Evolution of the Clothing Industry in the United Statesby Jodi Starkman
Throughout the ages, making clothing was the responsibility of the housewife, who sewed her family’s garments at home. This was still the case in the early years of the United States. In his 1791 Report on the Subject of Manufactures, Alexander Hamilton wrote that in a number of districts two-thirds to four-fifths of all the clothes of the inhabitants were “made by themselves.” The well-to-do went to custom tailors and dressmakers or bought garments imported from Paris and London.
The clothing industry was one of Britain’s oldest, traced back to the medieval guilds. In the early nineteenth century, even after the industrial revolution had begun, it was still characterized by small custom tailoring (“bespoke”) shops geared primarily to clothing for gentlemen. The English tailor was a skilled journeyman measuring the customer, cutting, sewing by hand, and then fitting the entire garment. Clothing for the lower orders was made at home.
In the 1830s, ready-to-wear manufacturers started to set up shop in both Britain and the United States. In the United States they supplied clothes for slaves in the South or seamen in the North. Brooks Brothers, for example, started out in the whaling port of New Bedford, Massachusetts, precisely to meet the sailors’ needs for clothes. Another market was bachelors who had no one at home to sew for them, catered to by dealers in secondhand clothes. Unable to keep up with the demand, some dealers began to buy cloth and have it sewed by farm women working at home. Here and there such a merchant jobber might even assemble a group of women into a workshop.
The invention of the sewing machine by Elias Howe in 1846 and Isaac Singer’s improved model four years later paved the way for volume production of clothing in factories. The Civil War and its demand for uniforms hastened the process. Soon, most American men’s clothing was “off-the-rack,” that is, factory made. Women’s wear moved to factories somewhat later, but the industry grew rapidly in the late nineteenth century, developed by retail and wholesale dealers. In New York, the principal American center for the manufacture of women’s clothing, the labor force consisted largely of Irish and German immigrant women, some of them still working at home. As the major source of immigration shifted, however, Jewish and Italian immigrants, many of them men and some with tailoring experience, flooded into the expanding apparel industry.
Two types of production arose. One was the factory, where the production process broke down the garment into its constituent parts, permitting division of labor and the use of workers less skilled than the tailor artisan. In the fashion-oriented sectors, which grew with the rise of ready-made women’s wear, a system emerged that was something between handicraft trade and factory production. Here, the division of labor went only as far as the constituent crafts—cutting, machine sewing, hand finishing, and pressing. In either case, garment assembly was based on a “bundle” system. Work was delivered to the individual workstation in a bundle. The worker untied the bundle, performed the required tasks, and then retied the pieces to be passed on to the next stage. Workers were paid piece rates based on the number of items sewn.
Forces at Work in the Garment Industry
Giant factories or mills with agglomerations of huge machinery, employing thousands of workers and owned by mammoth corporations with large amounts of capital, is the typical portrait of twentieth-century industry. But the garment industry never fit that description, and even its “large” factories producing standardized items were picayune by comparison. The shops were labor intensive, employing relatively low-skilled, usually female, workers and required little capital investment. The technology was fairly simple—basically the sewing machine. At first, cutting was done with scissors and pressing with hand irons, until electric cutters and steam presses replaced them. To this day, apparel has one of the lowest capital-to-labor ratios of any industry. Competition among manufacturers has always been fierce, and the entire industry has been squeezed by two more powerful forces: the textile suppliers and the big retail chains that are the chief buyers.
Not being saddled with large amounts of sunken capital nor dependent upon highly skilled labor, the industry had the potential to be mobile but was, in fact, concentrated in a few urban centers. This was due to the fact that fashion, particularly women’s fashion, played a role in garment economics and tended to tie the industry to centers of high society. A nation’s leading city became the style setter and major center of production. Fashion trends were set by the rich and famous who lived there, and moved mainly from high-priced to low-priced lines, as everyone tried to emulate them. (The worldwide craze for blue jeans, a derivative of work clothing, indicates that emulation also can move upward.) Although other large cities also were garment centers, New York dominated in the United States, as did London in Britain and Paris in France.
