Apple Manufacturing Jobs Are Not Coming Back and That's OK

Everything about Apple is as American as apple pie, even its decision to send manufacturing and unskilled-labor jobs to China. What matters more is that Apple products have spawned high-paying jobs for skilled workers in America, writes CIO.com's Tom Kaneshige. That's why the Apple name keeps popping up in this year's presidential election.

These days, everyone wants to invoke Apple to score some political points—and for good reason.

Apple has become the standard bearer for American-style capitalism, becoming the most valuable company of all time. The iPhone has become the symbol of America's dominance as an innovator. And the late Steve Jobs has become a true legend: a college-school dropout who started a company in his parents' garage and became one of history's greatest CEOs.

But the political discourse around Apple is about more than celebrating a great American company. Apple has become a microcosm, a roadmap for competing in the new global economy where skilled workers, entrepreneurs and innovators can prosper, but unskilled American labor faces tough times ahead.

Apple rose to lofty heights during the worst economic climate since the Great Depression and has become a beacon of hope and recovery. It's no wonder President Barrack Obama and Governor Mitt Romney mention Apple at nearly every major event as they vie for the presidency.

August 27, 2012: Republican National Convention

Governor Romney pointed to Steve Jobs as a heroic risk taker who achieves the big payoff: "Business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving... It is about dreams. Usually, it doesn't work out exactly as you might have imagined. Steve Jobs was fired at Apple and then he came back and changed the world."

September 6, 2012: Democratic National Convention

President Obama cited Steve Jobs as someone who embodies the American Dream: "We believe the little girl who's offered an escape from poverty by a great teacher or a grant for college could become the next Steve Jobs or the scientist who cures cancer or the President of the United States, and it is in our power to give her that chance."

All the Apple cheering, though, took a more serious tone this week during the second Presidential debate, raising important questions about America's future.

October 16, 2012: Second Presidential Debate

Moderator Candy Crowley asked: "iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper (there). How do you convince a great American company to bring that manufacturing back here?"

Governor Romney responded: "The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China's been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents our technology."

President Obama responded: "Candy, there are some jobs that are not going to come back. Because they are low wage, low skill jobs. I want high wage, high skill jobs. That's why we have to emphasize manufacturing. That's why we have to invest in advanced manufacturing. That's why we've got to make sure that we've got the best science and research in the world."

It's true that Apple and virtually every other tech gadget maker sends manufacturing to China, where Chinese laborers are paid very little to put iPhones and iPads together. Saturday Night Live did a funny skit recently on this.

It seems Governor Romney's call to pressure China would be part of a larger plan to take away the financial incentive for U.S. companies to outsource manufacturing overseas, thus hopefully bringing back manufacturing jobs. President Obama, on the other hand, doesn't even want those jobs back.

What's missing is the other side of the Apple equation: The iPhone and iPad, along with the iOS app and hardware peripheral ecosystems, have spawned many high-paying jobs for skilled workers.

In a landmark study, researchers at the University of California, Berkeley, found that Apple keeps most of its high-wage functions, such as product design, software development and product management in the U.S. All tallied, Chinese workers add $10 or less to the value of an iPad compared to American workers who add $160 worth of value.

"In America, when we talk about manufacturing, we should be talking about advanced manufacturing jobs for highly skilled workers that require a solid education and pay wages on which you can support a family," writes Arik Hesseldahl at AllThingsD. "And the fact is, there's a lot of American work that goes into an iPad or an iPhone or a Mac."

Too much has been made about Chinese workers who work on only the final stage of a complex product. Apple is an American icon because it creates jobs for highly-skilled Americans and showcases American ingenuity to the world, as well as makes a boatload of money.

Whether or not there are enough high-skilled jobs to go around or highly skilled Americans to do them is another issue, but one thing is certain: Apple has laid down the blueprint for the next-generation economy in America, and low-skill assembly jobs are not part of the equation.

