Here’s a letter to the New York Times:
Your report on Apple’s allegedly inadequate job creation in America is titled “How U.S. Lost Out on iPhone Work” (Jan. 22). Although your reporters missed it, the answer to this question is a happy one: Americans remain exceptionally prosperous.
According to The Economist, labor costs are only 7 percent of an iPad’s retail price.* This reality suggests that, in addition to the fact that the bulk of each Apple product is made by machine, most of the labor that is used to bring the likes of iPads and iPhones to market is of the low-skilled and low-paid sort that is abundant in developing countries. Should Americans lament the loss here of such low-paid jobs?
No. As your reporters admit, Apple uses lots of overseas workers precisely because those workers are willing to work in worst conditions and for lower pay than are American workers – strong evidence that the options open to even low-skilled Americans are far superior to those of most workers in developing countries. Our prosperity enables even the poorest of us to avoid such toil.
Of course, some people (apparently including, according to your report, Pres. Obama) wonder why Apple doesn’t simply hire American workers at American wages to do more of those jobs. Alas, the unavoidable result of that policy would be a substantial rise in the price of Apple products and a fall – likely total – in the number of such products produced and sold.
Put differently, your report, like Mr. Obama, insinuates that low-wage jobs overseas (and jobs currently performed by machines) would, if transferred to America, somehow become the same – but higher paying – jobs for workers here. This insinuation is wrong. If Apple followed Mr. Obama’s suggestion, there would soon be no Apple and, hence, no “iPhone work” that the U.S. could possibly “lose out on.”
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
* (HT Fred Dent)