Where the iPhone work went

Updated: 2012-01-29 09:38

By Charles Duhigg and Keith Bradsher (China Daily)

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Middle-class jobs fade

The first time Eric Saragoza stepped into Apple's manufacturing plant in Elk Grove, California, it was 1995, and the facility near Sacramento employed more than 1,500 workers. Mr. Saragoza, an engineer, quickly moved up the plant's ranks and joined an elite diagnostic team. His salary climbed to $50,000.

"It felt like, finally, school was paying off," he said. "I knew the world needed people who can build things."

A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren't the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.

Some of Elk Grove's routine tasks were sent overseas. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore.

Then it was Mr. Saragoza's turn. Apparently deemed too expensive for an unskilled position, and insufficiently credentialed for upper management, he was called into a small office in 2002 after a night shift, laid off and then escorted from the plant.

There were employment prospects in Silicon Valley, but none of them panned out. "What they really want are 30-year-olds without children," said Mr. Saragoza, who today is 48, and whose family now includes five of his own.

After a few months of looking for work, he started feeling desperate. So he took a job checking returned iPhones and iPads. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports. After two months, he quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs.

On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of resumes online, halfway around the world a woman arrived at her office.

The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad's glass screens.

Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She and her husband put a quarter of their salaries in the bank every month.

"There are lots of jobs," Mrs. Lin said. "Especially in Shenzhen."

Innovation's losers

Economists note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed.

What remains unknown, however, is whether the United States will be able to leverage tomorrow's innovations into millions of jobs.

In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple's growth and profit margins, they won't survive.

"New middle-class jobs will eventually emerge," said Lawrence Katz, a Harvard University economist. "But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?"

The New York Times

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