Big Tech's Hiring Binge Has Small Impact on Jobs
byJul 27th 2011 4:00PM
Earlier this year, Google (GOOG) made a huge splash when it announced plans to embark on its biggest hiring binge in its short history. Also hiring are other tech giants such as Apple (AAPL), IBM (IBM) and eBay (EBAY).
That's good news for the flailing U.S. jobs market, right?
Help Wanted: Just Not Here
Unfortunately, the ability of these large firms to affect the jobs market in the U.S. will likely be minimal. That's because many of the positions being created are for openings overseas.
Earlier this month, IBM announced plans to hire 1,000 workers over the next four years ... in Costa Rica. Big Blue continues to be a large employer in the states -- in 2008, 115,000 of the company's 400,000-plus workers were based in the U.S. But that percentage is dwindling in the U.S. and increasing overseas.
Also hiring are Apple and eBay -- both of which reported better-than-expected quarterly earnings. But they are vague about where these employees will be based. Emerging tech giants such as Facebook (which, at last count, employs more than 2,000) and Twitter (with a staff of fewer than 500) also declined to discuss their hiring plans in detail.
Are You Willing to Relocate for a Job?
Apple's growth plans illustrate why growing employee head counts aren't helping the plight of America's job market, where unemployment stands at 9.2%.
As of Sept. 25, 2010, Apple employed 46,600 full-time equivalent employees and an additional 2,800 full-time equivalent temporary employees and contractors. About 26,500 of those workers were in Apple's retail division, up from 16,500 full-time equivalent jobs a year earlier, according to SEC filings.
Head count will certainly rise this fall if Apple launches the iPhone 5. But like other U.S. companies, Apple sees better prospects for growth outside the United States. Right now the company has four stores in China, not including the fake one that recently shut down, of course. The company plans to open 40 new stores in fiscal 2011, including 28 outside the United States.
More Work, Less Help
Another reason these companies are not hiring en masse in the U.S. is because they don't have to. As the economy slowly emerges from its worst decline since the Great Depression, companies have learned to do more with less.
A Brookings Institution report recently pointed out that incomes rose 23% from 1975 to 2009 while work hours increased 26%. An assessment by the International Monetary Fund summarized the issue in a nutshell: "Employers responded to the crisis mostly by laying off workers rather than by shortening the workweek, and the recovery has featured a relatively rapid increase in productivity but sluggish job creation, for reasons not yet well understood."
Workers are paying the price for this in the form of lower wages as geographical boundaries become increasingly meaningless.
"Even if the economy were to immediately begin producing 600,000 jobs a month -- more than double the pace of the mid-to-late 1990s, when job growth was strong -- it would take roughly two years to dig ourselves out of the hole we're in," according to a March 2010 Atlantic article. "But the U.S. hasn't seen that pace of sustained employment growth in more than 30 years."
Motley Fool contributor Jonathan Berr doesn't own shares of any of the companies listed. The Motley Fool owns shares of Google.