The degree of fashion orientation governed the type of ownership and the size and location of factories. Men’s clothing—less susceptible to style changes—was made by more substantial companies with their own factories, as well as by small firms and contractor shops located in a number of cities. Highly standardized work clothes, for which there is a steady demand not influenced by fashion, could be made almost anywhere, including southern rural locations in the United States. More fashion-oriented women’s wear, for which demand was more limited and also more volatile, made greater use of subcontracting and smaller workshops and was located in large cities (mainly New York).
Another factor governing the industry is that is seasonal, mostly because of the weather—people wear heavy coats only in the winter—and the trendy nature of fashion. Items less subject to the whims of changing tastes are less seasonal, for the demand is steadier and there is the possibility of producing for inventory. Seasonality helped to tie the location of firms to major centers having adequate reserves of experienced labor that could be tapped on short notice.
In the higher-priced lines, fashion was the main differentiator among competitors. Success was based on acceptance of a firm’s styles (a form of monopolistic competition) rather than labor costs.1 Companies in this end of the business produced in their own shops and required a greater degree of skill from employees. Since employers were more interested in quality than speed, they paid time rather than piece rates. Their workers, therefore, enjoyed relatively high wages and good working conditions. High-fashion manufacturers were unlikely to move operations away from the fashion center because they needed to be close to resources that would allow them to respond quickly to changes in their customers’ tastes.
All but these high-end firms, however, could specialize by function and were able to divorce the production function from design and sales. Firms using outside contractors included manufacturers, which engaged in production themselves but sent surplus work to contracting shops, and jobbers, which only cut the material and then sent it to contractors for assembly. Contractors competed for orders, and since their profits were the difference between what they received from jobbers and manufacturers and what they had to pay their workers, the system fostered low wages and poor work conditions.
Britain dealt with the problem by legislating labor standards. In 1909, Winston Churchill piloted a bill through the House of Commons establishing minimum wage boards in four trades, including the largest part of the clothing industry. At that time in the United States, the Supreme Court would not countenance a minimum wage, but unionism was gaining strength. Two significant labor organizations emerged in the apparel industry: the International Ladies’ Garment Workers’ Union (ILGWU) in women’s wear and the Amalgamated Clothing Workers of America (ACWA) in men’s.2 Through collective bargaining, they established some control over the system by making jobbers responsible for conditions in their contractors’ shops and limiting the number of contractors a jobber could use. They were not able, however, to establish the high wages that unions won in other industries. Overall, the two different approaches—minimum wage regulation in Great Britain and collective bargaining in the United States—resulted in similar wage levels for garment workers in the two countries, improved over previous times, but still low in comparison to wages in other manufacturing jobs.
Moving out of the Big Cities
The location of garment manufacturers affects and is affected by the economics of the industry. To better understand this process, we will focus on women’s and children’s wear in the United States. For a long time contracting did not affect the geographical concentration of clothing manufacturers, because the shops had to be close both to the jobbers’ showrooms and the labor supply.3 The industry was located mainly in Manhattan, first on the Lower East Side, but eventually west of midtown in the section that came to be called the Garment Center.4 Agglomeration economies also developed, as firms catering to the industry—embroiderers, belt makers, etc.—also clustered in the Garment Center. With production concentrated in a small area, the unions were able to police conditions.
The need for quick reaction to style changes had tied production to the Garment Center but advances in transportation permitted companies to look further afield for labor. In the 1920s, the motor truck allowed firms to take advantage of the bridges and tunnels across the East and Hudson rivers. Contractor shops tapping new sources of labor, largely young women willing to work for lower wages, opened in Brooklyn and New Jersey. Weakened by internecine warfare, the ILGWU could not cope with the migration, and production grew in the outlying areas. It took until the coming of the New Deal for the union to be able to bring these shops under the union’s control. However, as vehicles got faster and roads were improved, trucks could travel a longer distance overnight, and shops were opened even further away. After World War II the outward movement accelerated and expanded into the old mill towns of New England that had been abandoned by the textile industry and the anthracite coal region of northeast Pennsylvania staggering from the shift to oil for home heating.
The use of a more standardized production system, akin to that used for men’s clothing, contributed to the ability of shops that made women’s wear to relocate. In the manufacture of better dresses, coats, and suits, one worker performed all the machine sewing and another all the hand sewing, but standardized products, which eventually included lower-price dresses and coats and suits, could be made by “section work.” Tasks were subdivided—one worker set the sleeves, another stitched the lapels, and so on—making it feasible to employ less-skilled and lower-paid workers. The New York locals’ ban on the use of section work only encouraged shops to locate outside the city. The union pursued these “runaway shops,” but even as it brought them within the fold, it was careful to push wages up only high enough not to induce employers to move into new territory. As a result, although all unionized shops working for Manhattan jobbers came under the same collective agreement, workers outside Manhattan were paid less than those in the city.
