The Betrayal of the American Dream (12 page)

Once the nets were installed, the number of suicides dropped, but working conditions at Longhua and other Foxconn plants have changed little, if at all, according to SACOM. Although Apple pledged to work with Foxconn to improve conditions, in SACOM’s view the company failed to follow through and insist on reforms, and so many of the conditions that prompted the suicides still exist. Similar conditions apparently prevail at other Foxconn plants that make products for other American manufacturers. About three hundred workers who assemble Microsoft XBoxes in central China threatened mass suicide from the roof of their factory in early 2012 over wage and working conditions, but were talked down by the town’s mayor.

Following a new wave of revelations and criticism in the press in 2012 about working conditions in the factories of its Chinese suppliers, Apple CEO Tim Cook traveled to China to inspect plants where Apple products are made. An internal audit released afterward confirmed many of the charges of harsh working conditions where iPhones and iPads are made. Foxconn pledged to raise wages and improve conditions. Only time will tell if anything will change; in the past, similar pledges have been made to make life better for the workers.

After the suicides at Longhua, Foxconn and Apple stepped up plans to move more iPhone and iPad production inland to cities in central and western China, where there is even less oversight of living and working conditions. One major center for iPad production is now Chengdu in southwest China, nearly one thousand miles from Hong Kong. In its first year of production, an explosion, apparently caused when aluminum dust was ignited, rocked the plant, killing four workers and injuring eighteen others. SACOM investigators interviewed workers at Chengdu and found that many of the same conditions afflicting Apple workers at the plants on China’s east coast were present at Chengdu: workers labored for hours at a time applying chemicals, sealants, and parts to iPads, assembling objects they knew they would never have the money to buy.

One young worker lamented that he couldn’t even dream of owning an iPad because it would “cost two months’ salary”—a far cry from the working conditions of the young Apple in its U.S. factories. Bill Stamp remembers a day early in his career when Apple, having asked workers to come in on a Saturday, gave everyone a new Macintosh as a bonus for a job well done. Everyone felt rewarded, properly included in the success of the ever-innovative Apple. But would innovators of the future allow themselves to dream of innovation if they thought it would inexorably lead to slavelike working conditions and suicides? Surely that isn’t the end of the story of American innovation of the future?

To Stamp, it’s amazing to realize how quickly it all changed—how the door to so much opportunity and a secure future suddenly slammed shut when Apple began to subcontract the making of its basic products and then shipped all the work to other countries.

Stamp sees his own future clearly. Like tens of millions of other Americans, he realizes that he will never be able to retire: “I figure I’ll drop over dead somewhere because I’ll still be working,” he says. If, that is, he can find work.

As for Apple, moving jobs abroad couldn’t have worked out better. The corporation sometimes has more cash in its bank accounts than the U.S. Treasury. In January 2012, the company became the most valuable corporation on the planet—its stock was worth $422 billion, a sum that exceeded even the worth of Exxon Mobil Corporation, the world’s largest international oil and gas company. For the Apple executives who sent the company’s jobs offshore, the results have been especially rewarding. Tim Cook, who took over as Apple’s CEO when Steve Jobs resigned shortly before his death, was handed a fat new compensation package in 2011 valued at nearly $380 million. That roughly equaled the pay of more than five thousand factory workers in America who still had jobs.

CHAPTER 4

PHANTOM JOBS

O
n his last day on the job, Kevin Flanagan, after clearing out a few personal effects and putting them in boxes in the back of his Ford Ranger, left the building where he’d worked for seven years. He settled into the front seat of his pickup truck on the lower level of the company garage, placed a twelve-gauge Remington shotgun to his head, and pulled the trigger.

He was forty-one years old. He was a computer programmer. He’d been a programmer his entire working life.

Until, that is, his job was shipped overseas. The business of moving traditional U.S. jobs abroad—called “outsourcing”—has been one of this country’s few growth industries. It’s the ultimate short-sighted business promoted by the country’s elite because it means lower wages and fatter profits. As for the American workers eliminated along the way, they are just collateral damage. Kevin was a casualty of the new American economy. Only a few years before, programmers like him were seen as some of the brightest lights of a modern American workforce as technology became the backbone of so many corporate operations.

Kevin was college-educated and hardworking by all accounts. He had compiled an impressive résumé with his last employer, Bank of America in Concord, California, and at previous jobs in the Bay Area and Los Angeles. His peers gave him high marks: One called him a “programming god.” Another noted that “every time I got stuck on a program, he’d unstuck it in, like, ten seconds.”

He was analytical by nature and loved to solve problems, but in the end he had no answer for the problem that had been dealt his profession.

His employer, Bank of America, did what so many companies now do to their employees. After years of dedicated service, one day they’re told they’re being replaced. Not because they haven’t worked hard enough. Not because they aren’t dedicated to their jobs. Not because they’re not educated or qualified. They’re being replaced because the company, thanks to federal policies, can hire someone else a lot cheaper.

Kevin’s replacement was a programmer from India who had gained admission to the United States under a U.S. government program pushed through Congress by big business. Corporate lobbyists claimed the program was needed to ease a shortage of domestic programmers and computer specialists. In fact, it was a way for corporations to cut salaries.

Kevin was ordered to train his replacement or lose his modest severance package. It ripped him apart. Playing by all the rules had gotten him a pink slip.

It was a bitterly sad end for a talented professional. Kevin grew up in the Long Beach, California, area, the son of middle-class parents. His father worked for the famed aircraft maker Douglas Aircraft. His mother was a high school music teacher. In school, Kevin was inquisitive and loved to ask questions—he needed to know the “why” of everything, his father, Tom Flanagan, recalled fondly. Kevin was also captain of the high school debate team, which never lost a match.

