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Global Crisis/Innovation Blog

Why the iPod is Not the Apple of America’s Eye:  And Why America’s Rich Don’t Care

By Shlomo Maital

Apple’s iPod  

I’m a big fan of Chrystia Freeland, Reuters correspondent and NYT columnist.  In a recent column she supplies a set of data regarding the jobs and wealth created by Apple’s iPod, derived from an excellent study by three economists. *  My friend Paul drew my attention to it.

   Here is why iPod, and Apple in general, cannot be the Apple of America’s job creation eye.  The numbers speak for themselves.

  • In 2006, the iPod employed nearly twice as many people outside the United States as it did in the country where it was invented – 13,920 in the United States and 27,250 abroad.
  • Fewer than half of the foreign iPod jobs – 12,270 – are in China. An additional 4,750 are in the Philippines. 
  • Even though most of the iPod jobs are outside the United States, the lion’s share of the iPod salaries are in America.  Those 13,920 American workers earned nearly $750-million (U.S.). By contrast, the 27,250 non-American Apple employees took home less than $320-million.
  • However, more than half the U.S. jobs – 7,789 – went to retail and other non-professional workers, like office support staff and freight and distribution workers. But those workers earned just $220 million. More than half the American iPod jobs are relatively poorly paid and low-skilled.
  • The big winners from Apple’s innovation were the 6,101 engineers and other professional workers in the United States who made more than $525-million. That’s more than double what the U.S. non-professionals made, and significantly more than the total earnings of all of Apple’s foreign employees.
  • Most of the wealth accruing from iPod went to Apple’s American shareholders, who benefited from the cheap foreign labor and the cheap American labor.

   In a poignant p.s., Freeland quotes Keith Banks, president of U.S. Trust, the private wealth management arm of Bank of America, who has said that for his millionaire and billionaire clients, the recession was over.   Nor, Mr. Banks told her, were they overly worried by the lackluster U.S. economy or Europe’s even weaker performance. That’s because the global economy over all – powered by the emerging markets – continues to grow strongly, and Mr. Banks’s American “high-net-worth individuals” are not just U.S. citizens, but global capitalists.  My own translation: America’s “global capitalists” love screwing American workers, provided they continue to grow wealthy as a result.   I’ll bet Mr. Banks’ clients sing The Star Spangled Banner with tremendous fervor and patriotism.  And, at every opportunity, they insist that America is the greatest country in the world [for them!].      

­­­_____

Greg Linden, Jason Dedrick and Kenneth Kraemer,  “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,”   The Journal of International Commerce and Economics, May 2011.

 

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Blog entries written by Prof. Shlomo Maital

Shlomo Maital
July 2011
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