In the last decade or more, Apple has been the most often mentioned example of successful company built around a very strong vision of strong product design and innovation. Nothing more logical, therefore, than to use the iPod and its production process around the world to explain the concepts of Globalization, including some of the fallacies created around it by conservative or ultra-nationalist political groups.
If you are interested in reading more about this and reach your own conclusions, you can download the full research (160 KB PDF file).
Once upon a time, the car was the key to understanding the U.S. economy. Then it was the family home. Nowadays, it is any device created by Steven P. Jobs. Call it the Apple economy, and if you can figure out how it works, you will have a good handle on how technology and globalization are redistributing money and jobs around the world.
That was the epiphany of Greg Linden, Jason Dedrick and Kenneth L. Kraemer, a troika of scholars who have made a careful study in a pair of recent papers of how the iPod has created jobs and profits around the world. The latest paper, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” was published in The Journal of International Commerce and Economics in May 2011.
One of their findings is that in 2006 the iPod employed nearly twice as many people outside the United States as it did in the country where it was invented — 13,920 in the United States, and 27,250 abroad.
Now come what might be the surprises. The first is that even though most of the iPod jobs are outside the United States, the lion’s share of the iPod salaries are in America. Those 13,920 American workers earned nearly $750 million. By contrast, the 27,250 non-American Apple employees took home less than $320 million.
That disparity is even more significant when you look at the composition of America’s iPod workforce. More than half the U.S. jobs — 7,789 — went to retail and other nonprofessional workers, like office support staff and freight and distribution workers. But those workers earned just $220 million.
The big winners from Apple’s innovation were the 6,101 engineers and other professional workers in the United States, who made more than $525 million. That’s more than double what the U.S. nonprofessionals made, and significantly more than the total earnings of all of Apple’s foreign employees.
Here in microcosm is why America is so ambivalent about globalization and the technology revolution. The populist fear that even America’s most brilliant innovations are creating more jobs abroad than they are at home is clearly true. In fact, the reality may be even grimmer than the Tea Party realizes, since more than half the American iPod jobs are relatively poorly paid and low-skilled.
But America has winners, too: the engineers and other American professionals who work for Apple, whose healthy paychecks are partly due to the bottom-line benefit the company gains from cheap foreign labor. Apple’s shareholders have done even better. In the first of their pair of iPod papers, published in 2009, Mr. Linden, Mr. Dedrick and Mr. Kraemer found that the largest share of financial value created by the iPod went to Apple. Even though the devices are made in China, the financial value added there is “very low.”