Manhattan remained the prime design and sales center for women’s and children’s apparel, but as a production center it was in decline. Immediately after World War II, the city accounted for two fifths of national employment and the metropolitan area for almost half. By the mid-1950s, the city’s share had dropped to less than one third and that of the metropolitan area to 43.5 percent. Since most of the jobs lost in Manhattan had moved to Pennsylvania and New England, the northeast region as a whole still saw no decline in its overall share of national employment.5 But outward movement quickened in the 1960s as the new interstate highway system made the South, with abundant supplies of cheap female labor, very attractive.
In 1950, the South accounted for only one sixth of employment in the apparel industry; by 1960, however, it was up to one fourth and after that its share soared. Southern production historically had been confined to the most standardized products, such as men’s work clothes, but gradually more sectors joined the migration, and soon the South became the leader in apparel production. The unions ran into formidable roadblocks to organizing in the South. Right-to-work laws, especially, were a serious obstacle in an industry with high labor turnover, since shops that had been unionized could be decertified as the workforce changed. So the unions began to rely on increases in the federal minimum wage to mitigate its weakened bargaining power.
The Challenge from Imports
Until the middle of the 20th century, most advanced nations were self-sufficient with respect to clothing and apparel imports were insignificant. In the mid-1950s, some standardized types of apparel began to arrive in the United States from Japan and Hong Kong. Imports received a lift in 1965, when the customs law was changed to allow products to be assembled offshore and then sent back to the United States with duties applied only to the “value-added” part of the product.6 Pressure from unions and employer associations induced the U.S. government to lean on other countries to limit their exports, but this was only a delaying action as some less developed Asian nations began to concentrate on increasing their exports. They built on their comparative advantage—abundant supplies of cheap labor—to specialize in low-capitalized, labor-intensive manufactures such as clothing and electronic assembly
Now facing competition from low-wage economies, the advanced nations sought an international solution. The Multifibre Arrangement (MFA), established by the General Agreement on Tariffs and Trade (GATT) in 1974, was intended to control the rate of increase of exports from less developed countries in order to give the clothing industries of the advanced nations time to restructure while allowing the LDCs to continue to develop. The removal of the MFA in 1994 led to increased imports and a spread of garment production to more, even lower-wage countries.
Despite competition from imports, U. S. production continued to grow until the 1980s when it started a sharp descent. Employment in the clothing industry declined accordingly, and there are now fewer than 400,000 production workers in the clothing industry in the U.S, as against 1⁄ million in the 1960s. (Part of the job loss is attributable to some increase in productivity.) Although Los Angeles has a strong hold on sportswear, New York remains the nation’s leading fashion design and marketing center, but most garments are assembled abroad. In a sense, this represents another step in the widening of the New York labor market, to Brooklyn and New Jersey in the 1920s, to Pennsylvania and Massachusetts in the 1930s and 1940s, to the South in the 1960s and 1970s, and to the entire world today.
The movement to freer trade has facilitated this new global division of labor. The success of Hong Kong and Korea in using the garment and electronic industries as starting points toward industrial economies led to emulation by others (e.g. Thailand, the Philippines) and today most developing nations follow this model. China, with a population of 1.3 billion, has become fertile ground for manufacturing all types of labor-intensive products, including clothing. In fact, China now accounts for about one fifth of world garment exports, and its share is expected to rise to half within a few years, at the expense of higher-wage LDCs.
Transportation changes also have played a role. Shipment by boat took weeks, which did not matter too much for highly standardized products such as men’s shirts. But other products required faster turnaround time. The advent of the jumbo cargo plane not only cut the cost of shipping by air (apparel has a high value relative to weight), but its speed made it possible to produce even fashion-oriented apparel abroad. Transportation costs are not insignificant. In 1979, the costs of importing to the United States, including transportation, importers’ markups, and tariffs, varied from one fifth of total costs for men’s dress shirts to one third for women’s coats. Even so, while transportation charges add to the cost of assembly abroad, they are more than offset by lower wages in the LDCs.
