Where I mix career information and career decision making in a test tube and see what happens

Friday, October 7, 2011

Steve Jobs and American Jobs

As the nation mourns the death of Steve Jobs, it’s interesting to look at the role that his company plays in job creation, because Apple is one of the highest-achieving firms in one of the outstanding American industries: high tech. I came upon a fascinating analysis of the employment impact of just one Apple product, a device that Steve Jobs essentially invented: the iPod. An article in the Journal of International Commerce and Economics (PDF) looks at how many jobs were directly created by the iPod.

It’s well known that the device is assembled offshore, mostly of foreign-made components, and the authors of the study estimate that the number of foreign jobs in the iPod value chain outnumbered domestic jobs in 2006 by 27,000 to 14,000. In fact, they estimate that only 30 production jobs and a similar number of professional jobs are created by the manufacture of a few iPod chips here in the U.S. However, in 2006 the iPod also accounted for “7,789 nonprofessional jobs (primarily in retail and distribution) and 6,101 professional jobs (primarily at Apple’s headquarters), including management, engineering, computer support, and a variety of other categories.”

More important, in their analysis of the earnings of the 41,000 iPod workers, the authors estimate that here the balance tilts decidedly toward the United States, where the workers earned nearly $750 million in 2006, compared to only about $320 million earned by the foreign workers. “Over two-thirds ($525 million) of the earnings in the United States went to professional workers, and an additional $220 million to nonprofessional workers. While most of the nonprofessional jobs were relatively low-paying retail positions, we estimated that nearly $50 million went to administrative jobs at Apple for which we used the national average wage of $38,000 a year; actual Silicon Valley wages were probably even higher.”

In drawing conclusions, they hold up the iPod as an example of the opportunities and risks that globalization has created. “Apple’s tremendous success with the iPod and other innovative products in recent years has driven growth in U.S. employment, even though these products are made offshore. These jobs pay well and employ people with college degrees. They are at the high end of what might be considered middle-class jobs and appear to be less at risk of vanishing from the United States than production jobs.”

However, these high-value jobs require that future workers coming out of U.S. schools get a really good education. In addition, there is the risk that creative jobs, such as engineers and designers, will be taken by overseas workers as foreign governments and even American companies invest offshore in education and in cultivating creative industries.

The authors of this study don’t address the question of how many jobs the iPod indirectly created--or destroyed. The invention of the iPod set off a revolution in the way music is distributed. As people shifted to buying music on the Web in the form of MP3s, many record stores had to close, and as pirated MP3s circulated widely, record companies suffered declining sales even as the amount of music being consumed probably continued to rise. Although the shift to MP3s probably caused a net loss of jobs, the iPod also sparked the invention of the podcast, which created many jobs, not only for podcasters themselves, but also for the sound engineers who are involved in production of the glossier podcasts. Radio broadcasting has been consolidating into a few megacorporations, such as Clear Channel, but podcasting has helped keep many local sound-production businesses afloat.

Of course, the iPod is only one Apple product that sprang from the fertile imagination of Steve Jobs. The iPhone created a whole new platform for which creative programmers could devise new applications. Many of Steve Jobs’s other inventions will continue to create employment for American and foreign workers who are still to be born.

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