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By Isaiah J. Poole
Executive editor of the blog site OurFuture.org

The scheme that Apple cooked up this week to finance a $55 billion stock buyback for its shareholders was orchestrated to avoid paying $9.2 billion in taxes, Bloomberg reported Friday.

That $9.2 billion tax bill that Apple dodged would have been enough to make unnecessary all of the major budget cuts we’ve been writing about this week as part of our “Repeal the Sequester” campaign. With $9.2 billion, the federal government could have (based on lists compiled by The Washington Post’s Wonkblog and Think Progress):

• Paid for rescinding the furloughs of air traffic controllers without raiding $250 million from an airport improvement fund.
• Restored Head Start funding to avoid having to kick an estimated 70,000 people out of the program this year.
• Kept Meals on Wheels funding for seniors intact.
• Restored National Institutes of Health funding, so that research on cancer treatments and other diseases could continue uninterrupted.
• Rescinded cuts of up to 10.7 percent in unemployment checks to people who have been looking for work for more than six months without success.
• Kept paying for public housing assistance and housing vouchers for people who might otherwise be homeless or in substandard living conditions.
• Rescinded cuts in programs for children with special needs and learning disabilities.
• Kept already stretched Occupational Safety and Health inspectors on the job, doing the 1,200 workplace inspections that are being shelved by sequestration.
• Fully funded disaster relief programs, a particularly critical need now that a wildfire is currently causing serious damage in southern California.
• Restored $480 million now cut from the FBI’s operations. (more…)

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The Fed’s policy of keeping interest rates near zero is another form of trickle-down economics.

For evidence, look no further than Apple’s decision to borrow a whopping $17 billion and turn it over to its investors in the form of dividends and stock buy-backs.

Apple is already sitting on $145 billion. But with interest rates so low, it’s cheaper to borrow. This also lets Apple avoid U.S. taxes on its cash horde socked away overseas where taxes are lower.

Other big companies are doing much the same on a smaller scale.

Who gains from all this? The richest 10 percent of Americans who own 90 percent of all shares of stock.

But little or nothing is trickling down. The average American can’t borrow at nearly the low rates Apple or any other big company can. Most Americans no longer have a credit rating that allows them to borrow much of anything.

It would be one thing if Apple and other giant companies were borrowing in order to expand operations and create new jobs. But that’s not what’s going on. Apple, remember, is still sitting on $145 billion. (more…)

By Dave Johnson
Fellow, Campaign for America's Future

Following are my prepared notes for my talk on the Netroots Nation panel, Why Can’t Apple Make Your iPhone in America? except cleaned up to make me look better:

We used to make things here, and then came free trade and then China opened up, and we moved a lot of manufacturing there, including electronics. We say Apple here, because Apple is the most obvious, and because the supposed values of Apple conflict dramatically with what we now know about the working conditions of the people who make their products. But we mean ALL OF THEM.

We used to think that China got so much business because labor was cheap. The elites, benefiting from that, said take advantage of the low prices, and our workers can move on to better more productive pursuits.

Of course, intentionally undercutting the wages of our own workers was bad enough. And using that as a wedge to break unions was bad enough. But the story of our trade deal with China is much worse than that.

Not too long ago stories about the working conditions of Chinese electronics workers started to be heard. We started hearing about protests, strikes, and then about suicides at these factories.

The reports reached wide audiences from a New York Times report, How the U.S. Lost Out on iPhone Work

This report hilited Steve Jobs telling President Obama that these jobs are never coming back, and the reason was not the lower cost of labor. The reason was that in China they could make workers do things that they can’t make them do here. They can make them live in dorms where they wake them up at midnight to stand for hours on assembly lines, or use neurotoxins that let them clean many more screens in a day. They can dump horrible stuff into the environment. And this is just the tip of the iceberg. Ask Chen Guangcheng the blind lawyer who just arrived in the US about how people are treated there. (more…)

By Steven Capozzola
Media Director, Alliance for American Manufacturing

Last fall, we pondered whether Apple could start building iPads and iPhones in the U.S. Our conclusion was, YES, Apple could indeed start assembling products in the U.S.

