March 10, 2011 — -- What would happen if you took off every article of clothing that wasn't made in America?
That's the challenge ABC News gave commuters in New York City's famed Grand Central Station recently, with some eye-popping results.
In most cases, our participants would have been standing naked in the terminal had we not called off the experiment before it was too late.
It's a stark example of a stunning fact: Some 98 percent of the clothing purchased in the United States is imported from abroad. Just two percent of clothing bought in this country is manufactured on U.S. soil.
On the concourse at Grand Central, the clothing labels read like a trip around the world, with sweatshirts made in Honduras, t-shirts from Vietnam and scarves from China.
China is by far the clothing leader, with whole towns dedicated to manufacturing specific goods. The town of Datang, for example, makes one-third of the world's socks.
ABC's David Muir visited a Datang sock factory last fall, meeting a worker named Chen Gulfang. She and her husband came to work at the factory, leaving behind their 9-year-old son with his grandparents to take advantage of a big opportunity. The demand is so great in Datang that the factory head said the company was looking to hire 200 more workers immediately.
A worker at the Chinese sock factory makes just $14 a day, or $270 in month. In America, a clothing worker makes $88 a day, or $1,760 a month.
Given that stark difference, how can an American clothing company ever manufacture affordable socks?
Many economists say that American companies shouldn't even try.
"I don't think this is where we should compete with China, frankly," said Bruce Katz of the Brookings Institute. "What we're good at is the production of advanced goods."
In the case of clothing, that means focusing on the design of high-technology gear like the waterproof and windproof jackets from outdoor clothing giant The North Face.
American Clothing Workers Focus on Design
At The North Face's lab in San Leandro, Calif., 400 employees work diligently to design the next generation of advanced clothing that foreign competitors simply can't match.
"We have a unique combination of engineers and designers working together," said Ian Eburah, design director for the company's outdoor category. "All of the design, all of the development, all of the product engineering is coming out of here."
But despite the challenges presented by cheaper foreign manufacturers, there are still plenty of companies that have continued to make clothing domestically.
At Round House Workwear in Oklahoma, employees have been manufacturing durable work clothes for 108 years. Today, the company is thriving, fueled in large part by customers who want to buy clothing that is 100 percent made in America.
"In the last 40 years, we're one of the few companies that's never had a layoff," said David Antosh, vice president of Round House Workwear. "And we're one of the only ones that's actually grown."
In 2008, the company opened a second factory to help it keep up with increasing business. Eighty employees manufacture clothes that are sold domestically and even exported to boutiques in France, Italy, Germany and the United Kingdom where fashion-conscious buyers snap them up.
"They're all interested in the authenticity of made in the USA.," said Antosh.