Saturday, April 16, 2016

Flight From $15: California Clothing Manufacturers Fleeing Minimum Wage Hike

by JASmius

And so, the exodus begins - or, rather, accelerates, leaving behind only those Gollyfornians (outside of the commie-lib coastal enclaves in L.A. and San Fran and John Paul Jones types like the Director) too poor to seek economic asylum in slightly less insane refuges.  Which will presumably leave only the commie-lib coastal enclaves to be gouged ritualistically and unmercifully to pay for all the masas inferiores and extranjeros ilegales (pardon the overlap).  And then they'll leave as well, and the Pyrite State can break in two and slide into the Pacific, with no Raymond Gaines to charge to the rescue:

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 [Red] 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 five hundred local jobs. The company still employs about four thousand 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."

And accelerate that trend that other cost-goosing factors set in motion years ago:

In the last decade, local apparel manufacturing has already thinned significantly. Last year, Los Angeles County was home to 2,128 garment makers, down 33% from 2005, according to Bureau of Labor Statistics data. During that period, employment also plunged by a third, to 40,500 workers. Wages, meanwhile, jumped 17% adjusting for inflation, to $698 per week — although that can include pay for top executives, as well as bonuses, tips and paid vacation time.

Many apparel companies say Los Angeles is a difficult place to do business. Commercial real estate is expensive and limited, the cost of raw materials continues to rise and it can be difficult to find skilled workers who can afford to live in the city. They expect things will become even more challenging after the minimum-wage hike further raises their expenses. [emphasis added]

Whenever you see the word "could" in this story, substitute the word "will".

Ironies abound in this tale.  American Apparel has been a "Made In The USA" stalwart, and though they're not sending a ninth of their job base overseas, they are shipping it out of California.  As usual, smaller companies will be proportionately harder hit, as with Joompy, which provided jobs in the less ritzy part of L.A. by maintaining large retail customers like...Forever 21, but can barely do so anymore because their costs have gone up so much and their equally cost-conscious customers don't want to pay the correspondingly higher costs to a domestic supplier when more economically foreign suppliers can give them a better deal.  As per one of my frequent catch-phrases, the top three priorities of any business, especially small and medium-sized enterprises, are cash flow, cash flow, and cash flow.  Controlling costs is inherent to those priorities.  People's jobs depend on it.

And now Pyrite State Dems have slaveringly jacked up every business's labor costs by sliding the entire wage scale $5 an hour upward in this already inflationary context, which will cost a lot of the working poor those jobs.  Brilliant.

And remember, Pyrite State Dems don't give one leaf off the proverbial fig tree about it.  Or, as Magneto once said....

Remember what I said yesterday:

Shouldn't we do everything we can to make the U.S. economy as internationally competitive as possible before we start bitching about the "unfair trade practices" of our trade partners? Why screw them over when we're still hamstringing ourselves with depressionary (high taxes, strangling regulations....

Like a $15 an hour minimum wage.

....nationalization of entire industries) domestic policies? And especially when we'll ultimately be compoundingly buggering ourselves.

A perverse fetish that Pyrite State Dems apparently find irresistable.

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