He studied computer science and philosophy at California State University in Long Beach. After graduation, he worked as a programmer for McDonnell Douglas, and when that company began to falter before being acquired by Boeing, he moved to the San Francisco area and worked as a programmer at two companies before joining Bank of America in 1996. He was part of a small unit at the bank’s Concord Technology Center, a four-building complex on San Francisco’s East Bay where programmers wrote code on a myriad of money transfer transactions.

There Kevin felt he had found a home. His father said that his son liked his job and his colleagues and did well at the bank. He was even offered a promotion to move to one of the bank’s East Coast facilities, but he declined.

“Kev wanted to stay where he was,” said Tom Flanagan. “He was content with his small group of programmers, with the job, and with the little house he bought in Pleasant Hill.”

But then, in his father’s words, “the hammer began to strike.” The bank began shipping some work offshore and importing programmers from India as guest workers, courtesy of the U.S. government. Bank of America had cut a deal in 2002 with an offshore provider based in India to oversee part of this work transfer.

The outsourcing was bad enough. Flanagan found himself called upon to clean up some of the mistakes that came in from overseas. Week after week Kevin saw his little group of programmers whittled down. As more foreign guest workers arrived, one after another of his longtime programming colleagues was let go. Finally his unit was down to one—him. Even though “he knew it was only a matter of time,” his father said, Kevin nevertheless was “totally disgusted” by the order to train his replacement. That might have “tipped him over the edge,” his father said, though no one saw it at the time.

On what he knew would be his last day of work, April 17, 2003, Kevin met with a bank official from Chicago who had been sent in to do the firing. The official later told police that he had met with Flanagan the morning of the day he committed suicide, explained his severance package, and asked him to turn in any company property in his possession. The official told police that Kevin, ever professional, was in “good spirits and had been taking it well.”

For the Flanagan family, the wounds are still fresh. They lost a son and brother, and America lost a good mind, in Tom Flanagan’s words. They knew Kevin was upset. They knew he felt betrayed by the company that he’d given so much to for years. But they had no idea that he was “so desperately in need of help.”

Kevin Flanagan didn’t lose his job by accident. Outsourcing is not a freak occurrence of nature like an earthquake or hurricane, although we often use metaphors like that to describe what it feels like for those on the wrong end of it. Kevin Flanagan lost out because the economic policies that those in power have imposed on America guarantee that jobs like his will be eliminated. Of course, they never told Kevin that when he went off to college to study computer science.

Any product or service in America can be imported or outsourced with little or no duty, regardless of where or how it is made. The product may be produced cheaply under dangerous conditions, in a nation with no labor standards or environmental regulations. But to the folks who run the country, that’s okay.
Sorry,
they say,
but American workers will have to pay the price. That’s just the way it’s going to be. That’s the market at work.

This is
not
the market at work—this is the market they created that works for them. The ruling class sold the idea of opening the country to an unrestricted flow of imports on the basis that American society as a whole would benefit: we would buy from other countries, and they would buy from us. But from the start there has never been a balance. No safeguards were ever put in place to prevent other nations from taking advantage of our open-door policy to sell us goods produced under conditions that made their cost artificially low. One of the central manufacturing costs is the price of labor. Inevitably, the consequence of inviting foreign firms into the American market is that labor costs fall to the level of the lowest suppliers.

Global free trade is an invitation to cut the cost of labor at home or, even more profitably, shift jobs abroad. Like so many other chapters in the nation’s trade history, the shipment of work offshore began imperceptibly as a way for companies to trim costs, and was seemingly so inconsequential in the beginning that it appeared to pose no threat to U.S. workers.

America essentially invented outsourcing, but few outside the corporate world realized how rapidly it, along with other trade policies, would devastate employment across the middle class as imports quickly overwhelmed exports and workers in industry after industry were sacrificed on the altar of unrestricted free trade.

For the ruling class, this was just fine. Everything was proceeding along the lines of their free market theories. They wanted no restrictions on trade policy, and Congress obliged. They wanted complete freedom to close plants in the United States, set up plants offshore, and outsource work to anywhere in the world without any tax penalty, and Congress obliged. They wanted to stonewall the wage demands of workers back home by hinting that their jobs might be ticketed for the next offshore shuttle if they asked for too much, and Congress went along. With this kind of oversight, was any job safe?

Kevin Flanagan certainly thought his field was safe when he entered it in the 1980s. Computer programming looked like one of the surefire careers for the future. Everyone said so. The advent of large mainframe computers in the 1960s had kicked off the first big increase in jobs, and the demand for programmers rose even more in the late 1970s with the introduction of personal computers and the extension of data processing into more and more businesses. Everyone thought that even bigger growth in programming jobs lay ahead.

In its 1990–1991
Occupational Outlook Handbook,
a biennial publication that forecasts the future of occupations in the United States, the U.S. Department of Labor was especially bullish: “The need for programmers will increase as businesses, government, schools and scientific organizations seek new applications for computers and improvements to the software already in use [and] further automation . . . will drive the growth of programmer employment.” The report predicted that the greatest demand would be for programmers with four years of college, who would earn above-average salaries.

When the Department of Labor made these projections in 1990, there were 565,000 computer programmers in the United States, but with computer usage expanding, the department predicted, “employment of programmers is expected to grow much faster than the average for all occupations through the year 2005.”

It didn’t. Employment fluctuated in the years following the report, then settled into a slow downward slide after 2000. By 2002, the number of computer programmers in the United States had slipped to 499,000. That was down 12 percent from 1990—not up. Nonetheless, the Labor Department was still optimistic that the field would create jobs—if not at the robust rate the agency had predicted, then at least at the same rate as the economy as a whole.