03.31.12

Before Condemning Foxconn, Americans Should Examine Their Own Labor History

It’s easy to condemn Foxconn’s labor practices, but Zachary Karabell argues that we should bear in mind that not so long ago those same conditions existed in another emerging industrial power—the United States.

Apple has made waves this week, but not for its products or its stock price. Instead, it has once again been the center of damning revelations about labor practices in Chinese factories that make the iPad and the iPhone. But while Apple certainly deserves the criticism, this story is not as simple as it seems. It’s not just about Apple and working conditions; the other story is U.S. anxiety about China, double standards, and an American tendency to forget our own history and how we have evolved.

Over the past two years, Apple has come under intense scrutiny because of questionable working conditions at factories run by Foxconn, a Taiwanese equipment maker with megafactories in Shenzhen and elsewhere in China. A rash of suicides at Foxconn plants in Shenzhen last year provoked international outcry, and served as a direct rebuke to the famously secretive Apple and Steve Jobs.

Under new CEO Tim Cook, Apple commissioned the Fair Labor Association to assess conditions at the Foxconn plants, and then released those findings yesterday. The report—which was especially critical of safety conditions and of labor violations ranging from excess hours worked to insufficient overtime paid—received extensive attention and in many ways supported Apple and Foxconn’s critics.

In releasing the report and vowing to make immediate and extensive changes, Apple and Cook were praised for dealing with the issues head-on. Foxconn’s chairman, Terry Gou, who is as much a celebrity in China as Steve Jobs was in the United States, promised to increase salaries substantially and to limit hours worked in accord with both international norms and with China’s own laxly enforced labor laws.

By embracing transparency and responding to legitimate criticism, Cook clearly moved Apple away from the insularity of Jobs and took a cue from an earlier visionary company led by a strong-willed CEO that almost lost its brand luster because of abusive working conditions: Nike. In the 1990s, under CEO Phil Knight, Nike faced its own factory-conditions-in-Asia scandal and that led to a transformation of its corporate culture that has since established the company as a world leader in both sustainability and innovation. Cook seems poised to do the same for Apple, and in his own very public embrace of change, so has Foxconn’s Terry Gou.

But what about the conditions in the first place? Who or what allowed for working weeks in excess of 60 hours, insufficient safety controls, and conditions that led to that bizarre wave of suicides? It’s easy to say that greed on the part of Apple and Foxconn and reckless disregard for the millions of workers eager to get a job in a fast-moving and economically tumultuous China were the cause. Easy, but not quite right.

A bit more than a century ago, the U.S. Supreme Court in Lochner v. New York ruled that a New York state law limiting the workweek to 60 hours violated the contract rights of both workers and employers. Not until the late ’30s was that decision overturned. The New York legislature had justified the law as a public-safety measure to protect the health of workers, but the court viewed it instead as infringement of economic freedom.

In their outrage over working conditions in China, most Americans probably do not recall just how recently things changed in the United States. That is not a justification for conditions in China, but it is quiet rebuke against the veiled and not-so-veiled accusations that China is somehow beyond the pale when it comes to labor conditions. In the past 40 years, Chinese society has gone from an agrarian economy with almost no individual freedoms and severe scarcity to a messy, complicated mix of authoritarian and capitalist. Factories such as Foxconn have been a source of substantial mobility of young workers away from subsistence farms and stultifying collectivism.

Foxconn employs more than a million workers, 230,000 in one of its Shenzhen facilities alone–equivalent to a midsize American city. Audit after audit has shown abuses such as poor safety conditions, overcrowded dormitories, and discriminatory pay practices. But take the most troubled midsize American cities, with high rates of violent crime, drug use, incarceration, and yes, suicide. In fact, while the 17 suicides at Foxconn plants between 2007 and 2010 sent tremors, the suicide rate was actually less—substantially so—than the suicide rate in the general population in the United States.

These uncomfortable comparisons are not particularly welcome to most Americans. The point of making them is not to excuse the abuses at Foxconn and too-long countenanced by Apple. It is rather to put into perspective that these issues are not particular to China, nor to Apple. Walmart has had its own share of similar problems at plants that source Walmart products in China, and many of these problems arose in the ’80s and ’90s with American-sourced goods in Mexican plants along the U.S.-Mexico border. And many of those issues were endemic in American factories until the ’50s, and in company steel and coal towns that formed the company-town model that Foxconn and others have emulated.

In their outrage over working conditions in China, most Americans probably do not recall just how recently things changed in the United States.

Over time, as the American economy stabilized and grew, as mores changed and workers especially demanded via unions more protections, better pay, and more rights, conditions shifted and have changed dramatically—as they did in Europe. But in the rough and tumble of initial industrialization, abuses, fatalities, and various indignities were rife. China has been following a similar path, but with two major distinctions: its changes have been occurring much more rapidly and in the glare of international attention. Terry Gou has been far more accommodating than Leland Stanford or Henry Clay Frick ever were.

That leaves the glaring question of Apple and why the company did not pay more heed to issues that it has been aware of for years. There, the fault clearly lay with the departed Steve Jobs and an indifference to what was happening over there in a country and culture not his own. Yes, there was a drive for profit, but those margins will not be terribly impacted even as Foxconn pays workers much more and works them quite a bit less. There is a fine line between shocked excoriation of some Chinese working conditions and complacent acceptance of them, a line far more crossed in one direction or another than walked with balance. Much of the recent outcry has fed xenophobia about the rise of China; much of Apple’s approach until now has turned a needlessly blind eye toward evident issues that it could have addressed. The changes promised by Apple and by Foxconn are positive, but the way we approach the emergence of China and the intimate entangling of our economies remains as troubled as ever.