Carpe Diem

Chart of the day: The CPI for clothing has fallen by 3.3% over the last 20 years, while overall prices increased by 63.5%

clothing

Over the last 20 years, the Consumer Price Index for all items has increased by 63.5% (see red line in chart above), while the price of clothing measured by the CPI for apparel has fallen by 3.3% (blue line), meaning that the real inflation-adjusted cost of apparel for Americans has fallen by about 41% (1 – (96.7 / 163.5)), see chart above (and thanks to “Old Pete” for the new, revised formula). In other words, clothing that would have cost $100 in 1993 would today cost only $59.10 in constant dollars.

Measured in average hourly earnings (“time cost”), clothing prices have fallen even more dramatically over the last two decades. Since January 1993, the Average Earnings of Private Production and Nonsupervisory Employees has increased by 84.6% from $10.94 per hour to $20.20 per hour. Therefore, for the average worker to purchase $100 worth of clothing in 1993 would have required 9.14 hours of work ($100 / $10.94 per hour); whereas the average worker today would only have to work 4.8 hours to purchase the same clothing today ($97 / $20.20 per hour), for a 47.5% reduction in the “time cost” of purchasing clothing.

Bottom Line: This is another example of the fact that even if median household money income (which doesn’t account for total compensation, i.e. non-monetary fringe benefits) is stagnant over time, that doesn’t necessarily mean that the average household’s standard of living is stagnant or declining. In the case of buying clothing for a typical American household even with a constant income over time, the standard of living for most households has actually increased significantly over the last 20 years, when measured in what is ultimately most important: household consumption and the affordability of life’s basics.

21 thoughts on “Chart of the day: The CPI for clothing has fallen by 3.3% over the last 20 years, while overall prices increased by 63.5%

  1. Clothing prices have been falling for several decades. I imagine the underlying reason is that, with more open trade than ever before, most clothing is now made in less-developed countries (formerly Hong Kong, Japan, Taiwan, more recently Vietnam, China, Bangladesh), where wages are considerably lower than are those of the ILGWU). Lower clothing prices have, in turn, means that fewer Americans bother to sew their own clothing these days. One regularly sees sewing machines at garage sales, and high school girls are no longer taught sewing in home economics class (do schools even teach home ec any more?). But what will happen if and when wage levels in developing countries converge with US wage levels?

    • Jane

      But what will happen if and when wage levels in developing countries converge with US wage levels?

      On that happy day everyone in the world will be as well off and prosperous as Americans are now.

      Are you thinking in terms of a fixed pie, such that the gain of one person is always at the expense of another?

      • No, I wasn’t thinking in terms of a fixed pie. Rather, just speculating about the ultimate result when wage levels in developing countries converge with US wages. See the last couple sentences of my earlier comments:
        “Lower clothing prices, in turn, mean that fewer Americans bother to sew their own clothing these days. One regularly sees sewing machines at garage sales, and high school girls are no longer taught sewing in home economics class (do schools even teach home ec any more?)…”
        What is the impact on the US when cheap imports may no longer be available? We will scramble to retrain seamstresses (do any ILGWU jobs still exist?), re-tool assembly lines, etc. Could portend a return of manufacturing jobs, not a bad outcome at all. But it could mean the end of all that cheap clothing, which was the point of the original post.

        • Jane

          See the last couple sentences of my earlier comments:

          Yes, I read your comment carefully the first time, and I believe I understand your points.

          What is the impact on the US when cheap imports may no longer be available? We will scramble to retrain seamstresses (do any ILGWU jobs still exist?), re-tool assembly lines, etc. Could portend a return of manufacturing jobs, not a bad outcome at all. But it could mean the end of all that cheap clothing, which was the point of the original post.

          It is helpful to view all economics and business activity from the point of view of the consumer, as ultimately we are all consumers, and the ultimate end of all production is consumption.

          As US consumers, we are all better off – richer – if we can spend less on clothes so we have more to spend on other things.

          One of the ways clothing becomes cheaper is through the replacement of labor with capital in the form of technology, especially automated machines that can do the repetitive, mind numbing work of low skilled and unskilled workers.

          Another way to make clothing cheaper is to perform that low skilled work in other countries where people are much poorer, and their labor is much cheaper, because there are few, if any, better alternatives.

          In that second case, from a consumer viewpoint US consumers are better off, and consumers in developing countries are better off as there is productive activity generating income that wouldn’t otherwise exist. It is a win-win – and as you pointed out, it raises the standard of living of poor workers in developing countries. What’s not to like?

          It is the impact on the US when cheap imports may no longer be available? We will scramble to retrain seamstresses (do any ILGWU jobs still exist?), re-tool assembly lines, etc.

          No. Those low value jobs are gone forever, and good riddance. When and if clothing prices rise due to higher labor costs, I expect to see more automation used in the clothing industry, requiring fewer, but more highly skilled workers, who are more highly paid.

          Could portend a return of manufacturing jobs, not a bad outcome at all.

