business news in context, analysis with attitude

Last Thursday, MNB took note of published reports saying that Apple had decided to give everyone working in its US Apple Stores hourly pay increases of as much as 25 percent, a decision that the company said followed a review in which it was determined that the some 25,000 people working for Apple's retail operation were underpaid.

Just a few days later, in the Sunday New York Times, there was a 4,300-word story suggesting that while Apple has been a profit machine in recent years, with a current CEO, Tim Cook, who is the highest paid senior executive in the country, the people working in its retail stores have been getting the short end of the stick.

"By the standards of retailing, Apple offers above average pay — well above the minimum wage of $7.25 and better than the Gap, though slightly less than Lululemon, the yoga and athletic apparel chain, where sales staff earn about $12 an hour," the Times writes. "The company also offers very good benefits for a retailer, including health care, 401(k) contributions and the chance to buy company stock, as well as Apple products, at a discount.

"But Apple is not selling polo shirts or yoga pants. Divide revenue by total number of employees and you find that last year, each Apple store employee — that includes non-sales staff like technicians and people stocking shelves — brought in $473,000." And yet, the average store employee making $12 per hour would make only $24,000 a year if they worked eight hours a day, five days a week, 50 weeks a year - which seems a little low for someone generating almost a half-million dollars a year in revenue.

Apple's ability to pay so little, the story says, "rests on a set of intangibles; foremost among them is a built-in fan base that ensures a steady supply of eager applicants and an employee culture that tries to turn every job into an exalted mission. This is why Apple can do something unique in the annals of retailing: pay a modest hourly wage, and no commission, to employees who typically have college degrees and who at the highest performing levels can move as much as $3 million in goods a year."
KC's View:
The Times suggests in its story, and other newspapers have reported, that the timing of the raises and the news story about how Apple paid its employees is not coincidence - that Apple announced the across-the-board raises as a way of blunting the impact of the Times piece.

Which I don't doubt for a minute.

It is interesting that while Apple has been dealing with accusations that its suppliers were exploiting employees in far off nations, the same accusations could be made of its own domestic operations.

Now, there will be those who will say that people with $24,000 a year jobs at this time in our economy ought to be grateful. But what this all goes back to is the subject that we were discussing last week here on MNB - the importance of having employees who feel that they are assets, not costs. Being paid fairly - especially in the context if what they are bringing in - is a big part of it. (Though not all of it ... Apple has been able to pay people less for a long time precisely because it has something else to offer people beside money. "Something else," however, rarely works when one has to pay the rent, or a mortgage.)

On this subject, one MNB user sent me a great quote from Jim Koch of the Boston Beer Co., who once was asked by a wholesaler why he invested so much in training his people, when ultimately they might leave. Koch smiled and replied: "What if I didn't train them, and they stayed?"

Hopefully, Apple - an exemplary company in so many of the products it produces - is learning that it needs to be exemplary in all facets of its business operations. And it'd be nice if other companies learned from Apple's example...