I read this article this morning from The New York Times about how Apple wasn’t creating working class jobs in the U.S. Then I got to the end of the article and there was a correction:
> An earlier version of this article misstated a difference between Apple today and Kodak decades ago. Apple, like Kodak, has created tens of thousands of working-class jobs; it has not failed to do so.
So they admit in the correction that Apple did create tens of thousands of working-class jobs, which fundamentally undermines what they were trying to say throughout the entire article.
There were still worthwhile nuggets around the growing modern use of short-term contractors for more marginal jobs, and their second-class status in the company. Especially in Bay Area housing market inflating prices with callous indifference to the wage-to-housing costs for young workers.
I just don’t understand why the NYT has felt this ongoing need to speak badly of Apple. It fails everytime, but the damage is always done. Of course Apple doesn’t need protecting by anyone, nevertheless it’s senseless.
Yeah, that was the important point to me – the former Kodak exec had a chance to improve her skills, be noticed by people at Kodak and move up. A contract employee won’t have that chance.
The only reason to use Apple as the current comparison is for clicks, though. They could have used any modern tech company and that point would likely be accurate.
Like everyone else in the industry, they need the clicks.
Rochester and Cupertino. The contrast couldn’t be more stark. Even mid-level workers in Silicon Valley can’t afford to live anywhere near their work, commutes are horrendous. Rochester has always been a different story, even in its heyday.
Agreed – Apple isn’t perfect and is subject to the same enormous pressures as any public company to grow profits at almost any cost. I say “almost” because I do think Apple is run more conscientiously than most companies, but this is effectively an externality and doesn’t change the underlying economics.
Regarding housing prices, they respond relatively honestly to traditional supply and demand economics (i.e. housing is closer to a commodity than monopoly resource). It’s impossible in a constrained geographical area to lower prices artificially without creating problems, and this is one area where the market does a pretty good job adjudicating.
The problem, fundamentally, is the huge distribution in income levels itself. When the average Apple engineer earns (and keeps after taxes) literally ten or more times what the average service worker makes, ability to spend becomes the sole deciding factor in housing uptake. During much of the postwar period in the US there were mechanisms that worked to keep overall income disparity relatively modest. There were plenty of rich, but the overall economic pie (and especially growth in the pie) was shared reasonably equitably. This caused tremendous benevolent ripple effects, such as the ability of average working people to better educate their children, creating a subsequent generation vastly more capable than even themselves and accelerating the pace of progress in every area.
Many of these mechanisms have been systematically dismantled by the mythology of market fundamentalists, the self-interested encouragement of the wealthy, and the greed-is-good bumper-sticker philosophy that has lodged itself in so many welcoming minds – including mine, when I was younger. This does not work. It’s a myth, and an extremely dangerous one. The economy needs to be forced to work for everybody, or it will only work for the fewer and fewer and fewer as time goes by. This has been proved countless times throughout history.
“It’s impossible in a constrained geographical area to lower prices artificially without creating problems, and this is one area where the market does a pretty good job adjudicating.”
It is a myth there isn’t already immense artificial shortages of housing in the area.
– Bay Area cities artificially preventing home owners adding a rental unit or two.
– Artificially zoning for even more jobs instead of housing as if those jobs aren’t people who will be housed further away and end up on roads anyway.
– Artificially capping heights.
– Arbitrarily preventing enough micro units.
– Artificially preventing street stores from simply building an extra floor on top to rent to workers.
– Delaying housing with years and years of approvals is artificially denying housing when tens of thousands are moving there for work every year.
Strangely, the pay rate to service workers does not go up even when housing, food, and transportation costs are skyrocketing. Almost as if the classic Econ 101 supply-and-demand model… doesn’t work for the low end of the labor market.
Generally in agreement with Mr. Dalrymple; have to disagree with him on this. The contract-out sector of the US economy works very very well for those for whom it works. For the rest… not so well.
The original example was still interesting. The woman at Kodak was a full time employee with paid vacation. The woman at Apple was outsourced and apparently doesn’t get paid vacation. The woman at Kodak had upward mobility. Does the woman at Apple? Hard to know, actually. The woman at Kodak was clearly a motivated person. I’m sure she had a lot of coworkers who complained about impotence and helplessness and being trapped. The woman at Kodak would have been a rarity anyplace, anytime. It’s possible that she could have done what she did at Apple too. But I wonder if you just went straight to the bottom, got pissed and felt you needed to post?
I’ll agree with the first sentence. But inflating prices are simply a thing that happens in this situation. The fact that it happens doesn’t represent callousness on anybody’s part. And attempts to suppress normal market forces generally fail.
Those things you cite contribute to shortages, but they don’t constitute artificial shortages. Lots of places have rules attempting to maintain a certain aesthetic. Every cap is “artificial” and the limitation on micro units isn’t “arbitrary.” Disparaging language is a subtle kind of dishonesty. The Bay Area seems to be very proud of its appearance. They establish rules to maintain that appearance. That doesn’t mean the rules are wise, and it doesn’t mean that rules once established should never be changed. California is also notoriously stupid in planning its power grid, for instance.