          The return of low value manufacturing jobs would be a disaster. They are gone because we, in the US, have more valuable jobs to do these days.

          But it could mean the end of all that cheap clothing, which was the point of the original post.

          Not at all. Don’t expect to see people making their own clothes by hand at home any time soon, in an effort to save money.

          • Not to belabor the point, and I think we mostly agree more than we disagree. See my comments in ALL CAPS below.

            “As US consumers, we are all better off – richer – if we can spend less on clothes so we have more to spend on other things.”
            ABSOLUTELY, THIS WAS THE POINT OF THE ORIGINAL PERRY POST.

            “One of the ways clothing becomes cheaper is through the replacement of labor with capital in the form of technology, especially automated machines that can do the repetitive, mind numbing work of low skilled and unskilled workers.”
            YES, LABOR-SAVING CAPITAL INVESTMENT TYPICALLY OCCURS WHEN LABOR COSTS RISE. WHO KNOWS HOW MUCH THIS CAN OCCUR IN CLOTHING MANUFACTURE? PERHAPS ROBOTS COULD STITCH UP CLOTHING WITH NO HUMAN INTERVENTION, BUT I’D GUESS THIS WORK IS SOMEWHAT MORE LABOR-INTENSIVE THAN OTHER TYPES OF ASSEMBLY. BUT PERHAPS I’M JUST NOT IMAGINATIVE ENOUGH TO ENVISION HUMAN-LESS CLOTHING MANUFACTURE. AND TO THE EXTENT THAT ILGWU STILL EXISTS (WITH EITHER SKILLED OR UNSKILLED MEMBERS), THAT UNION WOULD CERTAINLY RESIST THE ROBOTS!

            “Another way to make clothing cheaper is to perform that low skilled work in other countries where people are much poorer, and their labor is much cheaper, because there are few, if any, better alternatives.”
            AGREED, THIS IS WHY CLOTHING HAS BECOME SO MUCH CHEAPER; AMERICANS CURRENTLY BENEFIT FROM TRADE WITH OTHER COUNTRIES THAT HAVE COMPARATIVE ADVANTAGE IN SUCH LABOR-INTENSIVE WORK.

            “…Don’t expect to see people making their own clothes by hand at home any time soon, in an effort to save money.”
            AGREED, DIY CLOTHING WOULD PROBABLY NOT OCCUR ON ANY LARGE SCALE. BUT AT ANY RATE THIS IS A SIDE ISSUE TO THE POINT BEING MADE: THAT CHEAP CLOTHING IMPORTS WILL END (OR AT LEAST DIMINISH) WHEN DEVELOPING COUNTRY WAGES CONVERGE WITH US WAGES. UNTIL THEN, AMERICANS HAVE CERTAINLY BENEFITED FROM CHEAP IMPORTS.

          • Jane

            I think we mostly agree. My original point was that employing cheap labor in developing countries makes us and them better off. The higher their wages the more they can spend on other things besides bare subsistence, creating markets for goods and services throughout the world.

            We need no more worry about their rising wages in the 3rd world than we do about rising wages in one of the 50 US states. Rising wages are a good thing if they result from higher productivity, and higher skilled workers.

            I can’t imagine clothing prices ever rising to the high level they once were when much more labor was involved.

        • I think I see your point, but you are overly pessimistic. Your key worry is this,
          “What is the impact on the US when cheap imports may no longer be available?”.

          But there is no reason to think the rise of wages in low-wage countries will result in a rise in the true cost (cost/hour worked) of clothing (or anything else) in the US after decades of decline, it will simply result in slower decline or stabilization in true cost.

    • Jane, we’re already reshoring many “obsolete” jobs that we offshored decades ago.

      People like Ron should be happy. Now, Americans can buy cheap clothes made in the USA by Americans earning cheap wages :)

      • Of course, Americans won’t live in dormitories like in China. Instead, they’ll live in their cars, shelters, or in their parent’s basement.

  2. Clothes are cheaper…but Social Security taxes, and ssles taxes in most regions, are much higher than 40 years ago…the middle class pays too much in taxes…neither party seems to care…they serve elites…

  3. Jane Johnson said :

    But what will happen if and when wage levels in developing countries converge with US wage levels?

    Jane, if you think the wages in Bangladesh and Vietnam are even going to rise to the level of Mexico (let alone the US) in your lifetime, you have no clue why the first world became the first world.

    At any rate, automation is what lowers costs and destroys low-end jobs, not poor countries. Offshoring of low-end jobs is just a sign that automation of those same jobs is going to happen within 3-5 years.

  4. Actually, adjusted for inflation the price of clothing has fallen 40.9% since 1993, not 66.8%.

    To find the relative fall in clothing prices divide the current clothing index on the chart by the all items index on the chart, then subtract the result from one:

    96.7/163.5 = 0.591

    1 – 0.591 = 0.409 = 40.9%

    A very big drop in just twenty years nonetheless.

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