Temps

Kelly Services, a temp agency, is now the second biggest private employer in the U.S. Only heavily subsidized, socially-toxic Walmart employs more people across the country. Last month, Michael Grabell filed this report for Pro Publica on the state of the temporary work in America. The implications are profound, not just for the individuals involved and for their families, but for our economic system going forward, for our democracy and for our society overall.

Grabell paints a picture that sounds like the situation involving day laborers in third world countries but that isn't what he's writing about. "The people here," he writes, "are not day laborers looking for an odd job from a passing contractor. They are regular employees of temp agencies working in the supply chain of many of America’s largest companies – Walmart, Macy’s, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys made overseas and pack them to fill our store shelves. They are as important to the global economy as shipping containers and Asian garment workers." And many scrape by on the stingy minimum wage the Republicans and their conservative allies are trying to abolish, "renting rooms in rundown houses, eating dinners of beans and potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement." Last month the Labor Department reported that there are now 2.7 million temp workers in the work force, the most ever. About a fifth of the job growth since the end of Bush's Great Recession has been in the "temp sector."

“We’re seeing just more and more industries using business models that attempt to change the employment relationship or obscure the employment relationship,” said Mary Beth Maxwell, a top official in the Labor Department’s Wage and Hour Division. “While it’s certainly not a new phenomenon, it’s rapidly escalating. In the last 10 to 15 years, there’s just a big shift to this for a lot more workers – which makes them a lot more vulnerable.”

The temp system insulates the host companies from workers’ compensation claims, unemployment taxes, union drives and the duty to ensure that their workers are citizens or legal immigrants. In turn, the temps suffer high injury rates, according to federal officials and academic studies, and many of them endure hours of unpaid waiting and face fees that depress their pay below minimum wage.

The rise of the blue-collar permatemp helps explain one of the most troubling aspects of the phlegmatic recovery. Despite a soaring stock market and steady economic growth, many workers are returning to temporary or part-time jobs. This trend is intensifying America’s decades-long rise in income inequality, in which low- and middle-income workers have seen their real wages stagnate or decline. On average, temps earn 25 percent less than permanent workers.

Many economists predict the growth of temp work will continue beyond the recession, in part because of health-care reform, which some economists say will lead employers to hire temps to avoid the costs of covering full-time workers.

Rosa, a 49-year-old Mexican immigrant with thin glasses and a curly bob of brown hair, has been a temp worker for the better part of 12 years. She has packed free samples for Walmart, put together displays for Sony, printed ads for Marlboro, made air filters for the Navy and boxed textbooks for elite colleges and universities. None of the work led to a full-time job.

Even though some assignments last months, such as her recent job packaging razors for Philips Norelco, every day is a crapshoot for Rosa. She must first check in at the temp agency in Hanover Park, Ill., by 4:30 a.m. and wait. If she is lucky enough to be called, she must then take a van or bus to the worksite. And even though the agency, Staffing Network, is her legal employer, she is not paid until she gets to the assembly line at 6 a.m.

In Kane County, Ill., where Rosa lives, one in every 14 workers is a temp. Such high concentrations of temp workers exist in Grand Rapids, Mich.; Middlesex County, N.J.; Memphis, Tenn.; the Inland Empire of California; and Lehigh County, Pa. In New Jersey, white vans zip through an old Hungarian neighborhood in New Brunswick, picking up workers at temp agencies along French Street. In Joliet, Ill., one temp agency operated out of a motel meeting room once a week, supplying labor to the layers of logistics contractors at one of Walmart’s biggest warehouses. In Greenville County, S.C., near BMW’s U.S. manufacturing plant, one in 12 workers was a temp in 2012. A decade before, it was one in 22.

In temp towns, it is not uncommon to find warehouses with virtually no employees of their own. Many temp workers say they have worked in the same factory day in and day out for years. José Miguel Rojo, for example, packed frozen pizzas for a Walmart supplier every day for eight years as a temp until he was injured last summer and lost his job. (Walmart said Rojo wasn’t its employee and that it wants its suppliers to treat their workers well.)

