Apple Commits to Further Innovate and Create Jobs But Is it Really?

Apple claims to create 20,000 jobs Over next 5 years and to contribute more than $350 billion to the U.S economy but at Apple creating jobs isn’t the equivalent as hiring, and paying repatriation taxes doesn’t equal bringing all the money home.

Apple claims to create 20,000 jobs Over next 5 years and to contribute more than $350 billion to the U.S economy but at Apple creating jobs isn’t the equivalent as hiring, and paying repatriation taxes doesn’t equal bringing all the money home.

By Brandon Hinojos and Anne Howard

A sheet metal fabricator saw-cuts material for Apple’s data center expansion in Reno, Nevada.
A sheet metal fabricator saw-cuts material for Apple’s data center expansion in Reno, Nevada.

What is the Real Job Creation Number?

On Wednesday, Apple announced to contribute more than $350 billion to the U.S economy and funnel it into job creation along with a new training campus for workers. Over the next 5 years, Apple plans to generate an estimated 20,000 jobs for the U.S. This year, $55 billion of the amount will be brought back into American borders. In what Apple calls a “direct contribution to the US economy,” the tech archetype is adding to their already expansive workforce surpassing 2 million in total.

What’s the real number?

But is it really creating jobs? Let’s take a look. Currently, Apple says that it employs around 84,000 people in the U.S. On the other hand, an October filing with the Securities and Exchange Commission shows that it totals 132,000 full-time employees worldwide, showing that about a third of its employees work abroad.

Furthermore, out of the 2 million jobs that Apple claims responsibility for, a quarter of them are not direct employments but indirect jobs through Apple’s U.S.-based suppliers. “From the people who manufacture components for our products to the people who distribute and deliver them, Apple directly or indirectly supports hundreds of thousands of U.S. jobs,” Apple says on the page.

What about that campus? During the announcement, Apple promised a new campus, and yes,  building a campus facility can be a huge undertaking that takes years to complete and requires a lot of workers, as demonstrated for the company’s recently opened Apple Park headquarters in Cupertino, Calif. However, based on the conversation, the company had with Axios it seems that the new campus would not be nearly as important as the Apple Park project was.

Repatriation of funds Looks like a PR Stunt

On Wednesday, Cook told ABC News that the company was going to bring back “the vast majority” of its cash. Noticeably it failed to specify an amount nor a time frame for the repatriation. So when? How much?

Apple’s promise to pay $38 billion in repatriation taxes has been taken by many as a commitment that the company would return home more than a quarter-trillion dollars it currently has overseas. The truth is that Apple has no obligation to bring home that money and that since much of it is tied up in long-term investments, the repatriation is unlikely to take place. Let’s not ignore that Apple has to pay taxes on overseas earnings whether it brings the money back to the United States or not. With that understanding, we cannot equal paying the tax with meaning that all of the money is returning to the U.S.

Cook Claims the GOP Tax Bill Is Responsible for “Large Parts” of Apple’s New Investment Plan

Apple CEO, Tim Cook, said in a media announcement: “Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the US economy. We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness. We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”

apple job creation

Is the GOP Tax Plan Responsible for Apple’s Contribution?

Shortly after Apple’s announcements, President Donald J. Trump tweeted that this was a “huge win” and a result of “tax cuts” he pushed through for the U.S. economy. However, this is something that Apple doesn’t directly say is the sole motivation. The company says it “anticipates repatriation tax payments of approximately $38 billion” which even over the course of 5 years does not equal the total amount. Additionally, the press release said that “capital expenditures in the US, investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple’s direct contribution.” This doesn’t sound that such a huge investment was primarily a result of GOP’s tax plan.

Tim Cook told Good Morning America on Thursday morning,

“Let me be clear, there are large parts of this that are a result of the tax reform, and there’s large parts of this that we would have done in any situation.”

A new tech school is one move that may have been done regardless of the new tax laws. Still, it’s important to know that some of this “direct contribution” isn’t voluntary and is a deemed repatriation required by law. This one-time levy mandates U.S. corporations to bring back withheld cash abroad back into the states.

However, chief strategy officer of GBH Insights, Daniel Ives, told Mercury News,”It would have been tax suicide if they brought it back before the reform law.”

Gene Munster with Loupe Ventures blogged that the primary motivation behind Apple’s investment is economic and will ultimately serve their best interests in the long run. Despite many people believing that the new tax laws worked its magic on Apple, there’s evidence showing the company had it in the works and timed it accordingly. Nevertheless, the new corporate tax laws are definitely advantaging the tech giant.

Apple Inc. (AAPL) Option Chain

Shares of Apple gained 1.7% since the announcement, and are up 50% over the past 12 months.

At the time of publishing, Apple did not respond to The Scope Weekly’s request for clarity on its job-creation and it repatriation statements.


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