Source: cio.com

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IT job numbers decline for first time in 25 months

IT lost 1,700 jobs in September, according to data from the U.S. Bureau of Labor Statistics

Last week's jobs report from the U.S. Bureau of Labor Statistics showed better-than-expected results, including a sizable drop in the national unemployment rate to 7.8% from 8.1%. But for the IT industry, September was a big disappointment. After sustained growth -- including 36,300 jobs added in July and August alone -- the IT industry lost 1,700 jobs in September.

September marks the first the monthly decline since August 2010 that wasn't associated with a labor strike or other market anomaly, notes IT analyst firm Foote Partners, which focuses on tech employment research.

Foote Partners analyzed the numbers:

* In the Management and Technical Consulting Services category, 1,800 jobs were lost following 17 consecutive months of job growth during which a total of 95,400 jobs were added.

* One bright spot: the Computer Systems Design/Related Services segment. This category gained 2,900 jobs in September, marking the 24th consecutive month of job growth.

* Telecommunications posted a loss of 400 jobs in September, and the Data Processing/Hosting/Related Services segment lost a total of 2,400 jobs -- the largest single monthly decline since June 2009, Foote Partners noted. Between January and August, these two segments combined lost 15,000 jobs.

Of the sudden reversal in IT job expansion, Foote Partners CEO David Foote said it was unanticipated but, given the volatility in IT skills supply and demand, likely to be reversed in the near term.

"Overall national employment numbers were disappointing [in] July and August, but for IT they were spectacular, the greatest monthly gains in five years," Foote stated in his monthly analysis of the DOL's employment report. "At the jobs level I wouldn't be surprised if this turned back around soon because the truth is that many of the IT job segments in the government jobs reports, in particular those in IT services, have been on strong and sustained growth runs for nearly two years. Companies are actively searching for talent and hiring for the future, though with considerable selectivity."

Companies are looking for versatile individuals with multi-dimensional skills that aren't always easy to find, Foote noted.

"Companies continue to aggressively pursue workers with multiple talents -- a mix of technology, business, and people skills that many who are not working simply do not have. Or a unique combination of pure tech skills: for example, cloud administrators who are adept at automating the configuration and operations in a cloud environment by combining a variety of different skill sets around systems administration, virtualization, storage and network administration. It's not about just running a server. Or cloud developers who have mastered new sets of APIs, new frameworks, and non-relational databases like NoSQL to develop elastic and scalable apps in the cloud."

Source: networkworld.com

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Trying to fill 6,000 jobs, Microsoft pitches $10,000 H-1B visa

Rebounding after laying off 5,000 in 2009, Microsoft says it now has big need for more tech workers.

WASHINGTON -- With the recession hit in 2008, Congress put the idea of a "skills shortage" and a need for more H-1B visas in a closet.

That didn't mean, though, that interest in raising the H-1B cap went away for everyone.

New York City Mayor Bloomberg, for instance, last year called the limits on both temporary and permanent employment-based immigration a "form of national suicide."

Microsoft has long advocated for more work visas. But the company's advocacy was quieted during the recession as well, as it announced in 2009 a layoff of 5,000 workers.

Circumstances at Microsoft have since changed for the better.

Microsoft said Thursday that it has some 6,000 open positions in the U.S., and is creating new jobs faster than it can fill them. The company is now using its own workforce needs to make a case for a new type of H-1B visa as well as a permanent employment visa.

In prepared remarks delivered at the Brookings Institution here yesterday, Brad Smith, Microsoft's general counsel and executive vice president, presented a plan to add 20,000 H-1B visas and an equal number of STEM visa green cards to help companies get qualified workers.

What may make this plan novel is a proposal to require that companies pay the government $10,000 for H-1B visas in a new "supplemental category," and $15,000 for STEM green card visas.

Microsoft is recommending that Congress invest the money paid for the visas -- estimated at up to $500 million year -- in Science, Technology, Engineering and Math, or STEM, education programs.

