Clothes Are 2.6% of Your Budget. Housing Is 33%.

Walk into any big-box store and a T-shirt is $8, jeans are $25, a winter coat is $60. Your grandmother would not believe it. She would also not believe that the apartment above that store rents for $2,100 a month.

Both facts come from the same economy, and the gap between them is the whole story. The cost of clothing collapsed over three decades. Almost nothing else did. Understanding which things got cheap, and why, tells you more about American affordability than any political argument about it.

How much do Americans actually spend on clothes?

Very little, relative to everything else.

The Bureau of Labor Statistics tracks this through the Consumer Expenditure Survey, and the 2023 numbers are stark. Average annual household expenditures came to $77,280. Here is where it went.

Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey, 2023.

Clothing ranks below entertainment. For most of the twentieth century it was one of the three big line items in a family budget, sitting near a tenth of all spending; BLS historical expenditure data shows the share falling for decades. Shelter, wheels, and food now take roughly 63 cents of every dollar before a household buys a single shirt.

Why did the cost of clothing fall when nothing else did?

Because the labor was moved.

BLS research on apparel prices found declines in nearly every year from 1992 through 1998, and the index has stayed roughly flat in nominal terms since. Set against decades of wage growth, flat nominal prices mean a large real decline. The agency's own explanation named three forces: production shifting to countries with much lower labor costs, intense competition among sellers, and the rise of large discount retailers.

Strip out the economics and what happened is simple. The sewing did not get more efficient so much as it got relocated to someone earning a fraction of an American wage. That worker absorbed the cost reduction. The American consumer collected it at the register. The American garment worker lost the job entirely.

This is not a moral complaint about trade. It is a description of the mechanism, and the mechanism matters, because it explains which prices could fall and which could not.

What can't be offshored?

Everything expensive.

An apartment in Denver has to be built in Denver, on land in Denver, by people who live near Denver and pay Denver rent. A surgeon has to be in the operating room. A childcare worker has to hold the child. A nursing home aide has to be in the building at 3 a.m. None of that work can be sent to a lower-wage country and shipped back in a container.

Tradability is the author's classification. Price direction reflects BLS Consumer Price Index category data since the 1990s.

Sort American prices by whether the work can cross an ocean and you have predicted, with almost no error, which categories crashed and which exploded. Tradable goods got cheap. Non-tradable services ate the household.

That is why the median home now costs somewhere around $400,000 to $420,000, roughly five times median household income, against two to three times in the 1980s (NAR and Census data). It is why full-time center-based childcare commonly runs $10,000 to $17,000 a year per child, above in-state tuition in many states, per Child Care Aware and Care.com cost surveys. It is why a family health insurance policy averages close to $25,000 a year in total premium, with workers paying $6,000 and up of it, per KFF's employer survey.

Nobody found a container ship for any of those.

Does cheap clothing actually make you better off?

Partly. Less than the price tag suggests.

Run the arithmetic on an average household. Apparel at 2.6 percent of $77,280 is about $2,000 a year. Suppose clothing had instead tracked the broader cost of living and now ran at 6 percent of spending. That household would pay roughly $2,600 more per year.

Real money. Now compare it to what happened on the other side of the ledger: a home that costs five times income instead of three, childcare that can exceed a college tuition bill, a health plan whose family premium approaches the price of a used car every year. The savings on clothing are measured in hundreds. The losses on shelter and care are measured in tens of thousands.

Cheap goods made poverty look different without making it less binding. You can dress a family well on very little now. You still cannot house them. That is the trade the last thirty years made, and it is the same pattern running through why almost every essential price outran the paycheck and through what the grocery bill has done to the same household.

Why does this matter for the wage argument?

Because "things are cheaper now" is the most common rebuttal to the affordability crisis, and it is true only about things that do not decide whether you make it.

Televisions, clothes, toys, and airfare are historically cheap. Housing, healthcare, childcare, and education are historically expensive. A household does not go bankrupt over a coat. It goes bankrupt over a hospital stay, an eviction, or a childcare bill that exceeds the wage of the parent who would otherwise work.

The federal minimum wage has sat at $7.25 an hour since 2009. In that same stretch, the price of every non-tradable essential climbed while the price of tradable goods fell or held. A worker at that floor can afford more shirts than a 2009 worker could and is further from rent than ever. That is not a paradox. It is exactly what the offshoring mechanism predicts.

The part that didn't get cheaper

Falling clothing prices were not a gift from the market to the American worker. They were a transfer, and the accounting is easy to read. Consumers gained a few hundred dollars a year. Garment workers lost an industry. The categories that decide whether a family stays stable, meaning a roof, a doctor, and someone to watch the kid, stayed local and priced like it.

The affordability crisis was never about whether you could buy things. It was about whether you could buy the four or five things that cannot be made anywhere else. Cheap goods papered over a flat wage for thirty years and hid how far the essentials had drifted. The paper has worn through, which is the same story told across every line item in a broken American ledger. The numbers behind it live on our stats page.