Next Wednesday, Apple (AAPL) is slated to unveil the iPhone 5 -- the latest in a series of magical devices that have captured the world's imagination. Given its incredible success with consumers and phenomenal stock price gains, Apple has come to symbolize the best of American ingenuity, technology and innovation.
But Apple actually represents the worst of American business, according to award-winning journalists Donald Barlett and James Steele.
In their latest book, The Betrayal of the American Dream, Barlett and Steele cite Apple as a prime example of an American outsourcer.
Apple products are still conceived and designed in the U.S. but the company "very quickly" made the decision to manufacture its goods in other countries, Steele observes. "That manufacturing base, the heart of so much American middle class is very quickly yanked out."
In the 1990s, Apple products were produced at plants in Elk Grove, Calif. and Fountain, Colo. In the Colorado Springs area, Bartlett and Steele estimate more than 15,000 jobs, paying between $55,000 and $80,000, were lost when Apple sold the Fountain plant in 1996, costing the local economy $500 million. Similar devastation occurred around Sacramento when Apple closed its Elk Grove plant in 2004.
While they've shipped jobs overseas -- most notably to the notorious Foxconn plants in China -- Barlett and Steele note that Apple still enjoys the benefits of being based in America, and not just because of our huge consumer base.
Citing Apple's recent victory in its patent infringement case against Samsung, Barlett notes the case was filed in the U.S., not China or Singapore. "Apple knows full well this is only place they'll get that kind of a hearing," he says. "They derive enormous benefits nobody thinks or talks about and then thumb their nose at the working people."
That Giant Sucking Sound
To be sure, Apple is not the first or last U.S. company to move its manufacturing overseas and Barlett and Steele write extensively about Boeing (BA), which is increasingly moving its operations to China. But Apple is the "most visible" with the "most visible products," Barlett notes, and the company symbolizes how outsourcing has moved far beyond the 'Rust Belt.'
In a 2008 study, the Labor Department cited 160 service jobs that could be moved offshore, including aerospace engineers, biochemists, financial analysts, graphic designers, insurance underwriters, microbiologists, tax preparers and many other well-paying "white collar" jobs.
Back in 1990, the Labor Department cited consumer programmers as one of the fastest-growing occupations with predictions for continued growth well into this century. But the reality has been very different. By 2002, the number of computer programmers was down 12% from 1990 and by 2006 the Labor Department conceded programming jobs were "expected to decline slowly."
It's important to note that Barlett and Steele aren't anti-capital or against free trade. But they believe the hallowing out of the American middle class has occurred because of deliberate policy decisions, notably in taxes, deregulation and trade policy that make it economical for companies like Apple to move jobs overseas.
"Domestic programmers, like millions of workers in other fields, are casualties of a Congress long indifferent to the plight of American workers," they write.
The issue, they say, is not just the cheap labor. Even as America preaches "free trade," our biggest trading partners -- including China, Japan, Germany and South Korea -- are playing by a very different set of rules.
"We're such believers in free trade we won't take any tough positions," Steele laments. "The rest of the world is not playing by those rules. We have to be tougher. It's not a matter of building walls around the country. There's a way to have a more vigorous trade policy. But we've never had gumption to do it."
Meanwhile, the U.S. has had a trade deficit for 37 consecutive years and is on a path toward its first ever $1 trillion trade deficit. To Barlett and Steele, the trade deficit isn't just a number, it's a "direct reflection of jobs lost."
Jobs, the authors fear, that are never coming back.