California Apparel News

A rise in California’s minimum wage from $8 to $9 an hour next summer will cost Los Angeles clothing manufacturer Tianello at least $208,000 a year.

“That’s a lot of money,” said the company’s owner, Steve Barraza, doing a quick calculation of what a $1-an-hour wage increase will mean to his bottom line. “It adds to the cost of a garment, big time.”

Barraza has about 100 workers who cut and sew garments in his one-story red-brick headquarters building, located on Broadway south of downtown Los Angeles and the LA Fashion District.

Around 50 percent of his employees—instrumental in making the label’s Tencel and silk blouses, scarves, jackets, pants and dresses—earn minimum wage or a salary that is very close to that. “And then those who earn more than minimum wage will want to earn a dollar more an hour, too,” Barraza observed.

He said the new minimum wage will force him to augment his wholesale prices to cover higher costs.

In September, the California Legislature approved a boost in the state’s minimum wage, which is sending ripples of concern throughout California’s apparel industry. The salary increase takes effect July 1. Another jump in the minimum wage, to $10 an hour, takes place Jan. 1, 2016.

Sewing contractors, wash houses, garment dyers, fabric printers and other companies connected to the fashion industry are weighing how to cope with the added cost. “We are still looking at the impact,” said Wesley Chung, owner of U.S. Garment Inc., a denim dye and wash house located next door to the 7 For All Mankind headquarters in Vernon, Calif. “I don’t know how it is going to affect our bottom line.”

Some contractors have already notified their clients that prices will go up when the new minimum wage goes into effect. “I’ve already gotten messages from my contractors,” said Firuzé Hariri, a San Francisco designer whose line of blouses and reversible jackets is cut and sewn by contractors in San Francisco and Los Angeles. “They are all concerned.”

Hariri said she will undoubtedly have to pay the higher price to make her Beluva label because she wants to maintain the quality of her fashionable, polyester blouses, tunics and skirts, which have a distinctive crinkled look to them.

She is being hit with a double whammy. Currently, San Francisco’s minimum wage is set at $10.55 an hour. At the beginning of 2014, that goes up to $10.74.

California’s minimum wage has been stagnant since 2008, when it went from $7.50 an hour to $8 an hour. But with the cost of living inching up every year, minimum-wage workers have seen their standard of living shrink.

The minimum-wage bill’s author was Assemblyman Luis Alejo (D-Watsonville), who said it was time to provide relief for hardworking families. The bill was opposed by the California Chamber of Commerce and business lobbyists who maintained the proposed minimum-wage increase went up too quickly and was a job killer.

California currently has the eighth-highest minimum wage in the country, surpassed by states such as Washington, whose minimum wage is $9.19 an hour. The federal minimum wage is set at $7.25 an hour.

Blue-jeans capital

Apparel manufacturers say the minimum-wage hike is just one more obstacle to keeping apparel production in Los Angeles even though everyone is touting the “Made in USA” concept.

One of the hardest-hit sectors will be the factories that cut and sew blue jeans in Southern California, which account for 75 percent of all the premium blue jeans sold in the United States. Already, there is a movement for premium-denim brands to shift their production to Mexico after tariffs on U.S.-made women’s blue jeans exported to Europe rose from 12 percent to 38 percent.

Esmael Enriquez, the general manager at blue-jeans factory JS Collections, said about 50 percent of the company’s 70 garment workers make minimum wage.

Even though the company’s operating budget will take at least a $134,000-a-year hit, Enriquez doesn’t think JS Collections can augment its wholesale prices. “Customers don’t want to pay more,” he said. “Our income will probably remain the same, but our expenses will definitely increase.”

The factory cuts and sews 9,000 pairs of pants a week. Its biggest client is Vince, the high-end Los Angeles–based label whose denim pants retail for $185 to $245 at high-end stores around the country. Other customers include New York label Bonobos and Los Angeles–based Guess. JS Collections recently developed its own blue-jeans label, Postage, which makes up 10 percent of production.

Not far away at American Garment Sewing, also known as AGS USA, the minimum-wage effect will be more pronounced because the company has 200 workers, who make 30,000 units a week.

“We are waiting to see how the new minimum wage is going to impact our costing,” said Anton Pavel, vice president of operations at the 30,000-square-foot factory.

The factory’s principal client right now is Lucky Brand, but customers come and go, Pavel said. “More and more high-end production is moving to Mexico,” he said, noting that last year the factory employed 300 workers. “We are always looking for more customers.”

While many apparel factories pay minimum wage, others are committed to higher salaries in order to keep well-trained workers, who are at a premium, in the industry.

“We pay much more than the minimum wage to our sewers because of the skills required,” said Noah Landis, owner of Ark Apparel, which has a full-time staff of 10 people. The 2-year-old company in Vernon, Calif., does much more structured design pieces and manufactures entire collections. An average run is 700 to 1,000 pieces per project. “Paying more is key to what we do.” Landis said.