Apr 18, 2016 09:27 AM EDT

American Apparel And California Minimum Wage Hike Hits Los Angeles

By Jane Reed

Los Angeles, California housed the apparel industry in the United States. It attracted everyone to its clothing and designs. All that has been left unchanged until recent years when a much more enticing offer has been put on the table. Cheaper overseas labor costs have been an attractive interest to many apparel manufacturing companies and slowly, according to LA Times, they have been outsourcing to countries like China and Vietnam.

Recently, American Apparel has laid off 500 jobs. American Apparel is the biggest clothing company in the Los Angeles area and its recent decision to cut 500 jobs was because the clothing maker was allegedly planning to move to another area in the United States for its manufacturing segment. While that employment downturn happened, California is now looking at a potential exodus of its clothing manufacturers when the state's minimum wage of $15 per hour will become effective in 2022.

The minimum wage increase has been suggested over the years and it will definitely put a big dent on the Los Angeles apparel industry if it stands at $15. California already lost Guess Jeans in favor of cheaper labor costs in Mexico and South America, and Hudson Jeans, as well.

The outsourcing was necessary to keep up with low-cost competitors, according to Jeff Mirvis who is the owner of MGT Industries in L.A. Although the designs are made in L.A., MGT made that same transition in the 1990s when it moved its production line to Mexico, China and Southeast Asia.

"Manufacturers really have no choice," said Mirvis, whose father started the company in 1988. "With the rise of Forever 21 and stores like that, price points have gone down and down and down." This slow and painful process will affect thousands of jobs in the state which is why Labor Union organizers express that it's greed, and not survival, that's forcing clothing companies out of California.

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