How to Solve for Garment Labor Costs

How to Solve for Garment Labor Costs


In the world of manufacturing, labor costs are always calculated by means of time study data also known as work measurement data. Out of time study, we can calculate standard time (SAM) for different activities done as part of the manufacturing process. In garment manufacturing, the process is sometimes called cut & sew operations.

Work measurement data allows us to estimate direct labor cost of garment manufacturing. Other cost factors such as overheads and material costs are calculated separately. In this article, we will show you how to solve for garment labor costs through work measurement data.

Factory overheads which are not included in work measurement data are trimming and finishing labor costs among others. These factors also play a big role to the overall clothing manufacturers’ labor cost but has a different calculation which we can discuss some other time. Meanwhile, let us proceed to calculate garment labor costs.

Step 1: Measuring Garment SAM

There are two methods to calculate SAM (Standard Allowed Minute); one is by using Time Study and the other by using synthetic data. The standard formula for calculating SAM is;

SAM = basic time +bundle allowances + machine & personal allowances

Both methods follow the same formula and the only difference is how the Basic Time value gets recorded. For the Time Study method, basic time is recorded manually with a stopwatch on at least 5 different occasions and the average time is considered as the basic time value.

For synthetic data method, you list down all the motions done by a worker during a shift then refer to either TMU (Time Measuring Unit), GSD or SPD (Sewing Performance Data) for the corresponding values of these motions depending on the table used. The value will be referred to as the Basic Time value for measuring SAM in such method.

Step 2: Calculate Daily Labor Wages

Daily labor wages differ from one company to another but most of the time, the minimum labor wage is used as the value for this. Check with your HR department or ask the local labor and employment government agency regarding the minimum labor wage.

To calculate per minute labor cost, let’s say daily labor wages is $5. Calculated per minute labor cost is 5.0/480 = USD 0.010416 (wherein 480 is the number of minutes in an 8-hour shift)

Step 3: Calculate Line Efficiency

If you know the efficiency of your sewing lines, use those data. If not, then let us know how to calculate line efficiency;

Line efficiency = total units produced by the line x 100/total minutes of operators

Labor Cost Per Garment Calculation

For example, let’s say one line is running at 50% efficiency, daily labor wage is USD 0.00833 and product SAM is 20 minutes;

Labor cost per garment = (Garment SAM X Labor cost per minute)/ Line Efficiency in %

Therefore, direct labor cost of the garment

= US$ (20 X 0.00833)/50%

= US$ 0.3333

This is how clothing manufacturers solve for garment labor costs. Even if you are only working as a small factory that makes clothes, same formula still applies for calculating garment and apparel labor costs.

As Seen In

Do NOT follow this link or you will be banned from the site!
Thank You. We will contact you as soon as possible.
Want to Be a China Pro?
Our blog gives you a full breakdown of current events and trends so you can know when and how to source creatively.
  • Monthly updates on pricing and production trends
  • News updates on hot issues in production
  • Sourcing strategy of the month
  • Featured case study of the month
  • Factory inspection of the month
  • Updates on export regulations
yellow, green and red 3d lines increasing
* We never share your e-mail with third parties.
All rights reserved © Company Name, 2014
2016 (C) All rights reserved.
Thank You. We will contact you as soon as possible.
buildings in the a downtown
Want to keep getting great posts on a weekly basis? Start getting smart about production
If you enjoyed what you've read, subscribe now
If you enjoyed what you've read, subscribe now
Thank you! Please confirm your email to activate your subscription.
Sign up for our newsletter and get 50% off your first product design.
Experience What Is Making the USA Today, Yahoo and Co. Talk
Get started with your custom product right now! Just let us know what you want to do. We can do any custom design.