At minimum, the decline in demand will reinforce pressures to go back to previous conditions and wages. It is at this point that Catholic teaching may make a difference. Catholic teaching, however, highlights the gap between rich and poor as a specific moral problem. This is why moral uneasiness is destined to become more acute. Splitting the cost three ways means that less of the increase is passed on to the consumer.
More consumers buy sweatshirts and more people work in better conditions with higher wages.
In Notre Dame's case, the university receives a percentage of the manufacturer's profit. Notre Dame could arrange a deal where it agrees to take less of a cut in exchange for the manufacturer agreeing to have less of a profit margin. One objection would be that the money the university makes from licensing Notre Dame products goes to scholarships. My sense is that if the income from apparel were to diminish for whatever reason, the university would attempt to find other avenues of funding for the scholarships. The well-being of the workers who make our apparel seems to be about as good a reason as one might imagine.