Julieta is a hand on the wafer line I hold through two shells in Cayuga County, New York. She stands 10 hours in a sealed bunny suit, her hands in nitrile gloves, etching the chips your phone runs on. The hydrofluoric acid gets under the suit. It always does. I hold the line. The acid is on her hands. The margin is on mine. Her daughter is four.
Sanjay Mehrotra, chairman and CEO of Micron Technology, wrote in Fox News this week that his company is committing $250 million to seed Trump Accounts for 1 million American children. The founding spirit. A bet on the next generation. I agree. It is a fine bet. Here is the side he did not print.
Julieta qualifies for the $250 figure Mr. Mehrotra announced for counties with median incomes under $150,000. At a real return of 7% after inflation, the seed compounds to roughly $846 by the time her daughter turns 18. Julieta earns $18.20 an hour — $37,856 a year before the state takes its cut, which it does with more efficiency than I take mine. New York then tops up the wage I decline to raise: Medicaid for the daughter, a childcare subsidy when a slot opens, the earned income credit at filing. The public feeds the labor I underpay. I keep the yield. You are the public. Thank you for your contribution. It’s larger than mine.
The sit-stand stool at Julieta’s station would have cost me $340. Across 300 stations on the wafer floor: $102,000. I declined it. The ten-minute clean-room exit rotation every 2 hours — so a woman in a sealed suit can step outside the gowning area and breathe air that hasn’t passed through a chemical scrubber — would cost $4.80 per worker per shift. Across the floor, across a fiscal year: $432,000. I have not approved it in 3 years.
That’s the whole mechanism. Read the next sentence twice.
$250 is what the corporation is investing in her child. $432,000 is what the corporation is keeping by not letting her breathe. The ratio is the lesson. Most of my graduates never learn it. I keep teaching. One of them priced the phone assembly line you bought yesterday.
Reuben is a body on the night etch crew at the same facility. Same operation, same gown, same acid, different shift. His hands have developed a tremor in the last 8 months. He hasn’t reported it. A reported tremor is a reported liability. The form for that is in the top drawer. Reuben doesn’t have a daughter. He doesn’t qualify for the $250. He qualifies for the tremor.
The tremor will not compound at 7%.
The lawgiver Moses saw this clearly, in the verse the men who write the press releases prefer not to quote:
“And if a man smite his servant, or a maid, with a rod, and he die under his hand, he shall be surely punished. Notwithstanding, if he continue a day or two, he shall not be punished: for he is his money.”
That is the entire cost-benefit in one verse. The master is liable for the body that dies under the rod. The master is not liable for the body that continues, because the body that continues is his money. Scripture anticipated the calculation. I don’t need to invent it.
The Lord didn’t abolish mastery. He regulated it.
Now watch the same arithmetic 300 miles west, on a different floor. Braulio is 41, 11 years on a lithium-carbonate packaging line I own outside Lovelock, Nevada. The crack in the skin of his right hand opened in the second shift in March and hasn’t closed since. The lithium he bags at 0.6% moisture ends up in the battery cell in the device you’re reading this on. He handles it without the acid-rated gloves I declined to issue him, because the gloves cost $0.55 a pair per shift, and across 180 hands I keep $99 a day, $24,750 a year, and the skin break doesn’t yet violate the reporting threshold. Braulio has a son. He’s three. The son’s gift, in Mr. Mehrotra’s arithmetic, is the same $250 figure. Compounded at the historical market average Mr. Mehrotra himself cites, that’s roughly $1,742 by the boy’s eighteenth birthday.
$1,742. The device in your pocket retails for $1,099.
The son’s gift, in other words, is roughly what his father’s missing gloves cost the firm — plus $230, which is what I’ll keep next year by not buying them again.
The man who signed the $250 million line item at Micron is a graduate of mine. I don’t say this to threaten him. I say it to describe the reach. The CEO who priced your child’s $1,742 is pricing it the way I’d price it, because he was priced the same way in the same room by the same instructor, and the cheapest part of the curriculum was the part about the children. The expensive part was the part about the parent. Mr. Mehrotra is the part about the parent. The $250 million is the cheap part. The $200 billion build is the expensive part. You’re reading about the cheap part because the cheap part generates good press. The expensive part is Julieta’s lungs and Braulio’s hand.
In the 1880s, George Pullman built a company town south of Chicago and owned everything in it — the houses, the stores, the water, the gas, the church. He deducted the rent from wages he had already cut. When the depression came he cut the wages again without cutting the rent, and the paycheck arrived already gutted by the company’s claim on it. The Trump Account is the Pullman house in a tax code. The employer seeds it, matches it, names it for the President, and the worker signs the enrollment form in the gowning area before the first shift, because the alternative is nothing. The mechanism hasn’t changed. The lighting has.
Someone will ask me at the next quarterly review whether the Trump Account is good for retention. The answer is yes. Julieta won’t leave while the account is growing, because she can’t afford to forfeit the match, and she can’t afford to leave, and the inability to afford either is the architecture, not the accident. The account is not a gift. The account is a fence with a flag on it, and I am grateful to the man who thought of it, and I will use it.
The account compounds at 7% after inflation. The lungs have a different schedule. I keep one of the ledgers.
The $200 billion build creates the wages. The wages create the demand for the chip. The chip is what Braulio’s line supplies the chemistry for. The child has $1,742. The $1,742 will not buy the device the chemistry is in. The demand for the device therefore depends on someone other than Braulio — on the engineer, on the hedge-fund manager, on the man whose wages have risen with the build, and not on the parent on the packaging line. The arithmetic is closed at the top. The arithmetic is open at the bottom. I haven’t priced what the bottom will look like at the child’s eighteenth birthday. I haven’t asked.
The cycle is set, and I expect to be thanked for the forethought.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.