Or maybe you don’t understand supply and demand. If the pay rate to service workers fails to rise, it’s because there’s enough of a human resource supply for it not to need to rise. What you think of as the strange part, I see as the dissociated part. If it becomes enough of a pressure, it can then affect the supply… but from what you say it hasn’t yet. I’ve been in Aspen, where the service workers come in on buses every morning. It sucks but… unskilled workers represent a vast resource. Consider in China where fairly skilled workers work in factories building iOS devices for far less that could be had here. And if anybody quits in protest, there’s somebody waiting to take his place. Supply and demand, classical, working as expected.
Your last paragraph is ridiculous. The lesson in your paragraph 1 and 2 is more that working your way up from a custodial position is less feasible than it once was. If anything that means that being self-educated and self-motivated is more important than in the past, because the people at the bottom rank are more a bit more abstracted from the companies they work in. It’s the passive people who will get left behind.
This isn’t something that is limited to silicon valley. I work in higher education, for a state university. About 10 years ago, we began to see a shift in the contribution from the state budget to our annual budget. Our budget at one time was 75-80% state funded, and 20-25% funded by student tuition and fees. That has shifted closer to 40-50% state funded. In order to make that shift, we were seeing an average of 8% cuts to the state funding portion of our budget every year. We made up for this shortfall through a combination of cuts to our budget by not filling open positions, energy savings, raising tuition and fees, and shifting janitorial staff to a contractor model.
Most of the people who filled those roles shifted from working directly for the institution to working for the contracting firm, while doing the same job. The difference was, their compensation changed. I don’t know what their hourly pay was, but as employees of the institution they had been getting a generous benefits package, including health insurance, life insurance, tuition assistance (basically free tuition to our institution and most other programs at other state institutions), vacation, etc.
I’m not saying that everyone took advantage of all of those benefits, but those that did would have seen a dramatic change to their lives due to this change.
Um, no. A person working 70 hours a week + commute with no benefits and no corporate structure has less than zero chance to advance no matter how self-motivated or “un-passive” they are, regardless of glibertarian mythology.
New York Times click bait much?
Curmudgeon, I think we are generally in agreement. Most of the things you mention are refusals to increase supply. One reason there is not more supply is that the have-nots are relatively powerless. If the discrepancy between the haves and the have-nots was narrower then the economic arbitrage would be much more subtle and there would be much more pressure to increase supply in reasonable ways.
I don’t personally know SF or the bay area but the incredible demand there should probably result in an eventual Hong Kong-like city with high-density high-rises. Most of the “haves” wouldn’t like this but the problems you correctly point out are a symptom of their excessive influence, causing out-sized hardships for everybody else.
Actually, that is supply and demand working perfectly, which demonstrates one major problem with “market” fundamentalism.
If the supply of labor is high, there’s no reason its cost shouldn’t approach zero as individual bidders reduce their prices to compete in a flooded market. Things that are very plentiful, air and (usually) water, for example, should cost little or nothing.
You could imagine an entire labor market of homeless people trying to under-bid one another to make enough money to simply keep from starving. Those without families would always win as they’d only have themselves to feed. There is no “market” mechanism to keep this from happening.
By the way, this is not at all imaginary and I’ve personally encountered labor markets that resemble this very closely.
It would be outstanding for producers’ profits to be able to purchase labor for next to nothing, but terrible for an economy as a whole. One reason why minimum wages or some similar control is an imperfect but critical check on the market.
This situation is the choice of local property owners to have their cities design city plans to pull up the drawbridge and not welcome more neighbors unless they pass the income test, manufacturing a shortage of housing.
They are very artificial because they are created by choices and can be changed if residents felt bothered enough. Thus, “callous”, is entirely called for.
House investors are more concerned with making a windfall on their retirement-sale of their property than ensuring their grandkids can afford to live in the cute neighborhood they thought they were preserving for eternity.
Minimizing high-demand micro units is arbitrary, it is based on feelz of city house owners concerned with the class of people who might afford and occupy them.
Which Rochester?
yeah agree with Cranky — when you’re working 2-3 jobs with all your waking hours due to low pay and no benefits, the last thing you’re going to do is find time/energy/money to “self-improve”.
and i love the phrase “gliberatarian” — it’s true. practically every libertarian I’ve known is an university educated white guy with from the middle-class. theyre afforded opportunity to see the world this way because they had it otherwise.
the birth lottery is a real thing.
This whole article reminds me of a paid article by Samsung to bash Apple users!
Rochester, NY. Is there another where Eastman Kodak had it’s headquarters?
It seems everyone wants to blame the employer for a lack of jobs. Here is the real problem. We have developed a society where we expect to get goods and services for “low cost” but still expect to be paid “top dollar” for our own work.
These two ideologies cannot coexist, something has to give. Right now, it’s working class jobs going overseas because that is where people are willing to work for pittance and we, in turn, are able to get our “low cost” desires fulfilled.