Tuesday, June 26, 2012

The Apple Economy

Employees at an Apple Store. The 2012 version of the American factory? (Credit: James Martin/CNET)

The New York Times published a great article about Apple employees and their compensation earlier this week.  Here's are the basics:

About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year. They work inside the world’s fastest growing industry, for the most valuable company, run by one of the country’s most richly compensated chief executives, Tim Cook. Last year, he received stock grants, which vest over a 10-year period, that at today’s share price would be worth more than $570 million.

So the iconic American technology company has approximately 70% of their work force working in sales and customer service. By all accounts, these employees are compensated better than most retail-store employees with decent benefits, and the employees seem generally happy, albeit with lowered expectations, so that doesn't seem to be a big problem. But this highlights a key shift in our society to a more service based economy, with fewer and fewer employees needed to operate. You'd think if the most profitable company in the country was a technology company, they'd employ legions of engineers.

This piece in the New York Times from back in January, noted that Apple employs 43,000 American workers and an additional 20,000 overseas, with these margins:

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
Apple will likely surpass Exxon Mobil and end 2012 as America's most profitable company. And they will be doing so with just 63,000 employees world wide.

By comparison, in the 1950's when General Motors was the country's largest and most profitable company, they employed over 500,000 workers. Yeah, I know different eras and industries and all that, but the point is back then corporations' profits went back into the company to hire workers to produce more widgets.

I don't know what the answer is. Apple has obviously fulfilled its duty to its share holders and its customers, but questions surrounding what, if any, obligations Apple has to its employees and ultimately the country as a whole that helped provided it with this opportunity, is certainly a topic to be explored more in the future.

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