“Those jobs aren’t coming back,” were the words spoken by Steve Jobs to President Obama, in reply to Obama’s question about what it would take to get the iPhone (and other Apple products) manufactured in the US (from Apple, America and a Squeezed Middle Class).
The authors go on to point out that
Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
This phenomenal profit per employee is the envy of the business world. It’s is clear the secret to Apple’s success is their foreign labor force and factories. Yes, not just foreign labor. The factories themselves, could they even exist in the US and not run afoul of environmental laws? I don’t have proof, but I seriously doubt it. More than the labor force, I think this is what Jobs had in mind when he made that comment to the President. Emphasis mine here:
Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.
90% of Apple’s workforce is indirect, almost all of them in other countries. These state of the art factories that churn out phones, could they legally exist in the US? If you read the article, at least one aspect of the foreign factories is illegal: how they treat the workers at these factors. Forced 12 hour shifts, to start with. Dangerous conditions: there have been multiple reports of explosions at Foxconn (where the iPhone is made) with fatalities. Foxconn employs nets around their buildings to prevent suicides. Foxconn is so large, they have a city, called Foxconn City, where their workers live in dormitories. Apple is not unique in their outsourcing. All other electronics giants do it. Apple is just really good at it.
It’s clear that the Chinese economy is set up for making things like iPhones, and the US economy is not, environmental and labor issues aside. Until the policy makers and politicians in the US make creating a new middle class a priority, it will just not happen. Businesses will, when given a choice, make decisions that make them more profitable, and if those decisions mean squeezing the middle class, then that’s what will continue to happen.
Also, we as consumers have to understand there is a cost to wanting cheap phones and other electronics. That cost might literally be our middle class. Would that fancy new smart phone be worth it if it was double the price, if you knew that it was made in the US and was responsible for supporting middle-class jobs? I think it would be.
I’ll end with two quotes:
“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House. “If it’s the pinnacle of capitalism, we should be worried.”
“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
UPDATE 1/29/2012: Foxconn is in the new again regarding work conditions and worker deaths.