Issue #42: Trade Unions

We Deserve Better. Collectively, We Can Get It.

People working at technology companies are among the most exploited in the world. It might not feel like it, if you are a programmer getting up from your Herman Miller chair at your sit/stand desk to go and pick up your third subsidised meal of the day, stopping at the foosball table to talk about how you might spend your social allowance this evening. We will come back to all of these points later, but let us start with the golden rule of journalism: follow the money.

Technology companies are among both the most valuable and most profitable companies in the world. Take Apple as an example: over the last year their market capitalisation has increased by approximately $500B, a return on investment of approximately 28% over the year. Their gross profit in 2021 was approximately $153B, up 46% from the previous year. Around half of this money was used in stock buybacks, driving the high capital gains for their shareholders.

Apple make some transformational technology and highly desirable products. Well, that is an inaccurate shorthand. Apple’s employees, and the workers in their supply chain companies, make the products: the technology is largely developed by taxpayer-funded research institutions (the capacitative touchscreen that made the iPhone so successful was invented at CERN, for example).

Conveniently for my maths, Apple had 154,000 employees in 2021, so each contributed around $1M to the wealth of their shareholders over the year. Obviously so did a bunch of workers at ARM, and Foxconn, and Taiwan Semiconductor Manufacturing Company, and Samsung, and Intel, and Corning, and DHL, and a bunch of other companies. Economists do not really understand how a normal pencil is made, let alone Apple Pencil.

Let us imagine that the people who run Apple saw that capital was equally as important to the creation of these products as labour: that the contribution made by the Apple Park campus, the land it and its cavernous parking garages are on, the equipment, raw materials etc. was seen as equal to the contribution of the work that goes into designing, manufacturing, programming, and selling their products and services.

Half of the value of Apple’s products would be due to the investment made in them, and half due to the labour expended on their development and improvement. We would expect Apple to recognise these contributions equally, paying an average salary to employees of $1M.

In fact salaries that high are rare across the company. Obviously if you are the CEO you are sitting pretty, with $99M mostly paid in stock. According to Glassdoor, the “typical” software engineer salary at Apple is £68,885 in the UK (approximately $93,600 at time of writing), and $140,430 in the US. Put another way, Apple pays out more than seven times the amount to people who did nothing for them this year (but had previously given them some money) than they do for the “eighty hours a week and loving it” brigade who write the software that makes their products valuable. And of course, software engineers are among some of the best paid (or maybe least worst paid) employees: sales associates, store geniuses and others do far worse. For every dollar made by a retail representative, the people who actually realise the value of Apple’s products, a programmer might make about $7, the shares go up by $49, and Tim Cook is paid $2,807.

Some people will say that the employees do get to realise the same rewards as the shareholders, through option grants, stock purchase programs, and the 401(k) pension schemes. Ignoring the difference in tax burden of the passive investor and the active worker, these programs are culturally and structurally set up to keep workers in work, not to generate passive income.

They are called “incentive schemes” for a reason. If you work really hard, and really long, you get to experience a little bit of the gains that your long, hard work helped to realise. That 401(k) is not going to pay out until you are at least 59.5 years old, you are stuck in the system until then. And you are not going to realise the returns on all that work at Apple. It will be invested in some fairly low-risk spread across different stocks in different markets, management fees will be taken out, then the rate at which you draw it down will be tightly controlled too. It is deferred wages, not the path to living off the fat of the land.

Similarly, that stock program is there to keep you in waged employment, not contribute to your independent means. No self-respecting director of HR would design a wage system that made it easy for employees to stop coming to work. That is how you lose institutional knowledge, experience, and skills: Deirdre O’Brien knows that keeping the people in Apple in Apple is more important than keeping any of the capital assets, even while designing schemes that ensure the curtains and carpets are paid many times more than the staff.

It is within this system that we must come back to evaluate those benefits mentioned at the top of the post. They are not there to make your life easier. They are there to make your life easier if you choose to stay in the office all day, and socialise with your colleagues instead of your family or other, less profitable, relationships. One Silicon Valley company I worked at offered three free cooked meals per day; Apple have their subsidised Caffe Macs. That is there to make sure you are in the office before breakfast, chatting to your colleagues about work over your granola and fresh coffee. That you stay in the office all day, perhaps taking lunch to your desk (with its comfortable chair and adjustable height, remember?) to make a bit more progress on a task. That you do not go home until after dinner, which of course makes it easier to schedule those transatlantic conference calls (the London and Paris folks are just tucking into their dinner as the Silicon Valley staff have flung their compostable breakfast containers at a passing janitor).

Of course, these packages are designed to be compatible with the lifestyle of some, to the exclusion of others. Younger people, single people, who have fewer responsibilities at home (and coincidentally lower salary expectations) are particularly encouraged to apply. Have some reason to be at home, for example raising a family on your own? Sorry, that is not really compatible with our values. It is not so much that you are encouraged to bring your whole self to work; it is that your work should be your whole self.

So the whole system is tilted against those of us who actually make those insanely great gizmos and applications. We can see that just from the pay and incentives structure. We did not even have to investigate the way all of these companies require people to work in the highest property price, highest rent regions in the world: that this money they say is going to their developers is actually going indirectly to the landlords, and the complex connections between the corporate shareholders, venture capitalists, and property tycoons. Nor did we mention how those young, single, overwhelmingly male, overwhelmingly college-educated, overwhelmingly white, overwhelmingly rich junior employees are hypnotised by the supposed career progression: if you all work hard enough then one day you will all be the senior Vice President of engineering! But how did it get this way?

Because the power that the workers have is disconnected and unfocused. Things actually used to be way worse: if you work a notionally five-day week or a notionally forty-hour week, it is because unions fought to bring that down from six to seven days and twelve to sixteen hours (including for children). If you are an American, get a day off on Labor Day, and do not work for the Federal government, that is because of strike action. But decades of union-busting and disaffection have reduced the power of the workers, and the bosses have capitalised (pun very much intended) on that. Wages have stagnated while value produced has grown ever since the famous menage à trois of Reagan, Thatcher, and von Hayek. Reversing that trend will be slow, it will be hard, but it will only be done collectively. Normalise talking to your colleagues and peers about pay and conditions.

Join a union. Change the world.

Cover photo by krakenimages on Unsplash.

Graham is a senior Research Software Engineer at Oxford University. He got hooked on making quality software in front of a NeXT TurboStation Color, and still has a lot to learn.