Just for fun, let's look at the world of box-box retailers from the vantage point of the knitted hats. I have a friend who sells knitted baby hats for about $12. These hats are made out of some of the best yarn money can buy, even so the material cost for each hat is only $3. That means my friend, who spends about three hours knitting together a hat, gets paid $3/hr for her hats. That’s crap!
She’s providing a service that most people don’t have the time or the knowledge to do for themselves and therefore she should get paid at least, say, $20/hr. So, in a world where she got a fair American wage, she should sell her hats for $63. But she can’t? Why? Because no one is willing to pay $60 for a knit hat anymore when they can find a comparable one at Wal-Mart for $5. Sure they’re willing to spend $12 because they’re willing to pay extra for the quality yarn. But people are not willing to pay extra for the high-quality craftsmanship of an American knitter.
Without even knowing it, my knitter friend has to compete with Asians because Americans aren't willing to pay American wages anymore for garment construction. Wal-Mart and Asian manufacturers have set American expectations for prices and consequently, quality craftmanship gets the short end of the stick. Americans craftsmen like my knitting friend have to make a decision. Either they have to make their garment quicker and therefore of poorer quality or they have to pay themselves less for the good work they go.
The big problem here is that the potential buyer doesn't see any problem at all. In fact, since they’re buying a hat for $12 they think they're being generous because they're paying $7 more than they would if they bought the comparable hat from Wal-Mart. In their mind it's like giving $7 to a worthy cause (i.e., a hardworking American craftsman) when in reality, the price the buyer is paying the craftsman is an insult.
Now here's another odd situation caused by this retail dynamic that might further shed some light on this. My wife always finds herself in a bind when people ask her to do sewing alterations. My wife, a former professional seamstress, struggles to figure out how to respond to their "I'll pay you for it" comments when friends ask.
Here's the problem. Her sewing is skilled labor of a professional...not just an amateur...as such, they should expect a decent hourly wage, say $20/hr. But, she doesn't want to charge friends full price for her work...but she doesn't like hemming pants, so she doesn't want to do it for free either, so she's inclined to charge half price...sounds reasonable, right?
But, here's the problem. People hear her request for $10 for a 60-minute hem job and they think that she's being greedy or not cutting them a deal. Why is that? Well, it's because her friend bought the pair of pants from Wal-Mart for $15, so obviously to them, the cost of hemming a pair of $15 pants must certainly be significantly less than $10.
But why are the pants only $15? Well, no pants manufactured in America are selling for $15. They’re $15 pants because they’re made in a place were Wal-Mart can pay someone pennies for hemming, heck, constructing the entire pair of pants. Consequently, by having garments made in China, Wal-Mart has convinced people that the cost of sewing together an entire pair of pants is less than $15.
The manufacturers in Asia are setting American's perception for what something should cost. Neither my wife nor our knitter friend, can get a decent wage for their quality work because big box retailers have convinced Americans that their craftsmanship isn't worth a living wage...no matter how much better it is than the craftsmanship coming out of Asia.
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