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Immigration outrage – Altruism or capitalism?

February 6, 2017

What’s really behind all the high profile outrage over controlling immigration? It seems as though just about every big name company  CEO is advocating for unrestrained immigration.

Is their interest altruistic or economic?

It might help to look at the business models of these companies. The major players seem to be heavily dependent on low-wage labor to generate income.

Tech companies, service industries and healthcare all need a lot of semi-skilled labor to deliver their product or service. There’s a reason why the tech companies outsource to India or China for everything from assembly workers to coding to product development.

In some cases this model had its origins in a scarcity of qualified employees, but it seems unlikely that after two decades of emphasis on STEM, that would still be the case.

A year or so ago there were articles that explained that Apple originally outsourced its phones to China because the Chinese could put out a call for 3,000 “engineers” and have them lined up and ready to work within days. A similar call in the U.S. it was said, would not turn up 300 in that length of time.

Of course that isn’t the job  description of most of the people who assemble Iphones. Here we would call them production line workers.

No mention was made at that time of the actual relative wages, but it was estimated that an Apple Iphone would cost $60.00 more in wages and benefits if it was wholly produced in the USA.

That’s probably not totally accurate, because it didn’t seem to allow for the added plant infrastructure  capacity or added staff to handle the HR functions that would be needed to be able to stamp “100% American-made” on each phone.

Still, it is reported that Apple has sold 590 million Iphones since 2007. Times that figure by $60 dollars and you can see that lowering the cost of labor is a powerful profit incentive. In fact it’s a  35.4 Billion dollar incentive.

There are costs to outsourcing too, in terms of delays, quality control issues and shipping, not to mention any “indirect” costs that get misidentified on the balance sheet.

The best of both worlds would be to have a ready supply of cheap labor in the United States, especially if you can classify them as part-time independent contractors. That could potentially save 7.53% in taxes, not to mention benefits.

And why hire a barista or a housekeeper or landscape laborer at minimum wage, if you can find someone willing to work off the books for less?

Maybe that sounds cynical, but there have been scattered reports of Americans laid off, but having to train their temporary visa-holding foreign  replacements. And those are the legal replacements. It probably happens far more often than we know, even if it is just two or three people at a time at some mom-and-pop cleaning service.

No one wants to see people slaughtered by ISIS or even by their own government, but to equate all immigrants legal and illegal, as fleeing for their lives is just plain ridiculous. It makes good copy, but not good sense.

So the next time a CEO  tells you how socially responsible they are, remember what they grow mushrooms in and add a little salt to the finished product.

 

From → op-ed

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