Last year, during his best three-month stretch, Jordan Golson sold about $750,000 worth of computers and gadgets at the Apple Store in Salem, New Hampshire. It was a performance that might have called for a bottle of Champagne—if that were a luxury Golson could have afforded.
“I was earning $11.25 an hour,” he said. “Part of me was thinking, ‘This is great. I’m an Apple fan, the store is doing really well’. But when you look at the amount of money the company is making and then you look at your paycheck, it’s kind of tough.”
America’s love affair with the smartphone has helped create tens of thousands of jobs at places such as Best Buy Co. Inc. and Verizon Wireless and will this year pump billions into the economy.
Within this world, the Apple Store is the undisputed king, a retail phenomenon renowned for impeccable design, deft service and spectacular revenues. Last year, the company’s 327 global stores took in more money per square foot than any other US—wireless or otherwise—and nearly double that of Tiffany and Co., which was No. 2 on the list, according to the research firm RetailSails.
Worldwide, its stores sold $16 billion in merchandise.
Wage divide: About 30,000 of the 43,000 Apple employees in the US work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year. Photo: Scott Eells/Bloomberg
But most of Apple’s employees enjoyed little of that wealth. While consumers tend to think of Apple Inc.’s headquarters in Cupertino, California, as the company’s heart and soul, a majority of its workers in the US are not engineers or executives with hefty salaries and bonuses, but rather hourly wage earners selling iPhones and MacBooks.
About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year. They work inside the world’s fastest growing industry, for the most valuable company, run by one of the country’s most richly compensated chief executives, Tim Cook. Last year, he received stock grants, which vest over a 10-year period, that at today’s share price would be worth more than $570 million.
And though Apple is unparalleled as a retailer, when it comes to its lowliest workers, the company is a reflection of the technology industry as a whole.
The Internet and advances in computing have created untold millionaires, but most of the jobs created by technology giants are service sector positions—sales employees and customer service representatives, repairmen and delivery drivers—that offer little of Silicon Valley’s riches or glamour.
Much of the debate about US unemployment has focused on why companies have moved factories overseas, but only 8% of the US workforce is in manufacturing, according to the US Bureau of Labor Statistics. Job growth has for decades been led by service-related work, and any recovery with real legs, labour experts say, will be powered and sustained by this segment of the economy.
And as the service sector has grown, the definition of a career has been reframed for millions of US workers.
“In the service sector, companies provide a little bit of training and hope their employees leave after a few years,” says Arne L. Kalleberg, a professor of sociology at the University of North Carolina. “Especially now, given the number of college kids willing to work for low wages.”
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 company also offers very good benefits for a retailer, including healthcare, 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 such as technicians and people stocking shelves— brought in $473,000.
“These are sales rates for a consulting company,” said Horace Dediu, an analyst who blogged about the calculation on the site Asymco. Electronics and appliance stores typically post $206,000 in revenue per employee, according to the latest figures from the US’s National Retail Federation.
Even Apple, it seems, has recently decided it needs to pay its workers more. Last week, four months after The New York Times first began inquiring about the wages of its store employees, the company started to inform some staff members that they would receive substantial raises. An Apple spokesman confirmed the raises, but would not discuss their size, timing or impetus, nor who would earn them.
But Cory Moll, a salesman in the San Francisco flagship store and a vocal labour activist, said that on Tuesday he was given a raise of $2.82 an hour, to $17.31, an increase of 19.5% and a big jump compared with the 49-cent raise he was given last year.
“My manager called me into his office and said, ‘Apple wants to show that it cares about its workers, and show that it knows how much value you add to the company, by offering a bigger raise than in previous years’,” Moll recalled.
Though a significant increase, Moll’s new salary of about $36,000 puts him on the low side of the wage scale at the other large sellers of Apple products, AT&T Inc. and Verizon Wireless, both of which offer commissions to sales staff at their stores.
In other areas, Apple has been a leader. Stores in a variety of fields have adopted the company’s retail techniques, such as the use of roving credit card swipers to minimize check-out lines, as well as the petting-zoo layout that encourages customers to test-drive products.
But Apple’s success, it turns out, rests on a set of intangibles; foremost among these 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.
