Does employee exploitation lead to long term profitability? Does Apple have a problem?

A 6-page New York Times article last weekend uncovered what was known so far mostly to Apple’s current and former employees – the fact that the company pays its store employees a modest wage without commission or meaningful career opportunities. According to the article, while each Apple store employee (including non-sales staff like technicians and people stocking shelves) brought in sales of $473,000 worth of merchandise in 2011, many Apple store employees earn about $25,000 a year, or $12 an hour.

The article leaves the reader with the uncomfortable thought that Apple has created a new version of McJobs in order to maximize profits. But is it fair to present Apple as a sort of employee exploiter, or is the New York Times picking on a company that doesn’t really behave differently from any other retailer?

Another interesting aspect of the article is the fact that after the New York Times started its investigation for the article, Apple gave early raises to store employees that had not been expected until September, with some workers getting up to a 30 percent increase. The Los Angeles Times wondered if Apple “was just passing along the fruit of that success to its lower-level employees” or “might have been trying to gain favor with both the press and its employees before the New York Times article was published.” Given earlier discussions we had here on Apple’s little Dutch boy’ CSR strategy, there’s a good chance it’s the latter rather than the former.

While the New York Times provides a critical perspective on Apple’s treatment of its store employees, the picture is not all bleak. There are some positive elements that it’s important to mention. For example, according to the article, by the standards of retailing Apple offers above average pay – well above the minimum wage of $7.25 and better than the Gap, for example. Apple also offers very good benefits for a retailer, including health care, 401(k) contributions and the chance to buy company stock, as well as Apple products, at a discount.

There’s no doubt work at the stores can be tiring or “too relentless” as one former employee claimed in the article, with work environment that described as “too hectic and stressful, thanks in large part to the runaway popularity of the iPhone and iPad.” It’s also quite clear that there’s lack of upward mobility at the stores, or in other words – for most of the employees this is a dead-end job. Yet, these descriptions probably apply to most jobs at the retail sector and moreover, unlike many companies, the name “Apple” can be a strong credential to have on a resume as some former employees say. So where’s the meat? Where exactly is the exploitation here?

The article tries to make two points that might suggest that Apple exploits its employees. First, there is no profit sharing with employees – the company doesn’t offer commissions to store employees and apparently no sort of substantial bonuses when the company performs well. So basically Apple doesn’t share with its store employees the enormous wealth they’re helping to create – just to remind you, Apple’s profits in 2011 were $16 billion. Second, the reason many people in their early 20s want to work in Apple stores, although they can earn much more at Verizon Wireless stores, is the fact  that “when you’re working for Apple you feel like you’re working for this greater good,” as a former salesman explained. This in itself is not an issue – the problem is that seemingly Apple is working very hard to instill in its employees the idea that “they are doing something far grander than just selling or fixing products.”

While I can certainly understand the critical tone of the article, I don’t think Apple should be accused of exploiting its employees. If anything, Apple is making the most of the capitalistic system like many other companies and retailers do. In other words, Apple is exploiting the system, not its employees. Still, the article provides another indication that Apple is far from being a triple bottom line company and doesn’t seem to believe it needs to engage stakeholders – as we can see now this is true even when it comes to its own employees.

This story also seems to be an indication of Apple’s “little Dutch boy” strategy, which Prof. Gregory Unruh of Harvard describes as a reactive CSR strategy, where Apple bothers to act only when there’s a complaint or protest against the company, hoping like the little Dutch boy that poking its fingers in the holes in the dyke will stem the flow. Here it seems that the company tried to make an interesting maneuver, raising employees’ wages before the article was released to soften any possible criticism, and yet, it’s the same old strategy. Apple is still poking a finger in the hole in the dyke, hoping it will hold up.

It might, but not sure for how long. After all, even a company like Apple with its great product line can’t keep growing in the long term when its store employees, who plays such an important role in its success, are offered nothing but a new version of McJobs.

[Image credit: iPhil Photos, Flickr Creative Commons]

Originally Posted on Triple Pundit
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.