Some key points:

1. Labor costs are not the key factor. As Michele Nash-Hoff (President of ElectroFab) and Curtis Ellis (of the American Jobs Alliance) have explained, labor is a small part (probably less than 10 percent) of Apple’s cost of manufacturing, far less than capital equipment and components. With wages rising in China, and U.S. manufacturing workers actually being far more productive, the labor cost differential become very small.

2. Apple is the rare product that competes on quality, not price. While it may or may not cost more in total to assemble iPads in the U.S., Apple is not competing against dozens of similar products. And so, retail price is not the key criteria because consumers are already buying iPads due to their unique quality and attributes, not “low sticker price.”

3. Thanks to high productivity and top quality, U.S. manufacturing offers its own cost-savings and benefits. U.S. manufacturers are recognized as being the most productive, efficient, and safe in the world. A state-of-the-art U.S. manufacturing facility would offer its own cost savings by virtue of its incredibly productive and streamlined assembly processes.

Okay, so why are we analyzing the Apple production process today? Because Apple CEO Tim Cook was quoted this week at an All Things Digital Conference as saying he’d like to see his company make more components, and possibly assemble them, in the U.S. (more…)

Jared Bernstein
Senior Fellow, Center on Budget and Policy Priorities

Allow me to point and link you to two pieces in Sunday’s NYT. I don’t have time to give them the treatment they deserve — off to CA for the Milken Institute Global Conference where I’ll be debating tax reform and the role of budget deficits so more to come on those issues.

The first article is about all the machinations Apple goes through to cut its tax bill (their effective rate is under 10 percent, according to the piece). This is a well-known story — journalists Jesse Drucker and David Cay Johnston have also done yeomen’s work in this space as well. But the NYT piece added an important dimension by discussing some of the granular costs of the revenue losses to localities in Apple’s backyard.

A mile and a half from Apple’s Cupertino headquarters is De Anza College, a community college that Steve Wozniak, one of Apple’s founders, attended from 1969 to 1974. Because of California’s state budget crisis, De Anza has cut more than a thousand courses and 8 percent of its faculty since 2008.

Now, De Anza faces a budget gap so large that it is confronting a “death spiral,” the school’s president, Brian Murphy, wrote to the faculty in January. Apple, of course, is not responsible for the state’s financial shortfall, which has numerous causes. But the company’s tax policies are seen by officials like Mr. Murphy as symptomatic of why the crisis exists.

“I just don’t understand it,” he said in an interview. “I’ll bet every person at Apple has a connection to De Anza. Their kids swim in our pool. Their cousins take classes here. They drive past it every day, for Pete’s sake.

“But then they do everything they can to pay as few taxes as possible.”

Something very absurd — though not illegal — is going on here but we knew that already. The fact that U.S. foreign profits held in Bermuda and the Cayman Islands amount to between 550 and 650 percent of those countries GDP is a pretty strong hint that something’s awry, as is the “double Irish with a Dutch sandwich” move decribed in the piece (it’s just a very effective way to shelter profits earned in higher tax countries by assigning them to low-tax havens). (more…)

By Dave Johnson
Fellow, Campaign for America's Future

The “independent” audit of working conditions at Apple’s Chinese manufacturing supply chain is out, and it is not good. Workers are being exploited in ways that violate human rights standards and laws, and letting them get away with this is costing us our own jobs. Apple’s suppliers promise to improve conditions, make workplaces safer, stop forcing such long hours and lift wages. Foxconn even says they’ll start obeying Chinese law — but not until next year! If this really does happen can China keep its competitive advantage?