...At least 840,000 temp workers are like Rosa: working blue-collar jobs and earning less than $25,000 a year, a ProPublica analysis of federal labor data found. Only about 30 percent of industrial temp jobs will become permanent, according to a survey by Staffing Industry Analysts.

...African-Americans make up 11 percent of the overall workforce but more than 20 percent of temp workers. Willie Pearson, who is African-American, has been a full-time worker at BMW's South Carolina plant for 14 years. But since at least 2005, he said, he hasn't seen anyone who’s “been hired straight on. It’s all been through temporary agencies.” The company says “after six months they can hire them,” he said, “but I’d say it’s only one out of five” who actually lands a full-time job... Latinos make up about 20 percent of all temp workers. In many temp towns, agencies have flocked to neighborhoods full of undocumented immigrants, finding labor that is kept cheap in part by these workers’ legal vulnerability: They cannot complain without risking deportation.

Many people believe that the use of temp workers simply grew organically, filling a niche that companies demanded in an ever-changing global economy. But decades before “outsourcing” was even a word, the temp industry campaigned to persuade corporate America that permanent workers were a burden.

The industry arose after World War II as the increase in office work led to a need for secretaries and typists for short assignments. At the time, nearly every state had laws regulating employment agents in order to stop the abuses of labor sharks, who charged exorbitant fees to new European immigrants in the early 1900s. Presenting temp work as a new industry, big temp firms successfully lobbied to rewrite those laws so that they didn’t apply to temp firms.

In the 1960s, agencies such as Kelly Services and Manpower advertised their services as women’s work, providing “pin money” to housewives, according to Erin Hatton, a SUNY Buffalo sociologist and author of The Temp Economy. And they marketed the advantages of workers that the host company wasn’t responsible for-- a theme that continues today.

One 1971 Kelly Girl ad that Hatton found, called “The Never-Never Girl,” featured a woman biting a pencil (up top). The copy read:

Never takes a vacation or holiday. Never asks for a raise. Never costs you a dime for slack time. (When the workload drops, you drop her.) Never has a cold, slipped disc or loose tooth. (Not on your time anyway!) Never costs you for unemployment taxes and social security payments. (None of the paperwork, either!) Never costs you for fringe benefits. (They add up to 30% of every payroll dollar.) Never fails to please. (If our Kelly Girl employee doesn’t work out, you don’t pay. We’re that sure of all our girls.)

Carl Camden, the current chief executive of Kelly Services, said the anachronistic language was a response to the chauvinistic attitude of the time. “It wasn’t typical to see women working,” he said. “So you had that work often positioned as not real work. The way the media could sell it as sociologically acceptable was making money for Christmas, something you were doing on the side for your family.” (Manpower didn’t return calls for this story.)

...Unions, on the ropes nationwide, have historically done little for temp workers. The temp industry initially won union backing by promising never to cross picket lines. But in 1985, the Federal Trade Commission ruled that the trade association could not force its members to honor that pledge; so they didn’t.

“Unions have had two souls when it comes to temp workers,” said Harley Shaiken, a longtime labor economist at the University of California, Berkeley. One is to try to include them, he said, but “the other is circle the wagons, protect the full-time workers that are there.”

Will Collette, who led an AFL-CIO campaign against the temp firm Labor Ready in the early 2000s, said it was nearly impossible to organize workers with such a high turnover.

And recent rulings have tied union hands. A 2004 order by the National Labor Relations Board barred temp workers from joining with permanent workers for collective bargaining unless both the temp agency and the host company agree to the arrangement.

Some temp firms have even promoted themselves as experts at maintaining a union-free workplace. In a proposal for the off-road vehicle maker Polaris, the temp agency Westaff, a division of the Select Family of Staffing Companies, said its team was specially trained to spot early warning signs of union activity, such as “groups of workers huddling, then quieting when managers appear.”

Meanwhile, a whole ecosystem of contractors and subcontractors benefits from the flexibility of just-in-time labor. For example, Walmart’s two largest warehouse complexes are southwest of Chicago and in the Inland Empire east of Los Angeles. Both are managed by Schneider Logistics, which in turn subcontracts to an ever-changing cast of third-party logistics firms and staffing companies.

