Bangladesh is the cheapest place in the world to make a T-shirt. But this month, the minimum wage there will rise from $39 a month to $68 a month. That's got some factory owners nervous about whether Western retailers there will pull out. Our Planet Money team examines the future of the garment industry in Bangladesh.
RENEE MONTAGNE, HOST:
Our Planet Money team is out with a t-shirt, and it's tracking each step of how that t-shirt was made. Yesterday, we went to Indonesia, where the yarn was spun for the fabric of the t-shirt. Today, Bangladesh, where it was put together. Bangladesh makes a lot of the world's clothing. If you bought underwear from Target or, say, pants at JCPenney, they could have come from Bangladesh. And why has Bangladesh gotten so popular? Well, continuing on our t-shirt's trail, Planet Money's Caitlin Kenney and Zoe Chace have the answer.
ZOE CHACE, BYLINE: This is where it starts. Where are we?
JOHN MARTIN: New Jersey, right? I don't know which city, though. I know we're in Wal-Mart.
CHACE: That's right, the Wal-Mart in Secaucus, New Jersey. And why are you here?
MARTIN: Of course, to grab boxers, socks, t-shirts, whatever else catch my eyes. Save me from doing laundry, being too lazy.
CHACE: This is how cheap our clothes are, that John Martin would rather buy a new six-pack of t-shirts than wash the ones he currently owns.
CAITLIN KENNEY, BYLINE: What John Martin doesn't know - most people don't - is that there's a pretty equation that has to line up in order for us to get our clothes this cheap. Bangladesh is a big part of that equation.
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KENNEY: So, these are the sleeves.
MOHIUDDIN CHOWDHURY: Yes, the sleeves, yeah. Sleeve hem.
KENNEY: Sleeve hems, yeah. I'm in the middle of a sewing floor on a busy factory on a busy street in Bangladesh. The room is big and bright and filled with women sewing clothes. Tables are piled high with boxer briefs for Tommy Hilfiger, Calvin Klein, and one assembly line in particular working on a very special t-shirt.
CHOWDHURY: Planet Money. Wow.
KENNEY: These are our t-shirts. Mohiuddin Chowdhury runs this company, Clifton Apparels, Ltd. They make t-shirts for Jockey, the underwear company that's helping us make our t-shirt.
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KENNEY: It takes 32 people just to sew our shirt together - six on the sleeve, three on the neck. So many hands on just one shirt.
CHACE: We're economics reporters, so we really came over here to Bangladesh to find one thing: How much did it cost to make our shirt?
CHOWDHURY: It's about $2.
CHACE: The whole shirt.
CHOWDHURY: Whole shirt. One big shirt is $2.
KENNEY: Two dollars. That's the price that Jockey paid Clifton per shirt.
CHACE: We bought our shirts from Jockey. Jockey paid Clifton to make them.
KENNEY: And $2, that's an approximate price. Ashutosh Biswas, another manager here, he talks us through it.
CHACE: So, out of this $2, OK, what is the most expensive part?
ASHUTOSH BISWAS: Fabric.
CHACE: Fabric. How much?
BISWAS: Seventy-five percent of the commerce.
KENNEY: OK, people. Real slow - math on the radio. Here we go: The fabric to make the t-shirt is 75 percent of the price - so, about $1.50.
CHACE: In that $1.50 is the cost of cotton, the cost of turning that cotton into fabric. A dollar-50, so that leaves 50 cents. What's in the 50 cents?
KENNEY: Ashu says that's everything else: overhead, profit for Clifton. But mainly, it's people: managers, supervisors, and the many, many workers, all crammed into just 50 cents.
CHACE: Fifty cents seems so cheap for the workers' part of it.
KENNEY: That's so many people we just saw in that room, like, and 50 cents seems too small to cover all those people.
CHACE: Is this the cheapest place in the world to make a t-shirt - $2 a shirt?
BISWAS: Yeah. We can - yeah. Compared to the other countries.
