Apple Reports Record Quarter: But Should the Company Heed Obama’s Call to Bring Jobs Home?
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President Obama laid out his blueprint for the country Tuesday night in his third State of the Union Address. How to bring jobs back to America and put this country back to work is a top priority for him.
"Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed," he said. "We should start with our tax code. Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So let's change it."
In an election year with unemployment still high at 8.5%, there's a lot of talk about job creation, in particular where the jobs are coming from versus where they not coming from.
Apple, which just reported yet another blockbuster quarter, has come under fire in recent weeks for its use of Chinese manufacturing plants, where workers are subjected to abhorrent labor practices, according to multiple reports and Apple's recent decision to release its list of suppliers and pledge to deal with abuses.
These issues have received additional scrutiny thanks to Mike Daisey's critically acclaimed play, "The Agony and the Ecstasy of Steve Jobs". (See: The Darker Side of Apple: The Human Cost of Your Apple iProducts)
The criticism stems most notably from Apple's use of China's Foxconn facility — where wages are less than $1 a day and workers work very long hours doing the same task over and over to assemble some of the products many Americans have grown to love: the iPhone and the iPad. (See: Apple's Sweatshop Problem: 16 Hour Days, ~70 Cents An Hour)
In Defense of Apple
Shares of the $400 billion company jumped 8% on Apple's earnings report Tuesday after the bell. A very strong holiday shopping season helped the company sell more than 37 million iPhones and 15 milllion iPads. The company reported net income of $13.06 billion, or $13.87 a share, which is more than $3 above estimates. (See: STAY STOKED APPLE FANS: This Should Be One Heck Of A Year)
These staggering numbers have some wondering: Should Apple, which now has more than $100 billion cash on hand, do more to bring jobs back to this country?
Adam Lashinsky, Fortune's senior editor at large and author of the new book Inside Apple, joined The Daily Ticker's Aaron Task and Daniel Gross to answer that question. His answer: "I don't think so."
"We are in a post-industrial society. We are not going to make little devices in the United States," he says in the accompanying video. "It is hard to image rousing thousands of U.S. factory workers in the middle of the night because a client needs you to work on their order."
At the same time, Lashinsky highlights the fact Apple does employ thousands of workers here in the U.S. to innovate and design the company's products. President Obama even recognized this fact during his speech last night when called to support innovation and talent for those who aspire to be "the next Steve Jobs."
Jobs' widow was in the audience Tuesday night and smiled at the remarks.
To further Lashinsky's point, Dan notes that Apple is responsible for creating and reinventing entire industries where jobs have been indirectly added.
The company has redefined how we watch and buy our music and video media, as well as how we read our books and magazine content while at the same time created the App industry.
But should Apple, or any other company for that matter, decide to migrate jobs back to the U.S., Obama wants to give those companies some tax breaks. Here is the three-prong message laid out last night:
First, if you're a business that wants to outsource jobs, you shouldn't get a tax deduction for doing it. That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.
Second, no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.
Third, if you're an American manufacturer, you should get a bigger tax cut. If you're a high-tech manufacturer, we should double the tax deduction you get for making products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.
Tell us what you think! Should Apple do more to bring manufacturing jobs home to America?
