The Growth Of The Apple Store

The Growth Of The Apple Store

The Growth Of The Apple Store

Moneybox
A blog about business and economics.
June 26 2012 3:45 PM

The Growth Of The Apple Store

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Now that I've seen a few days' worth of discussion inspired by the NYT's reporting on the Apple Store retail workers, I'm seeing that this is a more interesting issue than I initially gave it credit for. Something a lot of people are focusing on, for example, is that even though Apple Store workers are paid pretty well for retail workers they're paid an amount that seems very low compared to Apple Store labor productivity. At the same time, Horace Dediu notes that Apple Store employment is growing sharply—much faster than the retail segment as a whole.

These are related issues, and in sum they point to the fact that we should be cheering the Apple Store on.

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The crux of the matter is that wages are determined not by firm-level productivity but by broad average productivity. China, for example, has long had an agricultural economy with terrifyingly low labor productivity. Since this sector was so large, average wages for low-skill work throughout China were incredibly low for a long time—even in factories where productivity was extremely high. This generated enormous profit opportunities for factory owners and for foreign firms who knew how to contract with Chinese suppliers. But the result of those profit opportunities has been enormous expansion of the Chinese industrial sector, to the point where average productivity is now way higher than it was 30 years ago and wages are rising.

Here in the United States, it's much the same. If the high-productivity Apple Store keeps growing faster than the economy as a whole, then sector-wide average productivity will go up and create the possibility of broad-based wage gains.

It is of course also true that in principle the existing Apple Store staff could band together and extract a higher wage out of Apple, reducing the profitability of the stores. But it's the profitability of the stores that's driving the extremely rapid expansion in both the number of stores and the number of workers per store. And these jobs, though by no means great, really do seem to be better jobs than the average retail gig with somewhat above-average wages and way above-average benefits.