“Free Trade”

By opening up so-called “free trade” we made democracy a competitive disadvantage. We just let in goods made in places where people have no say, and as a result there is no environmental protection, little worker protection, terrible working conditions, very low wages and terrible exploitation of people. So of course that undercuts goods made where people have a say, and therefore demand better. We made We, the People having a say (democracy) into a competitive disadvantage! Because we make this mistake we lost millions of jobs, tens of thousands of factories, and entire industries. We devastated out not just towns and cities, but entire regions. (See Free Trade Or Democracy, Can’t Have Both.)

Free People Won’t Tolerate That

A recent groundbreaking New York Times story by Charles Duhigg and Keith Bradsher, How the U.S. Lost Out on iPhone Work, exposed how workers are treated by Apple’s suppliers. Summary: Steve Jobs told President Obama, “Those jobs aren’t coming back,” because factories in China have people living in crowded dorm rooms where they can be rousted in the middle of the night and made to work 12-14 hour shifts, 7 days a week, standing the whole time, for very little pay, using toxic chemicals, and all kinds of other violations of human rights. Corporations can’t get “performance” and “efficiency” and “productivity” — profits — like that out of free people who have a say, so they move their operations over there and lay off workers and close factories over here. (Important note: it’s not just Apple, Apple is the biggest so the company name is really shorthand for the real culprits: namely, all of them.)

The FLA Report

This NY Times story had quite an impact. Apple was worried that people’s knowledge of their exploitation of workers in China might affect profits. So Apple responded by hiring the Fair Labor Association (FLA), a “labor monitoring group” that has no actual organized labor organization participation, to conduct an audit of working conditions at Apple’s Chinese suppliers. The report found numerous violations of labor standards and even Chinese law. For example, the report found “numerous instances where Foxconn defied industry codes of conduct by having employees work more than 60 hours a week, and sometimes more than 11 days in a row.” In addition, the report “also found that 43 percent of workers had experienced or witnessed accidents, and almost two-thirds said their compensation “does not meet their basic needs.”

TPM: Apple Supplier Foxconn Violated Workers Rights, Audit Finds,

The 60-plus hour work week found at the factories is above both China’s official legal maximum, 49 hours, and the maximum standard allowable by the Fair Labor Association (FLA), the organization that Apple paid to conduct what it said would be an independent audit…. The FLA inspection also revealed that “more than 43 percent of the workers report that they have experienced or witnessed an accident,” and “a considerable number of workers felt generally insecure regarding their health and safety,” especially pertaining to aluminum dust, which caused an explosion at a factory in the city of Chengdu in 2011 that killed four workers and injured 77, as the New York Times reported. (more…)

By Robert Kuttner
Co-Founder and Co-Editor of The American Prospect

The economy added another 227,000 jobs in February, the Labor Department reported Friday. That’s good news, sort of. It means that the recovery is slowly progressing. At this rate, we will be back to pre-recession employment levels sometime around 2018.

However, this growth in jobs was not enough for wages to keep place with inflation; nor did the unemployment rate drop, but stayed stuck at 8.3 percent. Why? Because folks who had given up have started entering the labor force again, but the percentage of people in the labor force is still two points lower than it was before the recession began. A new study by the Economic Policy Institute reports that earnings declined over the past decade even for college graduates — so much for the education cure.

In short, the recession made a bad problem worse, but the economy on the eve of the recession was nothing to be proud of. Throughout the first decade of the new century, before the recession hit, wages lagged behind living costs for the vast majority of Americans — because those in the top one percent were capturing such a large share of the economy’s total productivity gains.

Some of this trend was the result of globalization undercutting the bargaining power of U.S. workers; some of it resulted from weakened trade unions and minimum wage laws lagging behind inflation.

Flat or declining wages did not result from declining average productivity. So when we finally climb out of this jobs recession, perhaps we can belatedly confront these deeper trends.

I have been writing about the hotel workers union in New York City.

