Denim brands outsource in response ​to ​California minimum wage​

Due to the fact that manufacturers have been facing higher wages in California, it seems that the denim capital may be losing some of its main production business. Three major denim brands are now producing their product in Mexico, due to this wage-hike.

It was announced earlier this year that California’s minimum wage would be raised to 15 dollars an hour by 2022. This law, signed by Governor Jerry Brown, requires businesses with over 25 workers to increase their minimum wage for employees from 10 dollars to 10.50 dollars in the local Los Angeles areas. Over the next few years, the minimum wage will continue to rise until it reaches 15 dollars.

Because of this, the garment and fashion industry has been affected by this prompting manufacturers to leave the state. When the minimum wage change was first announced, Los Angeles-based company American Apparel stated that it was considering outsourcing some of its garments to outside of the U.S. As a result, the retailer wiped out about 500 local jobs according to the LA Times. At the time, CEO of the company Paula Schneider had stated to the publication that “manufacturing of a more complicated pieces, such as jeans, could soon be outsourced to a third-party company.”

Denim manufacturing decreases in the U.S.

There is already a significant amount of workers who are outsourced out of the U.S. because of our wages already. With the higher minimum wage, it puts pressure on other existing wages in the U.S. to be raised as well. This makes things difficult for garment makers who may not be able to successfully afford these wages. As reported by Apparel News, True Religion, 7 For All Mankind, and Hudson now confirm they are producing approximately 70 percent of their denim in Mexico. Jean Mart Inc., Paige Denim, and Frame are also reported to have moved their production sources out of the country.

This affects the Los Angeles denim industry, as it seems that the minimum wage raise can have an adverse effect on our economy. Although the law was passed with good intentions of having fair pay for all workers, it may end up reducing our apparel and garment business in the local area. In the last decade, local manufacturing has decreased a large amount. According to the Bureau of Labor Statistics data, garment markers decreased by over one third since 2005. It seems that while the law is passed, the trend of outsourcing may continue for our garment and denim industry.

Photos: Paige Denim