I recently read an article on the New York Times website that attempted to answer this exact question. The article Sorry, Etsy. That Handmade Scarf Won’t Save the World. was written by Emily Matchar, an articulate writer who delved into the issue thoroughly for the brevity of the article. I actually enjoyed reading it because it was so well written. Being a writer myself, that says a lot.
In the first three paragraphs, the author points out the irony surrounding handmade goods and their pricing. A store bought sweater, for example, can cost $20 or less at Walmart, but a hand-knit sweater can cost well over $100 on Etsy. Back in the 1930s and 1940s, handmade was free, and many families only survived because they wore only handmade clothes.
Almost every family had someone who could make by hand what they needed. These handmade arts were ubiquitous. (Interestingly, during the Great Depression, people used whatever they had on hand to make what they needed. Recycling at its best.)
In today’s world, not everyone knows how to knit or crochet clothing or grow food in a garden organically. Hence the increase in cost of handmade goods and organically grown food. It’s supply and demand.