Shirts for 33 cents…Made in America

Last week, Mike Shedlock of reported that a Chinese T-shirt company is setting up shop in Arkansas, lured by U.S. “sewbots” and lower production costs. It will cost about 33 cents to produce a shirt. You can see the original story here:  China Snaps Up America’s Cheap Robot Labor.

By early 2018, Tianyuan Garments Co., based in the Suzhou Industrial Park in eastern China, will unveil a $20 million factory staffed by about 330 robots from Atlanta-based Softwear Automation Inc. The company estimates its factory will stitch about 23 million T-shirts a year, one every 26 seconds.

“Around the world, even the cheapest labor market can’t compete with us,” Tang Xinhong, the chairman of Tianyuan, told the China Daily about the factory in July. The company, one of the biggest apparel makers in China, supplies Adidas, Armani, Reebok and other major brands. Developing a robot that can match the dexterity of a human hand to manipulate and stitch fabric is no small achievement. Next up: stitching a dress shirt with a breast pocket requiring about 78 separate steps. Softwear Automation says they will roll out that robot within the next five years.

Why am I telling you this? First, this is why low skill workers in the U.S. have not had a raise in real terms since 1979 (yes really!). This has exerted downward pressure on 80% of all wage earners. That explains a good part of the enormous transfer of wealth in recent years from labor’s share of national income to the share going to profits. And that helps to explain why the so-called economic recovery of the last nine years has been the weakest on record.

Second, we have idiots on the left who think that we can address inadequate incomes by raising the minimum wage. Huh? That will only encourage more job losses.

Third, we have idiots on the right who think they can bring higher-paying manufacturing jobs back to America through a combination of sticks and carrots. Huh? The manufacturing plants may well come back but the jobs attached to them are going, going, gone.

Fourth, we have trillions of dollars in debt looking to be serviced and eventually repaid from industries that no longer make any sense. Legacy industry is going bust and the result will be catastrophic rates of default given the current astronomic level of U.S. corporate debt. This isn’t like Ford obliterating the buggy-whip makers because the buggy-whip makers didn’t have trillions of debt.

Fifth, the share of the U.S working age population who will support our high expectations of public services and entitlement programs will continue to decline; greater burdens will fall on fewer workers until these programs break.

Personally, I have a response. I don’t think anyone needs cheaper shirts. Sure, the era of the 33¢ shirt means more shirts for everyone, even the unemployed. But how many shirts do you and I need? Not many. Ask my wife; she will tell you I do not wallow in sartorial splendour. So here is my proposal. Own no more than, say, 10 shirts. Buy them from local craftspeople. Buy your food from local farmers. Patronize the hand-made watches at the local jeweller. Respect the artists and artisans among us. Pay 10 times more for one-tenth of the stuff. This won’t save our over-indebted corporate sector but it will save a little human dignity.