Your people are good at making clothes, but back in the sweatshop, all they did was make the clothes. Now they're responsible for selling them as well, and that's where you're having trouble, I think.
You might try pulling a couple of them off of T-shirt duty -- you're obviously not selling enough T-shirts at a high enough price to justify the amount of shirts that you're making. This could mean that your people are making crappy shirts that nobody wants to pay for, or it could mean that there's just not enough demand for tie-dye shirts to support all six of them working on it, and they're either not selling everything they're making, or they're being forced to drop their prices heavily.
In your case, while your new recruits have good skills in making shirts, they probably have zero skill in business, so aren't skilled at the art of hawking the shirts they're making. I would suggest drawing your shirt workforce down to your one best skilled person, and letting that person continue practicing. You'll lose less money as they get into it, and that person will have less competition from other LCS shirt makers, so might be able to sell at a higher price. Eventually, they should start turning a profit. If you want to go with T-shirts for all six, start slowly phasing them in one at a time, letting each one train at a loss while the already trained ones are making a profit.
CRAP. This explains A LOT.
Still the current mechanics are broken. I had someone with 7 Tailoring try selling T-shirts. He earned $300 and it cost him $360. This is RATHER SUCKY.
Then I had the other 5 workers sell T-shirts too, 6 total. Earned $500 and cost them $2500.
...
Jon, have you playtested trying to get a T-shirt business running properly? I don't think your formulas are set properly. The competition with each other is far too stiff, I can't imagine what would happen with 20 workers or so. Come on, 6 T-shirt sellers in an entire city is too much competition for each other? I have gone to bazaars where there are dozens of T-shirt sellers crowded into less than 1 acre, and they *ALL* make tidy profits.
2ndly, I assume that Business skill is also a factor? er. That's bad. That means that only Conservatives will be able to get decent at this, since Business is capped by Wisdom?
3rdly, making suits and selling them makes T-shirts look like a joke. In fact, ANYTHING makes T-shirts look like a joke, since T-shirts make losses. Still, you have an obvious choice between making T-shirts and making Suits, since they both use tailoring, and T-shirts is the big BIG loser.
4thly, your suggestion of slowly building them up from a loss to a profit... remember what I said about early, middle and late game? Yeah, by the time these idiots finally start making a profit, MUCH LESS a significant profit, the LCS will have turned the country green, will have earned millions through other means, like robbery and donations and credit cards will have sleepers out the window... in other words,
by the time you can make money with T-shirts, MONEY HAS NO MEANING ANYMORE.
5th, you said you might remove manufacturing costs for T-shirts. That is NOT ENOUGH. Even then, T-shirts would still have the lowest income in the game, making them useless.
6th, it is very irritating how the game defaults automatically to selling T-shirts for people with Tailoring when you select Legal Fundraising. Er, their default is something that loses money? ... How stupid. It's bad enough you have a useless and even harmful option, but when the game defaults to that option, that's a bit much.