Tue March 6, 2012
How Many U.S. Jobs Does Apple Really Create?
Originally published on Tue March 6, 2012 6:19 pm
Apple has about 47,000 workers in the U.S. That's not a huge amount for such a profitable and influential company. Now the tech giant is saying it has actually created about 10 times that many jobs indirectly.
Some economists are skeptical of the claim. And the move comes as Apple is facing increased criticism and scrutiny over labor practices at factories it outsources to in China.
For a long time, Apple has enjoyed one of the best public images imaginable. But more recently, those images are being challenged by something much less fun — reports of dangerous working conditions at the Chinese factories where iPads and iPhones are made.
Now, amid growing concern about its outsourcing practices, Apple has posted a study showing that it has created or supported more than 514,000 jobs in the United States. That includes glass manufacturers, FedEx, UPS and a whole new mini-industry of people developing apps for the iPhone and iPad. But some economists are skeptical.
University of California, Berkeley economist Enrico Moretti has written a book about this kind of indirect job creation. He says Apple's total job creation estimate is too high — the real total is somewhere between 300,000 and 400,000.
"My own research suggests that for each additional job in the average high-tech firm, five additional jobs are created outside that firm in the local community," Moretti says.
And when well-paid tech employees spend a lot of money, that also creates jobs. According to Moretti, "That would suggest that at the local level, Apple generates about 300,000 jobs all together in the U.S."
Peter Cappelli, an economist at the University of Pennsylvania's Wharton School, says the entire exercise of guessing indirect job creation is inherently misleading. Cappelli says big companies are always coming up with these projections, sometimes in an effort to get tax breaks from local governments.
"I think one of the ways to think about this is the economy is a little like, say, a forest, and a big company is sort of like a big tree in a forest," he says. "If you're the big tree and you're looking around, you say, 'Look at all the shade I'm providing here, this is really impressive.' That's certainly true. The question is if the tree goes away, what happens?"
Well if the big tree wasn't there, other trees would grow up to take its place, and younger trees would come up in the middle. In other words, there wouldn't just be a big hole in the forest. By that same token, if you don't spend $500 on an iPad, you might spend that money on another computer or maybe a down payment on a car that was actually built in the U.S.
"It's a pretty squishy process to try to figure out," Cappelli says.
Apple isn't talking about why it came out with this jobs study when it did, but the company has said it is committed to improving working conditions at the factories it outsources production to in China.
ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, HOST:
And I'm Melissa Block. Apple employs about 47,000 workers in the U.S., not a huge amount for such a profitable and influential company, but now Apple is saying it has created about 10 times that many jobs in the U.S. indirectly.
Some economists are skeptical of that claim and, as NPR's Chris Arnold reports, the Apple study comes as the company is facing increased scrutiny for labor practices in China.
CHRIS ARNOLD, BYLINE: For a long time, Apple has enjoyed one of the best public images imaginable. In ads like this one, smiling grandparents are watching family videos on their iPad.
UNIDENTIFIED MAN: It's so simple to use and it's just ridiculously fun.
ARNOLD: But, more recently, such images are being challenged by something much less fun: reports of dangerous working conditions at factories in China, where those iPads and iPhones are made.
HEATHER WHITE: Some of the most extreme labor conditions that I've ever seen in China in, you know, over 20 years of working there off and on.
ARNOLD: Heather White is a research fellow with Harvard University and a former international labor monitor with the National Academy of Sciences.
WHITE: You know, approximately 16 or more suicides in their factories over the last couple of years. They've had two explosions.
ARNOLD: Now, with growing concern about its outsourcing practices, Apple has put up on its website a study showing that it's created 514,000 jobs here in the U.S. That's at glass manufacturers, delivery companies like FedEx and UPS. There's a whole new mini-industry of people developing apps for the iPhone and the iPad.
Enrico Moretti is a UC Berkeley labor economist who's written a book about this kind of indirect job creation.
ENRICO MORETTI: My own research suggests that, for each additional job in the average high tech firm, five additional jobs are created outside that firm in the local community in the long run.
ARNOLD: Moretti says well paid tech employees spend a lot of money on everything from haircuts to fancy cars to eating at restaurants and he says all that creates jobs.
MORETTI: That would suggest that, at the local level, Apple generates about 300,000 jobs.
ARNOLD: So he says the Apple number is not too unreasonable an estimate. Still, this whole exercise is thought of by many experts to be inherently misleading and mushy.
Peter Cappelli is a professor at the University of Pennsylvania's Wharton School. He says big companies all the time come up with these projections. Sometimes, they're trying to get tax breaks from local governments.
PETER CAPELLI: I think one of the ways to think about this though is the economy is a little like, say, a forest and a big company is sort of like a big tree in the forest.
ARNOLD: And he says you could think of the indirect job creation as the shadow or the shade cast by that big company or big tree.
CAPELLI: Well, if the big tree wasn't there, what you'd find is other big trees would grow in its place. Younger trees might come up in the middle, so it's not the case there'd just be a big hole in the forest if the company wasn't there.
ARNOLD: And, likewise, if you didn't go out and spent $500 on an iPad, you might spend that $500 on a different kind of computer or a down payment on a car that might actually have been built here in the U.S. So all this is very hard to be precise about.
CAPELLI: It's a pretty squishy process to try to figure out.
ARNOLD: For its part, Apple is not talking about why it came out with this job study right now, but the company has said it is committed to improving working conditions at the factories that it outsources production to in China.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.