US Apparel Manufacturing Jobs Continue Declining in 2015

[Updated data is available: U.S. Continues to Lose Apparel Manufacturing Jobs in 2016]

11

It may disappoint those who are hoping a return of apparel “Made in USA”, but according to the latest statistics from the Bureau of Labor Statistics, the U.S. apparel manufacturing sector (NAICS 315) lost another 4.2% jobs from April 2014 to April 2015. From January 2008 to April 2015, about 86,800 jobs (or 39%) in the U.S. apparel manufacturing sector had disappeared.

From the academic perspective, a sizable return of apparel manufacturing job in the United States seems to be extremely unlikely given the nature of the U.S. and global economy in the 21st century.

First, it is all about comparative advantage suggested by classic trade theories. The World Bank data show that from 1980 to 2010, the U.S. GDP increased by 424% (note: world GDP increased by 484% over the same period) whereas the total U.S. population was only 23% higher in 2010 than in 1980 (note: world population increased by 65.21% over the same period). This suggests that the United States actually is becoming more capital & technology abundant with less comparative advantage in manufacturing labor intensive apparel. A sizable return of apparel manufacturing in the United States might only happen in the following two occasions: 1) apparel manufacturing can be automated like textile manufacturing; 2) substantial amount of foreign workers were allowed to work in the United States. Unfortunately, neither of the two occasions seem likely to happen at least in the near future.

Second, it is about US apparel company’s business model in the 21st century. The suggested dominant types of apparel companies in the United States today are “branded manufacturers” and “marketers” whose business models heavily rely on global sourcing and non-manufacturing activities such as branding, marketing and design (Gereffi, 1999). If you carefully read US apparel companies’ annual reports, seldom you’ll see a company still regards “manufacturing” as a key competitive advantage or an area of strategic importance to invest in the future.

2

Additionally, according to data from the U.S. Bureau of Economic Analysis (BEA), the percentage of compensation of employees in the apparel industry’s total value added has been gradually declining since 2008. Similar trend is also observed in the U.S. economy and the U.S. manufacturing sector as a whole. Does the result imply that labor input is becoming less important to the output of the U.S. apparel industry? Or does the result suggest that U.S. apparel companies are more willing to invest on buying machines than hiring more people? Maybe it is the time that we shall pay more attention to the labor-capital substitution trend in the U.S. apparel industry.

Advertisements

Author: Sheng Lu

Professor @ University of Delaware

4 thoughts on “US Apparel Manufacturing Jobs Continue Declining in 2015”

  1. I definitely agree with the idea that the US is more capital and technology abundant than manufacturing and labor. We produce a lot of the ideas, but can not produce the actual products because of our lack of necessary resources to be able to manufacture. This post states how manufacturing is a key competitive advantage in investing in our future and the US just does not have it like China or India do. I think that we are more willing to invest in machinery for our manufacturing rather than hiring people since the percentage of compensation of employees in the apparel industry’s total value added has been gradually declining since 2008.

  2. It’s astonishing that the unemployment rate in the apparel industry here in the U.S. is so high. Since the recession, we’ve seen the unemployment rate decrease, but I never realized how much of an issue this really was for this particular field. I can see how the U.S. is more capital and technology abundant, but like we learned in class this isn’t always going to be the case for the United States because comparative advantages will switch between capital intensive and labor intensive over several years. China is an example of this. Working in the retail world myself, tons of customers are always looking for the “Made in USA” label and I think they would be disappointed to find out this news. I never really thought about all the products I use everyday coming from other countries, mostly China, but I’m becoming more aware of labels. Because the US apparel company’s business model is apart of this problem maybe its time to change the way this sector is set up. Global sourcing is a lot cheaper, but if more and more customers are looking for products made in the US, they would probably be willing to pay a little bit more for products.

  3. It does not surprise me that employment in the apparel manufacturing sector is steadily declining. As we have seen, as a country’s textile and apparel industry moves through development chain, it grows and grows to eventually hit a stage where the country is not producing much apparel and is putting its efforts into the more capital-intensive textile production- parallel to its overall development as a country. I find it interesting that I keep hearing about a pick-up in USA manufacturing on TV shows (such as Shark Tank), on social media, and with popular brands such as Alex and Ani which produces its jewelry products in the United States. I am perplexed as to why all this talk of domestic production has not really been reflected in the numbers. I do think that the labor input is becoming slightly less important in the US apparel industry, but we have to keep in mind that the US apparel industry is a small fraction of United States industry and production, and it does not necessarily mean that labor is less important in other sectors.

    1. very good thinking! Why should “marketers” and “branded manufacturers” reverse their business model back to apparel manufacturing? Will this serve their business strategy? Will this improve their return of investment?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s