The company presented a paper with recommendations on improving STEM training.

Microsoft says the 6,000 open jobs it has in the U.S is an increase of 15% over the number open last year, and that over 3,400 of those jobs are for researchers, developers and engineers.

"Our nation faces the paradox of a crisis in unemployment at the same time that many companies cannot fill the jobs they have to offer," Smith said.

He warned that if the positions can't be filled locally "we risk these jobs migrating from the U.S., creating even bigger challenges for our long-term competitiveness and economic growth."

Smith said Microsoft spends 83% of its R&D budget in the U.S. today.

It isn't clear whether Microsoft's proposed $10,000 fee will replace any existing charges applied to an H-1B visa.

The visa already has a variety of fees, including a $325 base filing fee, plus a $1,500 fee for employers with 26 or more full-time employees. There is a $500 fraud detection fee, and a $1,225 premium processing fee for expedited processing.

In 2010, Congress added a $2,000 fee on top of these charges for any company that has more than half of its workforce on H-1B or L-1 visas. This fee was aimed at offshore outsourcing firms.

The H-1B visa cap is currently at 85,000, which includes 20,000 visas set aside for advanced degree graduates of U.S. universities.

The U.S. begins accepting H-1B petitions on April 1 for the next fiscal year.

In April of 2008, still months before the collapse of Lehman Brothers in September that year, the U.S. exhausted the visas within one week. But after the recession, demand slowed. In 2011, it took 10 months to use up the visas. But for fiscal year 2013, which begins Oct. 1, the visa cap was reached in one month.

Microsoft is introducing the visa plan by itself, and will likely get support from some groups that advocate on skills immigration issue. But whether it goes anywhere with lawmakers that may be left until next year.

There is a lot of support in Congress to expand the green card program for foreign students that earn advanced degrees.

Although the recession ended efforts to raise the H-1B cap, lawmakers have pushed ahead to create STEM visas that offered permanent residency. The backers argue that such employment visas would help keep foreign advanced degree graduates of U.S. schools, seen as potential tech and business innovators, in the U.S.

Just last week, 257 members of the U.S. House voted to create up to 55,000 STEM visas. The vote for the Republican sponsored plan failed because the bill was introduced on suspension calendar and thus required that two thirds of the legislators vote "yes."

The Democrats didn't want to support the measure primarily because the Republican plan would have repurposed 55,000 diversity lottery visas for the STEM visas.

Diversity visas are made available to people in countries underrepresented in the U.S.

The H-1B visa is more controversial than green cards for advanced degree graduates.

The H-1B is heavily used by offshore outsourcing firms, which puts a lot pressure on the cap creating competition for visas for U.S.-based firms.

The H-1B visa has also given rise to small IT development shops that primarily use foreign workers. The prevailing wage protections in the visa aren't seen by critics as strong enough, and because employers apply for the visa, it is argued that the foreign workers are all but indentured.

Ron Hira, a public policy professor at the Rochester Institute of Technology and high skill immigration issues, took issue with some of the Microsoft's arguments, including its workforce projections and claim that computer science degree production is not keeping up with job demand.

Not all computer-related occupations have or need a computer science degree, Hira said.

"Is there a shortage of people going to medical school or even law school or in investment banking? No, because smart kids know that this is a reasonable career path," said Hira, although he notes that may be changing for law school.

"Why are kids not going into IT? Because of industry employment relations," said Hira.

In the late 1990s the number of computer science grads doubled and he believes enrollment could double again. "Why not focus efforts on that instead of importing guest workers?" he said.

In terms of visa needs, Hira believes the problem could be fixed through legislation introduced by Senators Richard Durbin (D-ll) and Chuck Grassley (R-Iowa). Among the things their reform would accomplish is restricting work visas to 50% of its employment U.S. base.

"This would solve their issues," he said.

Source: computerworld.com

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