6 Shocking Ways Capitalism Is Failing Working America
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Capitalism is coming apart at the seams and the middle-class is paying the price. This week’s news alone bombards us with examples of how, absent a dramatic rethink, our "free-enterprise" system may never again provide enough decent jobs for those who need and want them.
Apple is arguably the world’s most successful company. Yet most of the 700,000 jobs needed to produce its cherished products are located abroad, especially in China. Why doesn’t Apple manufacture in the United States? Charles Duhigg and Keith Bradsher writing for the New York Times reveal that Apple is looking for a cheap, “flexible” workforce that can be put to work whenever and wherever it is needed on the company's terms.
One chilling example concerns the manufacture of glass screens for the iPhone to replace plastic screens which are easily scratched. With only weeks to go before the phone’s release in 2007, the late Steve Jobs demanded a switch to glass. But to get that done on time required deploying the pliable workforce of the giant Chinese manufacturing firm, Foxconn:
“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”
In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.
Little wonder that Apple just announced that it doubled its already enormous profits over the Christmas holidays. Like the Pharaohs of old, it’s always paid to build great things on the backs of slave labor.
2. The Bain of Our Middle-Class Existence
A day doesn’t go by without suffering through another Mitt Romney defense of his career at Bain Capital, his highly profitable leveraged buy-out firm. Mitt repeatedly tells us that Bain created tens of thousands of jobs at Staples, Domino’s Pizza, Sealy, Brookstone, Sports Authority, Burger King, Burlington Coat Factory, Dunkin’ Donuts, and Toys 'R' Us.
For a moment let’s put aside the fact that Bain also drove a large number of companies into bankruptcy while loading them up with debt and extracting enormous profits along the way. Instead, let’s focus on the type of jobs that Staples, Domino’s et al. produce for the American middle-class. While these jobs are not as slavish as those sought after by Apple in China, most Bain companies pay so little and have so few benefits that it is impossible to support a middle-class existence from the jobs they create.
Since Romney likes to brag about Staples, we took a closer look at its average hourly pay (as reported on Glassdoor.com). Out of 61 job classifications listed, only three provide starting salaries of $20 or more per hour. The vast majority of those 61 jobs categories have pay scales that begin at $7 and $8 per hour and scale up over time to $13 or $14 an hour. I’d like to see Mitt raise his dog on that.
But wait! There really is some fairness in our economy when it comes to taxes. If you work at Staples and somehow climb your way up to a middle-class salary, you might be paying the same tax rate as Mitt who earns $20 million a year. Then again, since Mitt paid only 13.9% on his 2010 taxes, you might even pay a little more counting all your state and local taxes. (More on how he does it below.)