Saturday, January 21, 2012

All Costs are Labor Costs

This is what minimizing the Labor Theory of Value will do, a complete ignorance of what constitutes a labor cost.

Regarding the iPhone:

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.


The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.


It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.(1)

I get that direct wage costs are often a small part of a company's budget. But providing engineers at "almost no cost" is also a cost, one born by the State in this case. Engineers have to be educated, fed, and housed, whether the PRC or Apple is paying for it.

Every "inventory" , "transportation", etc. cost in a company's budget can be reduced to a labor cost if one looks far enough back in the chain of origination.

I don't understand the point of this article; it talks about state subsidies and 72 hour work weeks, yet states labor costs are not the issue. Maybe at it's core is an emoting on the desire to kick working class Americans around. Though it's not their fault the myopic U.S. ruling class decided to dismantle is manufacturing base (which albeit is being resurrected through insourcing as the U.S. becomes the cheap labor destination of the OECD).

But in capitalism, no wage is ever low enough. And there is always someone poorer than you, somewhere, who can be exploited.

1'How U.S. Lost Out on iPhone Work' - NYT

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