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Terence Jeffrey / May 15, 2019

Workers Making Apple iPhones Start at $3.15 Per Hour — in China

The workers who assemble Apple iPhones make a starting wage of $3.15 per hour in the People's Republic of China, according to The New York Times.

The workers who assemble Apple iPhones make a starting wage of $3.15 per hour in the People’s Republic of China, according to The New York Times.

“Apple has said the starting pay for workers at the world’s biggest iPhone factory, in Zhengzhou, China, is about $3.15 an hour,” The Times reported in a story published two weeks ago.

That $3.15 per hour is less than half the U.S. minimum wage of $7.25 per hour.

That means a teenager working part-time serving Big Macs at a McDonald’s in the American Midwest earns a far bigger hourly wage than a Chinese adult hired full-time to build iPhones in the People’s Republic.

A 2018 Congressional Research Service report on the U.S.-China trade relationship summarized Apple’s supply chain and its production of the iPhone.

“According to Apple Corporation, it used over 200 corporate suppliers with nearly 900 facilities located around the world,” said CRS. “The top five largest country sources of these facilities in 2017 were China (358), Japan (137), the United States (64), Taiwan (55) and South Korea (34).”

“Apple iPhones are mainly assembled in China by Taiwanese companies (Foxconn and Pegatron) using a number of intermediate goods imported from abroad (or in many cases, intermediates made by foreign firms in China),” said CRS.

In 2016, The New York Times published an in-depth story about the Foxconn facility that assembles iPhones in Zhengzhou.

“Running at full tilt, the factory here, owned and operated by Apple’s manufacturing partner Foxconn, can produce 500,000 iPhones a day,” reported The Times. “Locals now refer to Zhengzhou as ‘iPhone City.’”

“The local government has proved instrumental, doling out more than $1.5 billion to Foxconn to build large sections of the factory and nearby employee housing,” said The Times.

“It helps cover continuing energy and transportation costs for the operation,” said The Times. “It recruits workers for the assembly line. It pays bonuses to the factory for meeting export targets. All of it in support of iPhone production.”

Is this free enterprise?

Is the Apple iPhone an American product?

Apple’s relationship with the United States of America and American workers helps illuminate some trends in the modern American economy.

The United States normalized relations with the People’s Republic of China in 1979 and gave it most-favored-nation status the next year, according to CRS. In 1985, the first year for which the Census Bureau has published U.S.-China trade data online, the U.S. ran a $6,000,000 merchandise trade deficit with China. That equaled approximately $13,791,382 in December 2018 dollars (adjusted using the Bureau of Labor Statistics inflation calculator).

In 2018, according to the Census Bureau, the U.S. ran a $419,162,000,000 merchandise trade deficit with China.

That means that in inflation-adjusted dollars, our merchandise trade deficit with China was 30,393 times bigger last year than it was 33 years before then.

Who is winning this competition?

In January 1980, the year we extended most-favored-nation status to the People’s Republic of China, there were 19,282,000 Americans employed in manufacturing, according to the Bureau of Labor Statistics. This January, there were only 12,826,000. As our population and economy grew, we lost 6,456,000 manufacturing jobs.

At the same time America was losing manufacturing jobs, Americans who did not attend college were losing income.

In 1980, according to the Census Bureau Table H-14, American households where the householder was 25 and older and had finished four years of high school but not attended college had a median income of $55,777 in constant 2017 dollars.

In 2017, according to Table H-13, households where the householder was 25 and older and had graduated from high school but not attended college had a median income of $44,970 in constant 2017 dollars.

From 1980 to 2017, the real median income of households headed by Americans who completed high school but did not attend college dropped by $10,807 — or about 19.4 percent.

Those American householders now have little hope of getting a job assembling an iPhone — unless they can somehow get a Chinese work visa and move to Zhengzhou.

And even if they were to do so, as The New York Times reported, they would join a workforce whose wages start at $3.15 per hour.

The U.S. Constitution united the American people in a vast free-trade zone that was coterminous with our international borders. It gave Congress the power to impose duties on foreign imports.

It did not envision creating a free-trade zone between this free republic and a People’s Republic.

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