Thanks to an extraordinarily effective union, Local 6 of the hotel and restaurant workers union, nearly every large hotel in Manhattan is unionized, and everyone who works in these hotels, from dishwashers to room cleaners to doormen to banquet waiters earns a middle class wage. The union recently signed a seven year contract giving workers a 27 percent wage.

Local 6 is an exceptionally effective union, and New York is a unique tourist destination. But since the vast majority of jobs in America will soon be service sector jobs, not vulnerable to global competition, there is no good economic reason why they can’t all be middle class jobs. The challenge is political. We as a society simply need to decide, as President Obama famously told “Joe the Plumber,” that we want to “spread the wealth around” rather than having it concentrate at the very top. All service jobs could pay a living wage. How to do that? Unions, wage regulation, progressive taxation, and government using existing powers over contractors that it seldom exercises.

But what about manufacturing? This brings me to the other Jobs of my title, the late Steve Jobs. (more…)

While we applaud Apple for its innovative accomplishments – both in the world of technological advancements and industry-leading ethical improvements – we encourage them to elevate their performance so that other companies will soon follow their example. We call on Apple to help stop a war in Africa by sourcing clean minerals from the Congo. And we call on Apple to make their products in North America.

By Michael Winship
Senior Writer of Moyers & Company

If you would seek proof of that famous Margaret Mead adage, “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has,” look at what’s happening as more and more people protest Apple Inc.’s labor practices in China.
Take it one step further: if you should ever doubt the impact a solitary artist can have against injustice, meet Mike Daisey.

Daisey is a monologist, a creator of one-man shows, whose performance piece The Agony and the Ecstasy of Steve Jobs has jolted audiences into action as he parallels the obsessions of Jobs, the recently deceased former CEO of Apple; our consumer-driven lust for iPods, iPhones and iPads and the human toll taken by their manufacture.

Apple — like virtually every other electronics manufacturer — subcontracts much of the work that goes into building its devices to companies in Asia. One of them, Foxconn Technology, is the largest private employer in China. Its factories there and in other parts of the world put together approximately forty percent of all the consumer electronics devices on the planet. Their largest facility, Foxconn City, is in Shenzhen, just across the border from Hong Kong, and employs nearly a quarter of a million workers.

As the New York Times reportedlate last month,

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors. 

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu [the capital of Sichuan province in southwest China], killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning. (more…)

By Richard (RJ) Eskow
Senior Fellow, Campaign for America’s Future

I hate what I’ve learned about Apple’s outsourcing to China. I hate hearing Professor William Black explain why he believes that Steve Jobs, who I admired very much in some ways, must have ignored repeated reports that employees were being cheated and endangered. I hate knowing that Apple’s business practices are destroying the kind of good middle-class job his adoptive father had.

I hate knowing that many of this week’s news stories about China ignore the fact that American companies who outsource to China have employee fraud and death built into their business plans.

In the words of the old Bob Seger song: Wish I didn’t know now what I didn’t know then. But I do.

Where the Blame Belongs

China and trade are back in the news, thanks to the trade visit of Chinese Vice President (and future President, by most reports) Xi Jinping. Last week on The Breakdown radio show I interviewed William K. Black, Jr., the former regulator who is now a Professor of Law and Economics at the University of Missouri in Kansas City.

Prof. Black, who describes himself as a “white collar criminologist,” makes a compelling argument that the cruelty and cynicism of both Chinese authorities and American companies like Apple are far worse than most people can imagine. He identifies Apple’s greatest misdeed – one that may be shared by most of its competitors – as “anti-employee control fraud” which it tolerated despite repeated reports.

Before the interview, Bill Black and I shared stories of the working conditions we’d both seen in other countries. Sometimes it isn’t pretty at all. So let’s not kid ourselves any longer: Companies like Apple don’t outsource to China because the workforce is better-educated or more highly motivated. They don’t even outsource just because the labor is cheaper there. They outsource because employers who defraud their workers can make products more cheaply, and those who ignore their safety can produce them more quickly. (more…)