Apple & Entrepreneurs: Who Creates Jobs?

In 2012, The New York Times published a powerful expose of the conditions in which Chinese workers assembled iPhones, iPads, and other Apple corporation devices.

It came to mind when I read the lead article in that paper’s November 21 Business Section.  The headline came awfully close to an editorial endorsement:  “How Apple Empowers, and Employs, the American Working Class.”  The article itself came pretty close to an infomercial. 

It opens with Donald Trump’s declaration that he will make Apple start making computers and iPhones in the U.S.  That is unlikely, the article quickly notes, “but opening a smartphone factory in this country is not the only way to provide solid employment for working-class Americans who lack college degrees.”

The article goes on to report that besides employing 80,000 people “directly” the company says that “69 supplier facilities in 33 states manufacture parts” for Apple products and “hundreds of thousands” write apps for iPhones and iPads. The article quotes a company statement claiming that “Apple has created over two million jobs in the United States” over the last nine years. 

Now that is a very important statement, one at the center of a crucial debate about the nature of our changing economy.  Is it true?  

The reason I would like to know is a year-old Brookings Institution study by Jerry Davis, the Whitaker Professor of Business Administration at the University of Michigan. Davis’s argument was that 21st-century corporations were less and less likely to create jobs in the sense of traditional employment. 

Where the top corporations by market capitalization used to have hundreds of thousands of employees, increasingly they have tens of thousands.  In 1982, the top five such corporations were IBM, AT&T, Exxon, GM, and GE. They employed 365, 000, 822,000, 173,00, 367,000, 857,000 people respectively.

In 2012, the top five and their employees were Apple (76,000), Exxon (77,000), Microsoft (94,000, Google (54,000), and Walmart (2,200,000).  If it weren’t for Walmart, the decline in employees of leading corporations would be absolutely startling. 

Although Walmart is huge, it represents the latest iteration of old-fashioned retail, along with several of the next firms in the ranking: Kroger, Home Depot, and Target, all employing 350,000 or more.  “In short,” Davis concluded, “large-scale employers in the U.S. are overwhelmingly in retail, where wages are low, turnover high, benefits modest, and upward mobility minimal.”  Other big employers are fast food chains, but with jobs “primarily outside the U.S. and typically part-time.”  

Davis’s study directly challenges a prevailing view that encouraging entrepreneurs and “emerging” corporations with special treatment is the key to job creation.  The corporations hailed as 21st-century innovators create “shareholder value,” he argued, but not good jobs.  They outsource.  Or they “Uberize,” using free-lancers and part-timers, breaking down jobs into tasks or “gigs.”  They are “job creators”, he says, “only as a last resort.”  He tests this by looking at a number of hot start-ups going public and their numbers of employees:  Zynga with fewer than 2,000; Linkedin with fewer than 7,000; or Facebook with fewer than 10,000.

His bottom line, as it’s appropriate to say, is pretty dramatic.  “We need to abandon the idea that entrepreneurs are job creators, or that easing the path [for corporations to go public] will create employment.  Entrepreneurship aimed at creating shareholder value is unlikely to create many jobs in the U.S.”

But maybe Davis is wrong.  What about Apple’s claim that it has created millions of jobs?  What the Times story gives me, unfortunately, is a glowing tour of Apple’s new facilities in Austin, Texas, where 8,000 employees field calls from customers, oversee suppliers and finances, update software, and work on chips.  I learn that “a reporter and photographer visited the Austin campus and interviewed more than a dozen workers”—imagine that!—although “Apple’s public relations staff monitored some of the conversations.” 

The pay rates are not impressive, but there are “plenty of perks.”  Employees “can lounge on chairs shaded from the Texas sun, dine at a two-story cafeteria that serves an abundance of food options, including barbecued ribs and banana-bread gelato, and visit a full-service medical clinic, which includes dentists, acupuncturists, and a robot-assisted pharmacy.” 

No Chinese-style exploitation here, to be sure. But what about the original question of providing “solid employment for working-class Americans who lack college degrees.”  No data on employees without college degrees, and the snippets of interviews don’t really help: one employee had two years of college, another was “fresh out of college.”  No data on the two million jobs Apple takes credit for in its supplier, manufacturing, and development “partners.”  What does that mean?  Can I take credit for “creating” the jobs at my neighborhood’s pizza parlors and Chinese restaurants because I regularly order take-out?  I am sure that Apple has a better claim than that.  But what is it, exactly? 

I admire Apple enough to be writing this on one of its laptops.  But have I learned what the Times headline promised:  “How Apple Empowers, and Employs, the American Working Class”?   Afraid not.    

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Peter Steinfels, co-founder of the Fordham Center on Religion and Culture and a former editor of Commonweal, is the author of A People Adrift: The Crisis of the Roman Catholic Church in America.

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