Friday, December 2, 2011

Chinese Wages Too High - Now Hiring Robots

China's largest employer is Foxconn, a Taiwanese-owned company which has nearly 1 million employees.

American companies using slave labor in sweatshops for Foxconn:, Apple Inc., Barnes & Noble, Intel, Cisco, Hewlett-Packard, Dell, Microsoft, Motorola, and Vizio.

The basic wage at Foxconn, the world's largest maker of electronic components, is only CNY 940 per month (or 2% more than the local Chinese minimum wage. (1 CNY = 0.1571 USD) which makes the average wage for a typical Apple Inc. employees at Foxconn approximately $149.24 a month...or about what we would earn a day for one 8-hour shift at $18.65 a hour.

An iPad costs $499 in the U.S., but they're still complaining just because the workers want a little more for wages. And now, as though $149.24 a month is far too much for payroll, they want to automate. Foxconn's CEO unveiled a plan to hire 1 million robots by 2013 (because robots are easier to manage and don't commit suicide).

The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers. Is this what they pay for "skilled labor" (e.g. college graduates with engineering degrees?). Are these the "skills" that CEOs are telling us that Americans lack, just to work on an assembly line?

At $149.24 a month for wages, automation becomes relatively more profitable. And it is to automation that most jobs go to die.

The robots are being used at Foxconn for the same reason that self-service checkout counters are being used in supermarkets. The change in relative prices between labor and machines means the machines are being used to replace people.

As with many manufacturing jobs, minimum wage jobs, service jobs, (whatever) the result is always the same: raise the price of labor to a "living wage" and more automation will happen. It seems that poverty wages are here to stay.

Apple was once going to Brazil, but it would have cost much more for production (by moving production into Brazil, Apple would be able to address the country's market of 190 million consumers at lower price points.)

The new iPhone released last October comes at several price levels, from $199 to $399. The new Apple CEO Tim Cook is getting $383.6 Million worth of Apple stock, while his workers only get $149.24 a month to make cell phones costing you $400. But robots will make them even cheaper to make.

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  1. And when Tim Cook cashes out his stock, he won't pay the top income tax rate of 35%, but only 15% for capital gains.

    Apple was lobbying congress for a "Tax Holiday" so they can dodge $4 billion in taxes.

  2. Stephen Hawking Says We Should Really Be Scared Of Capitalism, Not Robots:

    Machines won't bring about the economic robot apocalypse -- but greedy humans will, according to physicist Stephen Hawking.

    "If machines produce everything we need, the outcome will depend on how things are distributed."