It's Saturday in New York, it's snowing, capes are trending on the runways, and at the Lincoln Center’s temporary Fashion Week mecca, the women's toilets are no longer flushing. (I later mention this at a midnight drink session with friends. One spouts back, “Models don’t pee.”) Under the tents you may still, however, purchase a Ciroc Ultra Premium Vodka for $12 or pick up a free copy of New York magazine's fashion issue or get a vending machine to cough up a sample hairspray, on the house. This is fashion’s inner sanctum, the salon of the well-heeled, fetish of glossy magazine subscribers, where the expectation is that nice and pretty things will land in your lap for dirt cheap.

Pity about the backed-up johns, because the runway show of the afternoon, by Mara Hoffman, is fashion week at its finest: silk and splendor draped on the stunning young women who promenade before buyers, designers, media and assorted hangers-on. David Bowie's "Space Oddity" plays over the finale, 24 models parading out single-file to present Hoffman's prêt-à-porter collection, in case the papers want to know whose shirts they wear. This production, one of 10 I catch during Fashion Week, is beautiful but routine. The typical runway presentation at this biennial event reportedly costs around $200,000 for a show that might last all of 20 minutes.

Among the participants is Jing Wang, of China, 5-foot-10-and-a-half of sharp angles and lanky limbs. I recognize her on a subway platform after the show and ask after her Fashion Week. Turns out she has been working most days from 8 a.m. to 8 p.m., and for this, getting paid nothing. Like, at all. This is the trend on the runways. Get past the metallics and the fourth second coming of the turtleneck—the glamour is minimal for models who are often working pro bono or for "trade."

Trade is product. Gear. Swag. Clothes. It's fashion's go-to when it asks models to participate in a runway show or photo shoot for free. What it isn't, is money. Not only is it impossible for these young women to feed themselves or pay rent with a tank top, but designers have been known to skip payment on even that.

Another model I'll call Abby participated in the VFiles show and was also promised payment in trade. She's 23 and pays the bills by moonlighting; I find her slinging drinks at her workplace, a bar in Brooklyn. For the past four years she has worked as a "street model," a part of the burgeoning fashion ecosystem in which designers, magazine editors, and shop owners scout good-looking people from wherever and hire them at prices well below what they'd pay models represented by an agency. Abby tells me most of the 40 models in the Vfiles show were cast this way. The lone exception was a 17-year-old model named Sahara, who's represented by Elite.

Abby agreed to work the VFiles show for trade. Instead, she found she worked for free. “They were like, ‘Oh, we’ll pay you in trade,'" she says, "and they didn’t pay us in trade.”

As Abby mixes a gin and tonic, a friend of hers seated beside me says, “That should be illegal.” Abby puts the shaker down and points at her chest. “Well," she says, "somebody didn’t get paid at all right here.”

Wage exploitation in fashion reaches much higher than street-model level—even celebrity models get stiffed. Supermodel Coco Rocha has written that a designer once paid her with a skirt with a broken zipper. That arrived after her second year of runway work, when she was an emerging star and walked for almost every fashion house—yet had managed to rack up $30,000 in debt.

How does such a thing happen? Agencies house traveling models and charge triple normal rent, in cities such as New York, London, Milan, Paris. Airfare to chase the runway party train adds up. Models agree in hopes the investment will pay off in a lucrative contract. But the odds are lousy. When not on shoots, models attend perhaps 10 castings a day. Those do not pay. Catch a break, get in front of top magazine editors, and maybe they book you for a shoot that could last 12 or 14 hours. That will pay maybe $150 a day, a figure that hasn't climbed during the past 20 years.

The result is that middle- and lower-income models, even those who work full-time, earn a subsistence wage. The annual median pay for a fashion model is a mere $18,750, only 1.6 times the poverty level. In New York City, earning $1,500 a month is scraping by, if that. And half of working models make less—food-stamp levels of income. It’s not a surprise that these young women, deemed freelance contractors by the state, often get recruited by nightclub owners to work as human ornaments in the shady models-and-bottles culture. It's easy to exploit women who are paid a pittance. Let them eat broken skirts.

Designers, meanwhile, are hardly skimping on their Fashion Week presentations. The cost of the 2011 Marc Jacobs show reportedly topped $1 million, a cool $1,750 per second. The cash goes to location rental, to lighting and set design, to the hive of hair and makeup artists (who get substantial full-day rates) who transform these young women on the subway into the glamazons we see strut. Paying even an editorial daily wage of $150 to the models would add less than $4,000 to the price of the production, pumping up an average show's cost by a whopping 2 percent.

But then, any cartel that owns up to its wage exploitation exposes its entire wormy framework. Take, for example, the NCAA. Paying teenage laborers in exposure and clothes is fashion's version of college football or basketball, where the glare of the lights obscures the participants' poverty. While the fashion industry is one of the few places women are earning more than men, the industry also knows how many young women are desperate for a crack at the business. Like sports, fashion modeling is basically a chump job unless you break through to the top ranks.

It's time to allow models to unionize, to collectively negotiate a living wage. Historically, those working in entertainment have been successful at creating unionized labor. Consider the formation of the Screen Actors Guild. This union was a direct result of a cynical studio system that signed actors to unbreakable seven-year contracts, didn't limit work hours, demanded clopenings, and didn't provide meal breaks. A group of actors in 1925 risked being blacklisted to form the Masquers Club and, eight years later, SAG. The current top-heavy state of fashion is none too dissimilar.

The lesson here is that there is precedent to fix the industry. The Model Alliance, a not-for-profit labor group for models working in American fashion, is making important strides, such as helping to get the 2013 Child Model Law passed. Yet the current laws classifying models as independent contractors prevents the Model Alliance from fully unionizing.

“Some people have argued that models have been misclassified as independent contractors and that an employment relationship exists between the model, her agency, and the client," Sara Ziff, the Model Alliance's founder and president. "This assessment is based on the level of control that agencies and clients exert over the working lives of models.” In some cases, she says, U.S. models are already recognized and treated as employees, and France recognizes models as employees. Fashion, so accustomed to taking its cues from France, should on this score once again look to Paris.

Structurally, it's hard for models to organize. They're young and replaceable, and enjoy only brief, low-paid careers. Still, they need to lobby for the right to collectively bargain for basic workplace rights: a wage, workday breaks, limited workday hours, protections against harassment. Remember that during this past Fashion Week, the industry ultimately left unpaid workers such as Jing and Abby without so much as a functioning pot to piss in.