Chinese workers get only $8 from each Apple iPad 2

apple factory workers

I’m sure we’re supposed to be outraged about this, that the Chinese workers who assemble Apple‘s iPad 2 in China only get, collectively, $8 from each unit produced. That’s certainly the way my sometime employers (that declaration of interest there, I freelance for them sometimes) The Register are playing it:

As Apple desperately tries to repaint itself as a caring company when it comes to workers’ rights, news has emerged that employees in its suppliers’ Chinese factories get just $8 of the $499 sale price of each iPad 2.

Several news sources cite a Korea Daily report which claims that, based on average salaries, workers in the region get a 1.6 per cent slice of the pie, while Apple creams off $150 or around 30 per cent of the tablet’s retail price.

As regular readers will know I look at this in a very different manner indeed.

My first point being that China is a poor country. Getting richer faster than anywhere else in history has done so far, true, but it’s not managed to become gloriously rich yet. So it really shouldn’t be a surprise that wages are low there. This is what poverty means, low wages. I’d also point out here that the very reason the place is getting rich so fast is because we buy so many things manufactured there, to the benefit both of those workers and ourselves.

The second is that wages at Foxconn are not in fact low by Chinese standards. They’re above average for manufacturing jobs in the country and they’re well above the average of all wages across the country.

My third point is that this isn’t exactly entirely new information. We’ve seen breakdowns of the labour content of various Apple products before.

My fourth is that clearly and obviously the money flows to the people who own whatever it is that is in short supply. This is true whether we’re talking about wheat in a famine, water in a drought or the division of the cash flow from electronics manufacturing. Apple earns more per piece of electronics than other companies, a greater share of the revenues from their electronics than other companies do, precisely because Apple is the company with that scarce thing, that rosy glow of the Apple brand (as well, admittedly, as some pretty neat products).

Every barista with pretensions to creativity wants Apple rather than the other products made using the very same chips in the very same Foxconn factories. Whatever it actually is Apple owns it, that unique something, so of course Apple gets more of the money.

So I will admit, again, to being rather confused about what it is that people are complaining about.

My final point is a larger one about what this means for manufacturing wages. We’re told endlessly that the western economies (it is just as strong a message in my native UK as it is for you in the US) that we must bring manufacturing home for only manufacturing provides good well paid jobs. But as we can see here, while it might provide well paid jobs by Chinese standards it most certainly doesn’t by UK or US standards. So why does anyone think that assembling iPads in either country would provide high paid jobs?

It is true that the manufacturing jobs we still have are well paid: but that doesn’t mean that the manufacturing jobs we currently don’t have will become well paid if we do gain them. Quite the opposite in fact: that these jobs are done in low wage places shows that they only support low wages.