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More Polarization

by Elaine Schwartz    •    Jul 6, 2012    •    242 Views    •    TIME TO READ: 1 minute

On Apple’s website, they say that they are responsible for creating 514,000 jobs. Apple cites 304,000 jobs in transportation, manufacturing and engineering that directly and indirectly relate to Apple design, production and distribution. Beyond, they quote 210,000 app economy jobs.

Their numbers might be inaccurate.

Using Cupertino, CA as an example, economist Enrico Moretti says that Apple’s job creation numbers are low. In Cupertino, Apple employs 13,000 people. Designers and engineers, most Apple employees in Cupertino are classified as highly skilled. They have a college degree and the discretionary spending power that fuels a “multiplier effect.” Dr. Moretti believes that a new high tech firm in a community initiates a ripple of new service sector jobs, ranging from doctors and teachers to personal trainers, taxi cab drivers and childcare workers. For the Cupertino area, he calculates that Apple created 70,000 additional jobs.

Looking at the increase in personal service jobs from a different slant, a WSJ article, “Why Hairdressers are Secure: Their Jobs Can’t Be Exported,” explains that service sector positions like hairdressers and home care for the elderly proliferate because they are not threatened by outsourcing.

I found it interesting that Dr. Moretti’s book, The New Geography of Jobs, his Econtalk podcast, and the WSJ article took the reader to polarization. For Dr. Moretti, he predicted a geographical polarization between those communities that attract innovative firms and those that do not. Closely related, the WSJ article focuses on the polarization in the job market, with the top and bottom ends growing while the middle disappears.  Looking back at an MIT paper that the WSJ article cites, it becomes even clearer that in the US and 16 European countries, the middle skill jobs are decreasing while the high and low ends are boosting employment (Appendix, Figure 11).

The following statistics are from the WSJ article:

1989-2007:

  • High education, skilled: +40%
  • Middle-skill: +5%
  • Personal service: +36%

 

2007-2010:

  • High education, skilled: -1%
  • Middle-skill: -12%
  • Personal service: +2%

 

Where does this leave us? Rather than the top 1% and the 99%, we have a polarization between buoyant and stagnant cities and upper and lower skilled workers because for both, a middle ground is diminishing.

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