(or: a tale of two economies)
- As you drive around Rochester, the role of Eastman Kodak in the city is evident everywhere, in the Kodak Tower that looms over the center of town, in the Eastman Theater on Main Street, and in the hulking buildings and empty parking lots of the manufacturing center known as Kodak Park.
In reading the company’s old annual reports, you get a sense that its executives thought of the jobs created and the wages paid as a source of pride and achievement. On the first page of most years’ annual reports was an accounting of how many employees the company had in the United States and worldwide, and the total pay and benefits they received.
Apple, with a spaceship-like campus about to open, looms large over Cupertino in its own way, accounting for something like 40 percent of the jobs in the city, and investing $70 million in local environmental and infrastructure upgrades. It is no middle-class enclave; the median home price is $1.9 million.
“We definitely feel a sense of pride to be the home of Apple,” said Savita Vaidhyanathan, the mayor of Cupertino. “But they consider themselves a global company, not necessarily a Cupertino company.” She said she has never met Tim Cook, Apple’s chief executive. “We would have a hard time getting an audience with anybody beyond upper-middle management,” she said.
This is the most salient point of this article, for me. The differentiation between what is done by an employee (and therefore has a career path) and what is done by a service provider (which is a dead-end job). How does someone elevate themselves when they are working for a service provider, who is probably cutting every benefit and corner, to compete with other low-price providers? There's no access for you to get into the office that you are currently cleaning... It's the way of business in America today... but that doesn't make it "right". "...But major companies have also chosen to bifurcate their work force, contracting out much of the labor that goes into their products to other companies, which compete by lowering costs. It’s not just janitors and security guards. In Silicon Valley, the people who test operating systems for bugs, review social media posts that may violate guidelines, and screen thousands of job applications are unlikely to receive a paycheck directly from the company they are ultimately working for..."
You're talking about an obvious manifestation of shareholder value: eliminate "unnecessary spending" and see expenses decrease with no impact on quarterly revenue. The concept of shareholder value was pioneered by Jack Welch, who while at GE transformed the company from one that makes things to one that buys and sells things. Shareholder value runs afoul of the idea of long-term profit and stability; "corporate culture" means "employees that are loyal to you because they don't want to change jobs every eighteen months." Dead-end jobs are far better for shareholder value because that dude doesn't get vested, doesn't get benefits, doesn't get raises and can be replaced by a contractor whose hiring simplifies your books and allows you to move numbers around. Jobs with career paths are better for the long-term health of any company because while capital improvements are depreciated over time, expertise only grows. There are sixty thousand people in switzerland working for 572 companies producing $27b in revenue every year... making mechanical watches. Often, on tools that date to the turn of the century. By contrast, GM employs 310,000 people and made $37b in revenue in 2017. Apples and oranges, sure, but it demonstrates that there is a value to core expertise, and core expertise is not generated by contractors.
I don't even know what to say. It's sad to read about the inexorable squeeze of the middle class. In the absence of a corrective force, typically government moderation or labor negotiated protections, the pressure to maintain profitability leads businesses to shed