APPAREL LOSES 9,000 JOBS IN MAY
Byline: Joanna Ramey
WASHINGTON — Job loss in the domestic apparel industry continued in May continued as factories dropped a seasonally adjusted 9,000 workers compared with April payrolls, the Labor Department reported Friday.
In May, the apparel industry employed 778,00 workers, which is 67,000 below year-ago levels.
As it has for many months, the decline in apparel jobs far outpaced losses in any other manufacturing sector. Katharine Abraham, the commissioner for Labor Statistics, stressed this fact in testimony before the Congressional Joint Economic Committee. Abraham routinely reports to the committee the day her office releases the monthly employment figures.
“Employment in this industry has been trending downward at a variable pace for 25 years, but the rate of decline appears once again to have accelerated a bit,” Abraham said.
While she didn’t cite a cause for apparel employment’s continued drop, industry analysts say the reason remains constant: Pressure from retailers to keep prices low is forcing companies to produce more apparel in low-wage factories abroad.
Don Ratajczak, director of the Economic Forecasting Center at Georgia State University, Atlanta, said the prolonged tight labor market in a thriving economy also is creating pockets of worker shortages in the industry, another pressure on companies to manufacture abroad.
With the exception of Miami, all metropolitan areas in the apparel-producing South have unemployment rates lower than the already low national unemployment rate in May of 4.3 percent, which is a 28-year low. For example, the Atlanta rate last month was 2.8 percent.
“The tight labor market is becoming an increasing problem for apparel makers, I have heard anecdotally,” he said. “How can you find good people to work in a mill town when they can be paid more making beds in a convention hotel?”
The average hourly wage for apparel makers in May was $8.49, which is 27 cents higher than a year ago. In contrast, the average hourly wage for all service-industry employees last month was $12.73, up 57 cents from the year before.
Making foreign countries even more attractive for production of apparel is the ongoing economic crisis in Asia, a phenomenon that Ratajczak said also is reflected in plummeting domestic apparel industry employment.
According to the latest import numbers, some categories of apparel shipments from Asia — particularly Indonesia, Thailand and Malaysia — were up dramatically in the first quarter of this year.
“The producers in Asia are trying to build up their exports, so they’re discounting, which they can afford to do because their currencies are so low,” Ratajczak said. This strategy is encouraged by monetary policies that are keeping inflation in check by raising interest rates, he said.
Abraham also singled out the Asian effect on U.S. manufacturing, which in May lost 36,000 jobs overall. “It is reasonable to suspect that at least some of the recent declines in manufacturing employment…are related to Asia’s economic problems, but we have no way of quantifying the impact,” she told the joint committee.
Carl Priestland, an economist with the American Apparel Manufacturers Association, said the true effect of the Asian economic crisis will be better judged after two to three more months of import statistics. However, domestic apparel employment still generally is being eroded by competitive pressures at retail for low-priced, foreign-made apparel, he said.
“The consumer desire for better quality at a given price has generated even more pressure to keep prices down, and sourcing strategies have had to change to accommodate it,” he said.
May employment in the domestic textile industry, where declines have been much more moderate than in apparel, dipped by 1,000 jobs to 604,000 from April. Compared with year-ago levels, employment in the industry last month was down 13,000 workers.
Brighter news came from the retail sector. Employment at department stores — where sales are on the upswing — is increasing. Last month, department stores added 28,000 workers compared with April to 2.476 million, which is 100,000 above year-ago levels. Apparel and accessories stores in May added 1,000 workers from April to employ 1.062 million, which is 13,000 above year-ago levels.