Calif.’s $15 minimum wage law ends apparel industry’s revival

Calif.’s $15 minimum wage law ends apparel industry’s revival

While California workers are excited at the state’s pioneering $15 minimum wage law, but the same law has apparently pushed the already-struggling apparel industry to the brink of its end.

American Apparel, which accounts for nearly 10 per cent of all clothing-manufacturing jobs in Los Angeles, has slashed nearly 500 jobs in the last couple of weeks. The company’s chief, Paula Schneider, said the company was planning to outsource to a third-party company.

Schneider didn’t tie the announcement directly to the state’s $15 minimum wage law, but the company started cutting jobs almost immediately after Gov. Jerry Brown signed the controversial bill into law.

Lloyd Greif, CEO of Los Angeles-based investment banking firm Greif & Co., said, “They’re headed out of Dodge. They are going to outsource all garments. It’s only a matter of time.”

Near the beginning of the 21st Century, Los Angeles was the apparel capital of the United States, with 4,000 active apparel-making factories employing more than 90,000 workers.

Over the next few decades, cheaper clothing imported from Chinese and other Asian countries cut Los Angeles’ attire industry to nearly half, with the number of factories and jobs falling to less than 2,200 and 46,000, respectively.

But, Los Angeles’ apparel industry returned to growth by 2013 as a steady inflation rate in China and other apparel-making Asian countries led to decrease in imports. However, California’s $15 minimum wage law seems to be thwarting the industry’s revival.