Finally, the fairly static nature of the industry’s technology and manufacturing process has facilitated geographic dispersal, since setting up a workshop does not require much technical know-how or capital or a skilled workforce. There was once some thought that microelectronic technology would allow advanced nations’ clothing industries to restructure and become competitive again. Indeed, technological advances and work restructuring—for example, abandoning the bundle system and using work teams in standardized product lines—have led to improved productivity. For the most part, however, new technology has been applied to the design and cutting stages of the production process, not assembly, and although assembly wages are much lower than those in the design and marketing end of the business, they account for most of total labor costs. Innovations, moreover, can be applied in foreign as well as domestic workshops, and information technology has made it easier to coordinate production at sites all over the world.
Advanced nations do enjoy productivity advantages, but they are not great enough to overcome wage differentials. A 1987 report by the Asian Productivity Organization offers an example: American workers could make a shirt in 14 minutes while it took 25 minutes in Bangladesh, but the average U.S. wage was $7.53 an hour compared with 25 cents in Bangladesh. Another study found that in 1983 Mexican garment productivity was 40 percent that of the United States, but its wages were only 21 percent of U.S. wages.
The sewing machine, though much improved, is still the basic production tool of garment manufacture, and it continues to be relatively easy for new firms to enter the industry, as capital requirements remain modest. Despite the rise of some large companies, they have not eliminated small shops. There are still 17,000 apparel firms in the United States. In many countries, large retail chains have come to dominate much of the industry and have been able to exercise a degree of oligopsonistic power. They coordinate consumption and production, guiding the selection of goods to be produced. Swedish fashion retailer H&M, for example, designs all its merchandise in Stockholm but outsources production to 900 workshops in 21 mostly low-wage countries, constantly shifting production to get the best deal. The businesses actually manufacturing the garments, however, remain small-scale undertakings.
This, then, is the scenario against which one of the most interesting problems of globalization is being played out. The unique characteristics of garment manufacturing—particularly how cheaply shops can start up and their ability to provide employment to many low-skilled workers—make it a dynamic engine for industrialization in many less developed countries. But these same characteristics often lead to poor working conditions and leave apparel companies using contractors in LDCs vulnerable to criticism regarding labor rights and low wages, as was discussed in the previous article.
- Business Week, November 11, 2002
- The Economist, February 15, 2003
- Roy B. Helfgott, “Women’s and Children’s Apparel,” in Made in New York: Case Studies in Metropolitan Manufacturing, Harvard University Press, 1959
- Kurt Hoffman and Howard Rush, Micro-Electronics and Clothing: The Impact of Technical Change on a Global Industry, Praeger, 1988
- Michael Scheffer, Trading Places: Fashion, Retailers, and the Changing Geography of Clothing Production, Royal Dutch Geographical Society/Faculty of Geographical Sciences, Utrecht University, 1992
- A business survival strategy recently adopted by domestic manufacturers in high-wage countries has been the development of “designer labels” (e.g. Calvin Klein), to compete with imports on the basis of style and quality rather than price.
- The ILGWU was established in 1900. The Amalgamated formed in 1914 as a split-off from the AFL’s United Garment Workers. Regarding it as a “dual” union, the AFL refused it admittance, but it came to dominate the industry. It was admitted in 1933 with jurisdiction over suits and overcoats and the UGW over work clothes, but it soon left the AFL for the new Congress of Industrial Organizations (CIO).
- Cut goods were delivered to the contractor and finished products returned by young men pushing carts through the streets and up and down the elevators.
- The center of Manhattan’s men’s industry was a mile south, around Union Square.
- The availability of lower wages elsewhere was not the only factor contributing to Manhattan’s decline as a manufacturing center. Consumer demand shifted away from traditional dresses, coats, and suits, a segment dominated by Manhattan, to more informal sportswear. Also, affordable loft space needed to accommodate section work in the larger shops was in short supply. Finally, while Manhattan garment wages were high relative to those in other locations, they were low relative to wages in general. The industry found itself facing labor shortages as the old male tailors retired and young women turned to other employment opportunities in white-collar positions.
- Later, the European Union adopted a similar policy, known as outward processing trade (OPT). Many firms, particularly in Germany, have taken advantage of it to have clothing produced in Eastern Europe.