To understand rising inequality, consider the janitors at Kodak and Apple, then and now
ROCHESTER, N.Y. - Gail Evans and Marta Ramos have one thing in common: They have each cleaned offices for one of the most innovative, profitable and all-around successful companies in the United States.
For Evans, that meant being a janitor in Building 326 at Eastman Kodak's campus in Rochester, New York, in the 1980s. For Ramos, that means cleaning at Apple's headquarters in Cupertino, California, in the present day.
In the 35 years between their jobs as janitors, corporations across America have flocked to a new management theory: Focus on core competence and outsource the rest. The approach has made companies more nimble and more productive, and delivered huge profits for shareholders. It has also fueled inequality and helps explain why many working-class Americans are struggling even in an ostensibly healthy economy.
The $16.60 per hour Ramos earns as a janitor at Apple works out to about the same in inflation-adjusted terms as what Evans earned 35 years ago. But that's where the similarities end.
Evans was a full-time employee of Kodak. She received more than four weeks of paid vacation per year, reimbursement of some tuition costs to go to college part time, and a bonus payment every March. When the facility she cleaned was shut down, the company found another job for her: cutting film.
Ramos is an employee of a contractor that Apple uses to keep its facilities clean. She hasn't taken a vacation in years, because she can't afford the lost wages. Going back to school is similarly out of reach. There are certainly no bonuses, nor even a remote possibility of being transferred to some other role at Apple.
Yet the biggest difference between their two experiences is in the opportunities they created. A manager learned that Evans was taking computer classes while she was working as a janitor and asked her to teach some other employees how to use spreadsheet software to track inventory. When she eventually finished her college degree in 1987, she was promoted to a professional-track job in information technology.
Less than a decade later, Evans was chief technology officer of the whole company, and she has had a long career since as a senior executive at other top companies. Ramos sees the only advancement possibility as becoming a team leader keeping tabs on a few other janitors, which pays an extra 50 cents an hour.
They both spent a lot of time cleaning floors. The difference is, for Ramos, that work is also a ceiling.
Kodak 1987 vs. Apple 2017
Eastman Kodak was one of the technological giants of the 20th century, a dominant seller of film, cameras and other products. It made its founders unfathomably wealthy and created thousands of high-income jobs for executives, engineers and other white-collar professionals. The same is true of Apple today.
But unlike Apple, Kodak also created tens of thousands of working-class jobs, which contributed to two generations of middle-class wealth in Rochester. Harvard economist Larry Summers has often pointed at this difference, arguing that it helps explain rising inequality and declining social mobility.
“Think about the contrast between George Eastman, who pioneered fundamental innovations in photography, and Steve Jobs,” Summers wrote in 2014. “While Eastman's innovations and their dissemination through the Eastman Kodak Co. provided a foundation for a prosperous middle class in Rochester for generations, no comparable impact has been created by Jobs' innovations” at Apple.
Evans' pathway was unusual: Few low-level workers, even in the heyday of postwar U.S. industry, ever made it to the executive ranks of big companies. But when Kodak and similar companies were in their prime, tens of thousands of machine operators and the like could count on steady work and good benefits that are much rarer today.
When Apple was seeking permission to build its new headquarters, its consultants projected the company would have 23,400 employees, with an average salary comfortably in the six figures. Thirty years ago, Kodak employed about 60,000 people in Rochester, with average pay and benefits companywide worth $79,000 in today's dollars.
Part of the wild success of the Silicon Valley giants of today - and what makes their stocks so appealing to investors - has come from their ability to attain huge revenue and profits with relatively few workers.
Apple, Alphabet (parent of Google) and Facebook generated $333 billion of revenue combined last year with 205,000 employees worldwide. In 1993, three of the most successful, technologically oriented companies based in the Northeast - Kodak, IBM and AT&T - needed more than three times as many employees, 675,000, to generate 27 percent less in inflation-adjusted revenue.
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