CHACE: And there you have it, ladies and gentlemen, the cheapest place in the world to make a t-shirt. That's according to Jalal Chowdhury, who founded this company - which is another way of saying Bangladesh has the lowest-paid workers in the world for this kind of work.
KENNEY: A fact that is not lost on the workers in Bangladesh.
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KENNEY: Over the last few months, there have been violent protests in Bangladesh, workers demanding a higher minimum wage. And during the time we were there, the question of what the workers should be paid dominated the conversation.
CHACE: And that question was just answered. A new wage is set to take effect this month. The official minimum wage in Bangladesh will jump almost 75 percent from $39 a month to $68 a month - way less than the workers were asking for, and way more than the factory owners wanted to pay. Sirajul Islam Rony, he was on the wage board representing the workers.
SIRAJUL ISLAM RONY: (Through translator) We are not overly happy about it, but we are fine with it. With this rise, maybe their situation will improve a little bit, but not much. It won't be a really meaningful improvement.
RUBANA HUQ: It's going to be good for the workers. It's going to be a little tough for the owners, but I think we shall survive.
KENNEY: Rubana Huq runs a group of garment factories in Bangladesh making dress shirts and blazers. She says, you know, Bangladesh has done so well, in large part by being the cheapest place in the world to make clothes. Now Bangladesh is way closer to the garment-making world, and her biggest fear is that her customers will go somewhere else. In fact, she had a customer recently say, you know, you're as expensive as Cambodia right now.
HUQ: Do you know you're as expensive as Cambodia right now? So, I might as well get it from there.
KENNEY: This is a fear that factory owners and workers both share, that Western buyers will leave and take the jobs with them.
CHACE: One of those Western buyers - that's us, Planet Money - and Jockey, the t-shirt maker that we're working with. So we went to Jockey to ask if wages rise too much, will you guys leave?
KENNEY: What we found out is there's not a make-or-break figure that would make Jockey pull out of Bangladesh.
MARION SMITH: It depends on relevance to the rest of the world, to be honest with you.
KENNEY: This is Marion Smith, international sourcing guy at Jockey. And that answer - it depends relative to the rest of the world - it's sort of subtle, but essential for understanding how a company like his makes choices about where to operate. To illustrate, Marion Smith tells us one story. A couple of years ago, he says, the price of cotton spiked.
SMITH: When we had the cotton crisis, in particular, and when it zoomed up from, like, 70 cents a pound to 2.10.
CHACE: Now, think about that: The price of cotton just about tripled, and cotton is a much bigger portion of the total cost of a t-shirt than the labor is. If you're making cotton t-shirts and cotton goes up by that much, it's hard to not pass that cost on to the end customer.
SMITH: And we did, and our competition did. The real thing was who was going to do it first? Everybody ate it for a long time. It was who could hold out the longest.
CHACE: If there'd been a place to go to get cheaper cotton, they all would have gone there, but there wasn't. So the companies just paid more, and passed some of that cost on to us.
KENNEY: But for decades, labor has been different. There's always been a place you could get it cheaper. First, it was Japan, then it was Korea, China. Lately, it's been Bangladesh. But Marion Smith says we might be at the point where labor is becoming more like cotton. There's no place to get it cheaper.
SMITH: It's like Bangladesh is going to go up. And who's cheaper than Bangladesh?
CHACE: So you think we've hit sort of absolute zero, here. We've chased the cost as far as it goes, and it's going to start rising?
SMITH: Yeah, as a global economy, yes.
CHACE: So, our clothes are going to get more expensive. Our t-shirts are going to get more expensive.
SMITH: That will be my prediction.
CHACE: But because labor's part in that equation is so small, a rise in t-shirt prices could just be a few cents - perhaps not even enough to make us do our own laundry. I'm Zoe Chace.
KENNEY: I'm Caitlin Kenney, NPR News.
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MONTAGNE: Later today on ALL THINGS CONSIDERED, our t-shirt series goes to Colombia, where wages are much higher than in Bangladesh. That has consequences for workers there. Visit NPR.org/shirt for lots more t-shirt reporting. This is NPR News. Transcript provided by NPR, Copyright NPR.