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Apple’s American Workforce and the Service Economy

The New York Times recently published an in-depth article on “Apple’s Retail Army, Long on Loyalty but Short on Pay,” as part of its excellent series on “The iEconomy.” The new article notes that the majority of Apple’s US workforce (30,000 of its 43,000 domestic employees) are not engineers – part of the hailed “creative class” typically associated with the likes of Apple – but hourly retail sales employees.

Last year, the article reports, “each Apple store employee — that includes non-sales staff like technicians and people stocking shelves — brought in $473,000.” Yet, many of these employees are paid just $25,000 per year.

The most common definition of low-wage work used in international comparative research is two thirds of the median income. In the US, the median income in 2011 was $34,460. This puts the typical Apple store employee at 73% of the median, making employment in an Apple store effectively a low-wage job.

In noting the changing concept of career in the brave new service economy, the article quotes past ASA president Arne Kalleberg, who states that “In the service sector, companies provide a little bit of training and hope their employees leave after a few years.”

The problem – which the article strongly implies but does not fully tease out – is that many workers in service jobs are not students working part-time while in school, but post-schooling workers facing a bleak job market. And it is not simply a job market grim because of temporary recession, but one that is structurally heavy on low-wage, dead-end jobs.

According to data I have analyzed from the US Bureau of Labor Statistics, in 2005 fully 21% of employment in America was in retail trade and leisure and hospitality industries. The leisure and hospitality industry is clearly a low-wage industry (median wage in 2005 = $18,410), and retail trade (median = $20,480) comes in just slightly above that cutoff, at 70% of the 2005 median ($19,424).

Add to this three more industries slightly above the median – nursing and residential care facilities ($22,350), Social assistance ($21,400), and Administrative and support and waste management and remediation services ($22,610) – and 26% of the entire nonfarm economy consisted of low-wage industries in 2005. Welcome to the new economy.

The article also quotes sociological economist Paul Osterman, who questions whether there is a moral difference between Wal-Mart paying low wages to single mothers versus Apple paying low wages to young men.

The article goes on to discuss the unique situation of Apple, which is able to pay low-wages yet have an extremely loyal workforce because of its “built-in fan base.” But it goes on to note that many of its employees are frustrated at the lack of training and promotion opportunities – lack of an internal labor market – for them. That is, dead-end work.

While some of Apple’s retail workers regarded these as good jobs for young workers, others found them to be both intense and dead-end.

This echoes a larger problem in the American economy: front-line service jobs – retail sales, cooks, nursing aides, janitors and the like – may be good for young workers in school, but many of these jobs are filled by workers out of school, workers who cannot find better jobs with internal labor markets, and who are uncertain about what type of training to get or unable to get such training (e.g. because of family responsibilities).

These problems are commonly ignored in the hype about the new economy and the creative class, as well as in the proposals of liberal economists to fix the economy. It doesn’t matter how much we educate the population if one-quarter of the economy consists of low-wage, often dead-end, servant jobs.

Matt Vidal is Lecturer in Work and Organizations at King’s College London, Department of Management. He is the chief blogger for the blog of the Organizations, Occupations and Work section of the American Sociological Association, where this article first ran. You can follow Matt on Twitter @ChukkerV.

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Matt Vidal is Senior Lecturer in Work and Organizations at King’s College London, Department of Management. He is editor-in-chief of Work in Progress, a public sociology blog of American Sociological Association, where this article first ran. You can follow Matt on Twitter @ChukkerV.

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