“When you’re working for Apple, you feel like you're working for this greater good,” says a former salesman who asked for anonymity because he didn’t want to draw attention to himself. “That’s why they don’t have a revolution on their hands.”
Managers often tell new workers that they hope to get six years of service, former employees say. “That was what we heard all the time,” says Shane Garcia, a former Apple Store manager in Chicago. “Six years.” But the average tenure is two-and-a-half years, says a person familiar with the company’s retention numbers, and as foot traffic has increased, turnover rates in many stores have increased, too. Internal surveys at stores have also found surprising dissatisfaction levels, particularly among technicians, or “geniuses” in Apple’s parlance, who work at what is called the Genius Bar. Apple declined requests for interviews for this article. Instead, the company issued a statement: “Thousands of incredibly talented professionals work behind the Genius Bar and deliver the best customer service in the world. The annual retention rate for Geniuses is almost 90%, which is unheard-of in the retail industry, and shows how passionate they are about their customers and their careers at Apple.”
Apple prohibits its staff from talking to the media, but several former employees who spoke for this article said they had fond memories of their jobs, and regarded them as ideal for people in their early 20s who aren’t ready for a full-on dive into the white-collar world.
And “Apple” can be a strong credential to have on a resume, these people said. Technicians often move on to higher-paying jobs in information technology, they said, and sales staff have a leg up on the competition if they stay in retailing because “people know how gruelling the job is”, as one former manager put it.
But other former employees have struggled to find work, or have moved into lateral jobs at other companies. And even those who used Apple as a launching pad described a gradual evolution, from team player to sceptic, as they discovered that there was a gap between what the job appeared to be (kind of hip) and what it was (frenetic and in many cases, a dead end).
Kelly Jackson, who was a technician at an Apple Store in Chicago, was thrilled when she was hired two years ago. But she said she was even happier when she quit a year later, having found the work too relentless and the satisfactions too elusive.
“When somebody left, you’d be really excited for them,” says Jackson, who now works at Groupon Inc. “It was sort of like, ‘Congratulations. You’ve done what everyone here wants to do’.”
Sceptics outnumbered believers when Steve Jobs, then Apple’s chief, pitched the Apple Store concept to his board in 2000. Ultimately, approval was given for just four stores.
Jobs hired a Target Corp. executive named Ron Johnson to help design and oversee the stores. He in turn hired eight people, one of whom was Denyelle Bruno, then an executive at Macy’s West. When she was first approached, she said, she was told next to nothing about the work.
That did not daunt Bruno, now an executive at Peet’s Coffee.
“I had grown up using Macs, and if it involved Apple and I could be involved,” she said, “it made me feel important.”
Bruno was one of the first hardcore Apple fans hired for the nascent chain. Many others would follow, and part of her job was to help recruit them. Initially, that involved walking into stores, including those operated by Sprint and AT&T, and scouting out promising employees.
Such solicitations were unnecessary after the first two stores opened, on 19 May 2001, in McLean, Virginia, and Glendale, California. Soon, so many people wanted to work at the stores that Johnson would compare applicants-to-openings ratios and boast that it was harder to land a job at an Apple Store than to get into Stanford, his alma mater.
At Apple, the decision not to offer commissions was made, Bruno said, before a store had opened. The idea was that such incentives would work against the company’s primary goals—finding customers the right products, rather than the most expensive ones, and establishing long-term rapport with the brand. Commissions, it was also thought, would foster employee competition, which would undermine camaraderie.
Tellingly, Apple doesn’t use the word “sales” to describe members of its sales team. They’re called “specialists”.
By minimizing the profit motive among employees, Apple does more than just filter out people interested primarily in money. It also reduces the number of middle-aged and older people on the payroll, said former managers. This isn’t about age discrimination, they said, so much as self-selection. Generally, an Apple employee is someone who can afford to live cheaply, is not bothered by the non-stop commotion of an Apple Store, and is comfortable with technology. People who fit that bill tend to be in their early or mid-20s, the former managers said. They typically don’t have children and many don’t have spouses, which means they are relatively inexpensive to cover with health insurance.
The iPhone, which arrived in 2007, brought unprecedented crowds to Apple Stores. The company tried to hang on to its culture, but naturally it changed, and in many ways, say some former employees, for the worse.
©2012/The New York Times