How many jobs has Apple created in the U.S.?
(MoneyWatch) How many jobs has Apple (AAPL) created in the U.S.? Joshua Gans, Professor of strategic management at the University of Toronto notes that "Apple has an answer to this question: 514,000 in the US. 304,000 of those are either jobs at Apple or at companies that supply them. Another 210,000 are iOS app economy jobs but let's face it, those aren't likely to be full time."
How accurate are these numbers? Professor Gans observes that most people currently employed by Apple would have jobs elsewhere if Apple had never existed, "So from that perspective, Apple is massively overstating their job creation."
However, when it comes to calculating the number of secondary jobs that Apple has created, for example jobs developing the infrastructure needed to run the networks that iPhones and iPads run on at AT&T and Verizon, "514,000 is a massive understatement." According to Professor Gans, Apples' calculation fails to fully account for this type of job creation. He says, "One suspects that once you take that into account, then the US jobs that can be somewhat attributed to Apple innovation are much higher than what Apple have claimed." Gans also points out that Google, Microsoft and Motorola have increased R&D and manufacturing to compete with Apple.
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The point is a good one. When we think of technological development, we tend to think only about the jobs within the company's walls. But for many companies such as Apple, that's only the beginning of the story. There is also a multiplier process that can create many additional jobs in other areas of the economy.
This has implications for economic policy during recessions. Building
these supply networks through what economists call agglomeration -- firms
locating in a common geographical location, e.g. a box supplier locating near
manufacturers to lower costs for both firms -- takes time. Even in the case of, say,
software developers where a common geographic location is less important, there
are advantages to having firms locate together. The actual production may occur in other countries, as in the case of Apple, but there can still be important components of the operation here. And when most components of the operation are in the U.S., including production, these networks can be quite extensive.
During a recession these networks, which can take years to build, can evaporate quickly if the lead firm gets into trouble and goes out of business. Firms that would do just fine if they could make it to the other side of a recession they had no hand in creating are lost along with their entire support structure, and when they reappear post recession it won't necessarily be in the U.S.
The government should not be in the business of picking winners and losers. As Paul Krugman says, using agglomeration arguments to justify intervention on behalf of individual industries "can all too easily be used to justify any and all industrial interventions." However, as we tally up the costs and benefits of broad based monetary and fiscal polices designed to stabilize the economy in a recession, the benefits of protecting our areas of excellence is an important consideration.
