The Myth of the $2 Tee Shirt

Let’s discuss the true cost of a very inexpensive tee shirt – an undershirt actually. No side seams and no neck/shoulder taping (which are a couple of hallmarks of a “well-made” tee).

The above data was studied and produced by the Juki Corporation’s Apparel Manufacturing Research Laboratory. This is still regarded as the apparel production “bible”, and though the exact sewing machine numbers spec’d in this definitive source have changed, the process and time requirements have not.

Costing of garments is the same, no matter where in the world you produce. It’s the cost of the fabric, the yield required to make the garment, the cost and yield of trims and the time it takes to cut, sew, finish and inspect the garment. You only have so many levers to pull to reduce the cost of a garment:

1. Select cheaper fabric

2. Reduce yield of fabric

3. Select cheaper trims

4. Use less trims

5. Choose less time consuming construction

6. Total production quantity

7. Pay the workers who are sewing the garment less money

That’s it – that’s literally all of the levers you have to pull, no matter where in the world you manufacture.

A note on #6 Total Production Quantity: If you want to make 300 of this tee shirt, or 3,000 or 30,000 your setup time is roughly the same. And if you are only sewing this tee shirt all day, every day, every week, for the entire year you become much faster vs sewing lots of different styles every day / every week or every month. The 4.92 minutes per shirt is predicated on sewing this style only, which means you can produce 560,000 pieces per year per sewing line without working overtime.

The current minimum wage in the apparel sector in Guatemala is $386.34 per month. With 21 people required in 1 line for this tee shirt, and 4.92 minutes required to manufacture each tee, the lowest legal labor cost is $.73 per unit. This does not include any overhead expenses such as the cost of the building, sewing machines nor energy and does not include any profit margin for the factory nor does it include payroll taxes.

An average tee shirt takes .9 yards per garment so at $1.50 per yard your fabric cost is $1.35; at $3.00 per yard your fabric cost is $2.70; and at $5.00 per yard your fabric cost is $4.50. A low cost on two labels (one brand label and one care/content label) is $.04 or you could spend up to $.20 for more expensive labels.

I always think it’s funny how many times I have a conversation with a company that makes tee shirts, and they’ve always thought it would be nice to move to sustainable fabrics and ethical labor. Then they tell me they buy tee shirts for $2.00, so we need to match their $2.00 price.

Let’s do the math – for traceable, certified fabric that’s a blend of BCI cotton and recycled polyester, you’re at about the $3.00 per yard rate if you are buying in large quantities. With $2.70 for fabric and $.04 for the cheapest labels and $.73 for labor cost, you’re already at $3.47 and the factory still has overhead costs and they need to make a profit too.

Even if you say – let’s not use sustainable fabric, you’re not likely to find fabric for less than $1.50 per yard. With $1.35 for fabric, $.04 for labels and $.73 for labor cost, you’re still above $2.00 without the factory covering their overhead or making any profit. So how in the world can you buy a tee shirt for $2.00?

For sake of argument, let’s assume a 10% overhead cost for the factory (no profits included). With this overhead cost added in, this lowest price tee is now at $2.38. Maybe you are such a big important customer the factory is willing to give up its profit margin hoping you will give it more profitable styles. Maybe the factory considers this a “keep the lights on” order, and just needs to pay its people and overhead. But at $2.38 cost with no profit, where are they reducing the cost by another $.38 per garment??? The most common answer: Pay the people making the garments less than minimum wage.

As the apparel industry continues its drive to the bottom penny with its dependency on low cost labor, you have to think about who those decisions are affecting the most – the people who can least afford it.

To give you another point for easy comparison, the current minimum wage in Denver is $17.29 per hour / $3,181.36 per month vs $386.34 per month in Guatemala. This is the main driving factor in producing overseas instead of in the US.

So what if you want to be the brand that stands up to do the right thing? You have a great opportunity to do the right thing for the people making your apparel at a very small cost increase. Most factories work on a 20% margin. Most brands work on a 75-80% margin. By paying marginally more for labor, you can have a huge impact in raising the wages and standard of living for the people sewing your apparel. Instead of being part of the problem in our industry that leads to people working forced overtime or accepting illegal wages or slave labor or child labor, be part of the solution. The solution that lifts people up and rewards them financially for the good work they do. And you can do it at so little cost to yourself. #JointheMovement