When it comes to any economy, it is said that “build a better mouse trap, and the world will beat a path to your door.”
This quote—attributed to Ralph Waldo Emerson, though there’s no record of him saying it verbatim—is an accurate description of the impact of innovation on society. Make a new device that makes something simpler, and watch the customers fly through the doors of stores everywhere with cash in hand.
We see it today with the launch of the fifth version of the iPhone, produced by Apple. Since its debut last weekend, five million of the smartphones were sold. Averaging at about $400 each, that amounts to nearly $5 billion in sales in less than a week.
In an economy that’s still sluggish at best, this is quite a feat. At the same time, however, it makes us wonder where all that money is going.
Apple’s corporate offices are in Silicon Valley, California, and there are scores of Apple stores and hundreds of iPhone retailers across the country. Naturally, workers in these locations are tasting the sweet fruits of the iPhone’s tremendous economic success.
But let’s not forget that these revolutionary gadgets are being made an ocean away. The bulk of the manufacturing takes place in China, where workers on the iPhone assembly line reportedly make $1.78 an hour. To put that in perspective, that’s just under 25 percent of the federal minimum wage of $7.25 an hour.
Many of these workers in China are employed by Foxconn, which manufactures 40 percent of the world’s consumer electronics. Look around your home, and you’ll undoubtedly find at least one appliance or gadget which was made there.
For years, Apple and other American manufacturers have outsourced thousands upon thousands of good-paying industrial jobs to foreign lands for the sake of lower labor costs, cheaper goods and higher profits. But it now appears that the tide may be turning.
There was a riot recently that caused the shutdown of a manufacturing facility in north China where 79,000 workers were employed. It seems worker unrest has become more common in China as workers are made more aware of their rights.
For the past two years, Foxconn and Apple have faced regular criticism for the labor conditions at the huge facilities across China. The two companies have pledged to improve conditions, but labor rights groups say harsh practices continue, including excessive and unpaid overtime.
It remains to be seen if this labor unrest in China will be sustained and lead to change. After all, the nation’s communist leadership has their own massive economy at stake, and they don’t have a great track record when it comes to handling dissent among the ranks.
Should China make changes to correct these labor problems, what will Apple and other manufacturers do? Will they bring those jobs back to the U.S., or will they seek another nation which will look the other way at cheap wages and labor rights violations?
The iPhone has such a great reputation that people are willing to spend a small fortune to buy it, even if economic times aren’t great. Make a great product, and consumers will buy it, no matter the cost. And if Apple charged an extra hundred bucks per phone to cover the expense of having iPhones being “Made in the U.S.A.,” Americans will gladly pay it.
There’s no excuse for outsourcing. America needs good jobs the same way it needs good products. Give them both, and watch the economy flourish.