You're overestimating the proportion of the price attributed to labor that goes into an iPhone. The reason that production is offshored is to shave off a few pe

You're overestimating the proportion of the price attributed to labor that goes into an iPhone. The reason that production is offshored is to shave off a few percentage points. The price difference is almost nothing to the buyer, but a lot to the owners of Apple. iPhones have nothing to do with videogames. They are material objects, not zero marginal cost copies. edit: and the point is that, across the economy, it is very good for labor. While the iPhone's cost would rise a little bit nominally, it wouldn't rise as a portion of income, which is the only important number. The retail price would probably rise a bit more than that, but that's because it is a luxury good and its price would rise as incomes rose.