iPhone – jobs creator or loser?

Here is a fascinating video posted by New York Times about iPhone and how it helped to increasingly transform our economy from manufacturing to services. It is thought provoking and I do not entirely share author’s point of view. I agree, we lost manufacturing jobs and, indeed, service jobs create less supporting jobs around them. However, in my view, this particular example of iPhone is an exception from the general trend.

Consider all the app-development business that started, iTunes market, iCloud – I suspect that the jobs multiplier for iPhone is much bigger than 1.7! And why is the Apple worth more than Exxon? Because all of these generated businesses feed back into Apple. That’s I think is a genius of Steve Jobs and Apple’s strategy – to create an ecosystem that is closed loop but grows from within.


8 thoughts on “iPhone – jobs creator or loser?

  1. I thought that the large scale of the inputs that go into making the iPhone from over five countries, not including the U.S.A., to initiate the IPO model was fascinating; moreover, in the respect that shipping parts all around the world would be cheaper then just manufacturing the iPhone in the U.S.A. due to labor costs was interesting from an operations standpoint. I can also see how the service industry is thriving in the U.S.A. because people wish for the best personal experience, yet when it comes to manufacturing imperishable products these experiential qualities mean very little to the American consumer.

    – Edward Mulder, Section 000

  2. Very interesting video. While I do see how the outsourcing of technical manufacturing can decrease our domestic job growth, I cannot entirely fault the companies that do this. If you look at companies like GM, many of their financial pressures stem from unionized workers who demand ever-increasing wages for relatively rote job duties. And when you add on the retirement/pension plans they often require, it may seems logical to outsource the labor. The goal of a corporation, by nature, is to make money. It shouldn’t be their responsibility to sacrifice their own longevity by taking significant losses on labor costs.

  3. It was interesting to see how the middle class was being cut out as a result of the decisions that these companies make regarding automated manufacturing. It seems as technology evolves, the gap that exists financially and sociologically between the wealthy educated worker and the poor unskilled worker will widen as the middle class is simultaneously mitigating. Apple isn’t the only company to bolstering this global trend, many tech companies in fact have this effect as well which started at the beginning of the millennium.

  4. Very thought provoking video. While the statistics do seem to speak volumes about this disappearing middle class as a result of the changing economy, I think it is important to remember the value of placing statistics in the proper context. Yes, manufacturing jobs have declines with the advent of technology but efficiency from the viewpoint of the overall firm has dramatically increased. Like some others have said in their responses, firms act in the interest of customers and profitability. If this is most effectively done by reaching outside US borders, this is not necessarily all bad. In addition, I think that the growth of outsourcing from just unskilled labor into skilled labor and even management shows that maybe looking through a country-specific lens to assess the employment situation is not entirely appropriate in a fully globally dependent economy. There is mutual sharing of resources that makes just evaluating ‘jobs in America for America’ a skewed way of making predictions about the future of the country.
    Also, after watching this video, I started to really think about job growth in the US and decided to check some other statistics out. Interestingly enough, various articles on small business and niche industry companies like Advertising and PR agency growth came up on various feeds. There is still an extensive amount of entrepreneurial spirit that exists within the country making room for unique areas of job growth. While they may require entirely different skill sets, I think generations will adapt and accommodate the changes and find ways to stay afloat.

    • I share the skepticism in the above comments. On the same note as Shreya’s note on context, I was curious as to many of the authors assumptions. The author implies a direct correlation between increased unemployment from 2000 to now and the growth of the service industry. Granted, the current rate 9.6% is relatively high, but not unheard of since 1960 (the author’s referenced period). I would think that more factors are at play in determining unemployment. The fact is, with in this technological period of 2000-2012, the rate actually dipped 2004-2007. Another unsupported assumption is that manufacturing jobs enable ascension to the middle class while service jobs do not. I do not have statistics to argue one way or another; however, without data nor intrinsic logic, I am not convinced.

  5. I think iPhone here represents technology improvement, which both reduces manufacturing and service jobs in some ways. It is true that manufacturing jobs have been decreased due to the improvement of assembly line, and the number of jobs has been reduced because of the smaller number of supporting jobs that can provide. Moreover, service jobs has also been replaced by machines/modern technologies, as it can be seen from our everyday life. For example, small retail stores have been replaced by vending machines; toll-stations by the highways which used to have people to collect the money have been replaced by the machines. In this way, it is true that the number of jobs is decreasing and people are losing their jobs. However, since techonology makes the production process more efficient, people are actually better off in this economy. Thus, in order to keep the low unemployment rate, people who are considered as unskilled workers have to enhance their skills. The transformation in labor market is due to the adjustment of industrial structure, and it all simmers down to the matter of technology improvement.

  6. I understand that the number of manufacturing jobs can decrease due to the more advanced technology, the growth of outsourcing and many other factors. However, I think that such changes, especially in the case of Apple, will not necessary take chances away from moderately skilled workers. The app-development business is a great example. As Apple products become more popular, the market for apps continuously grows and becomes more competitive. These companies not only need highly skilled workers, such as engineers, but also need moderately skilled workers, such as sales personnel. Therefore, Apple’s outsourcing of labor does not decrease the number of manufacturing jobs. Additionally, manufacturing jobs, such as maintenance, are still necessary in many manufacturing companies, even the highly automated ones. I think that as the machines become more advanced, more maintenance labor will be hired to ensure the whole operation process. Therefore, I do not think that manufacturing jobs will be eliminated by technology innovation or outsourcing of labor in the long run.

  7. Pingback: Jobs creation in the Apple ecosystem | Operations Club 351

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