New $15 minimum wage causing apparel companies to outsource manufacturing

Young people usually only get one side of every issue - because we don't tell them the other side
Young people usually only get one side of every issue – because we don’t tell them the other side

This story is from the radically leftist Los Angeles Times, of all places.

They write:

Los Angeles was once the epicenter of apparel manufacturing, attracting buyers from across the world to its clothing factories, sample rooms and design studios.

But over the years, cheap overseas labor lured many apparel makers to outsource to foreign competitors in far-flung places such as China and Vietnam.

Now, Los Angeles firms are facing another big hurdle — California’s minimum wage hitting $15 an hour by 2022 — which could spur more garment makers to exit the state.

Last week American Apparel, the biggest clothing maker in Los Angeles, said it might outsource the making of some garments to another manufacturer in the U.S., and wiped out about 500 local jobs. The company still employs about 4,000 workers in Southern California.

“The exodus has begun,” said Sung Won Sohn, an economist at Cal State Channel Islands and a former director at Forever 21. “The garment industry is gradually shrinking and that trend will likely continue.”

But some lucky people are going to get an exemption from the new minimum wage law – even though they lobbied hard in favor of it.

The radically leftist UK Guardian explains:

Los Angeles city council will hear a proposal on Tuesday to exempt union members from a $15 an hour minimum wage that the unions themselves have spent years fighting for.

The proposal for the exemption was first introduced last year, after the Los Angeles city council passed a bill that would see the city’s minimum wage increase to $15 by 2020. After drawing criticism last year, the proposed amendment was put on hold but is now up for consideration once again.

[…]The amendment was originally proposed by Rusty Hicks, executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO. AFL-CIO is the largest federation of labor unions in the US, with about 12.5 million members. Hicks is also the co-convener of the Campaign to Raise the Wage.

At the time of its passage, Hicks lauded the $15 minimum wage.

“We are one step closer to making history in Los Angeles by adopting a comprehensive minimum wage policy that will change the lives of hundreds of thousands of hard-working Angelenos,” said Hicks. “The city council’s action today creates a path for workers to succeed and gives our economy the boost it needs to grow.”

Hicks did not respond to a request for comment.

Union leaders have a reputation for being just terrible at economics. And when I say “terrible”, I mean they are more ignorant of economics than inanimate objects.

I actually remember far back to when Obamacare was being passed. The big labor unions lobbied for the passage of Obamacare. And when it was passed, they lobbied the Democrats for exemptions to it for the big labor unions. Exemptions from fees, as well as exemptions from taxes. Basically, the big labor unions wanted to screw all the non-union companies with higher health care costs. Unite Blue! Socialism for thee, but not for me. That’s hypocrisy.

3 thoughts on “New $15 minimum wage causing apparel companies to outsource manufacturing”

  1. This seems so incredibly obvious. Increase the cost of doing business and the business must increase the cost of its products or services, or cut other costs, such as the number of employees. At what point do people realize that owning a business doesn’t mean one has money to burn?

  2. This actually proves the anti free trade point every bit as much as yours

    Assuming businesses were not allowed free movement of goods or to import cheap labor via legal or illegal means, they’d have no way to arbitrage wages down.

    And down they have, Americans measured as percent GDP on wages are half was wealthy as they were in `1973. Some of this of course automation/computers, some mass female entry into the work force but a lot of it is economic liberalism. Simply, fail to regulate, your system becomes and oligarchy which is what we have now.

    When you restrict trade heavily and increase wages a bit some of prices going up slightly (wages make up only a small percentage of most costs) quality getting lowered or more automation is used,

    The later is always possible but again its subject to regulatory tolerance as well if the State wants people to work, they can tax the heck out of automation or simply dry up the labor pool via by mass hiring.

    They won’t so what free trade will do is what Stephenson wrote in Snowcrash paraphrased slightly

    When it gets down to it — talking trade balances here — once we’ve brain-drained all our technology into other countries, once things have evened out, they’re making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity

    This means everybody gets poor and all the diversity we’ve imported means conflict as well.

    Free Trad is the express train to social and structural collapse

    1. Just FYI, free trade is supported by left, center and right economists. To be anti-free-trade is just to confess “I don’t know a damned thing about economics”.

      It’s the equivalent of espousing a flat Earth, something that no scientist could do.

      Everyone has an opinion, but not everyone is an economist, right:

      93% of economists across the ideological spectrum agree that free trade is correct.

      Author is Harvard Econ prof who served in Dem and Repub admins. Has endowed chair. Writes the econ textbook published by Harvard University Press.

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