan, physical fitness, how to reduce stress, free technical trainings, weekly English classes and discounts with partner university programs. We also now offer an in-house micro loan program where producers can receive an interest-free, short-term loan toward health emergencies and educational needs.

I think one of the biggest mistakes we can make as social entrepreneurs is dumbing down poverty and thinking we have all the tools to fix the problems of the people we seek to help. At the end of the day, the real impact that occurs within the Nisolo community is a result of the effort and decisions our producers have made themselves. Time, a lot of heartbreak and emotional exhaustion is often the trade-off you face when you do not set things up the right way from the very start.”

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