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How Outsourcing Tech Jobs Could Deepen Income Inequality In America

September 3, 2017, 7:36 PM UTC

America’s growing income inequality has been a persistent concern of both economists and activists for the better part of a decade. Part of that gap may be explained by the shift of America’s most successful companies – and technology companies in particular – towards outsourcing many low-skilled jobs. While much discussion of outsourcing focuses on the shift of manufacturing abroad, the same trend has also affected lower-skilled workers domestically, from security guards to product testers.

In a new feature at the New York Times, economics reporter Neil Irwin compares the situations of two janitors – one who started at Kodak in the 1980s and another at Apple today. The two workers received similar pay, adjusted for inflation. But the Kodak janitor, Gail Evans, an employee of the then-mighty photo corporation, was eligible for paid vacation and training. She was eventually promoted through the ranks to become Kodak’s Chief Technology Officer, and is now Chief Information Officer at the human resource firm Mercer.

The Apple janitor, by contrast, works for a contractor with no on-ramp for becoming an Apple employee, or access to the training needed to find a higher-skilled job.

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Irwin finds that companies like Apple, Google, and Facebook now employ far fewer people directly than companies with similar revenue once did. That’s partly down to their less tangible, more scalable digital products, though the phenomenon isn’t limited to tech companies. And focusing on core competencies, while letting someone else handle manufacturing or cleaning, may make companies less fragile – Kodak, for instance, has far fewer good jobs to offer than it once did.

But Irwin also argues that the rise of outsourcing has helped make companies less supportive of both lower-skilled workers, and of the communities the companies anchor. Kodak had deep ties to its home base of Rochester, N.Y. But shockingly, the mayor of Cupertino, Calif., where Apple is based, tells the Times that she has never met Apple CEO Tim Cook and “would have a hard time getting an audience with anybody beyond upper-middle management.”

Irwin’s enlightening reporting does omit one important caveat. While outsourcing has been brutal for many American workers, it has been a boon for those in the developing world. Factories and call centers in places like India and China, often providing services for U.S.-based corporations, have helped fuel rapid growth and pull more than one billion people out of extreme poverty. That has in turn driven declining inequality measures in low- and middle-income countries across the globe.

That, however, is unlikely to be much comfort to Apple’s janitors.