Such layers of temp agencies have helped Walmart avoid responsibility when regulators have uncovered problems or when workers have tried to sue, accusing the company of wage or safety violations. For example, when California inspected Walmart’s Inland Empire warehouse in 2011 and found that workers were being paid piece-rate according to how many shipping containers they unloaded, rather than by the hour, regulators issued more than $1 million in fines against the subcontractors for failing to show how the pay was calculated. Neither Walmart nor Schneider faced penalties.

Asked if the layers of subcontracting allow Walmart to escape blame, spokeswoman Brooke Buchanan said, “Absolutely not.”

“We work very hard to abide by the law,” she said, “and we expect all the businesses that we do business with and that they do business with to comply with the law.”

Schneider treats its associates with “dignity and respect,” spokeswoman Janet Bonkowski wrote in an email. “Our suppliers are independent,” she said. “When we utilize third-party vendors, we contractually require full compliance with all required laws and that all parties conduct business ethically.”

As work is downsourced through a cascade of subcontractors, some workers have been paid wages below the legal minimum or seen their incomes decline over the years.

Berto Gutierrez, who has worked several stints at the Walmart warehouse in Elwood, Ill., provided ProPublica with a copy of a 2011 paycheck from subcontractor Eclipse Advantage. The check shows he was paid only $57.81 for 12.5 hours of work, or $4.62 an hour. Neither Eclipse, Schneider nor Walmart provided an explanation for Gutierrez’s paycheck.

In 2007, Leticia Rodriguez was hired directly by Simos, the logistics contractor running the online part of Walmart’s Elwood warehouse. She said she worked as a supervisor on an annual contract for $49,500 a year, with health insurance. In 2009, when she declined to come in on what she described as a long-awaited day off, she was fired.

Rodriguez returned to the warehouse six months later, this time starting at the bottom, loading trucks for one of Schneider’s staffing companies. She said she was paid $15 an hour, but within a year the staffing company lost the contract.

Eclipse Advantage took over, and Rodriguez went to work for that company. There, she said, she got paid piece-rate, averaging about $9.50 an hour. But six months later, Eclipse left, and she and all the other workers lost their jobs. Rodriguez has since interned at the union-backed campaign Warehouse Workers for Justice, earning $12,000.

...The growing temporary sector does little to sustain workers’ standard of living. Temp agencies consistently rank among the worst large industries for the rate of wage and hour violations, according a ProPublica analysis of federal enforcement data. A 2005 Labor Department survey, the most recent available, found that only 4 percent of temps have pensions or retirement plans from their employers. Only 8 percent get health insurance from their employers, compared with 56 percent of permanent workers. What employers don’t provide, workers get from the social safety net, i.e., taxpayers.

And don’t look for Obamacare to fix it. Under the law, employers must provide health coverage only to employees who average 30 hours a week or more. After pressure from the temp industry and others, the IRS ruled that companies have up to a year to determine if workers qualify.

With the major provisions of health-care reform set to take effect in 2014, there’s growing evidence that 2013 is becoming a boom year for temping out. TempWorks, which sells software that keeps track of payroll and worker orders, says sales to staffing agencies have been going through the roof and that temp firms tell them the uptick is because of Obamacare.

Unlike the way it monitors nearly every other industry, the government does not keep statistics on injuries among temp workers. But a study of workers compensation data in Washington state found that temp workers in construction and manufacturing were twice as likely to be injured as regular staff doing the same work.

...Members of Congress have introduced a handful of bills protecting temp workers in the past two decades. None have made it out of committee. Efforts on the state level have met similar resistance.

But worker advocates and some temp agencies say the Massachusetts Temporary Workers Right-to-Know Law, which took effect in January, provides a model for other states.

That law requires temp agencies to give workers written notice of the basics: whom they will work for, how much they’ll be paid and what safety equipment they’ll need. The law limits transportation costs and prohibits fees that would push workers’ pay below minimum wage. Agencies must also reimburse the worker if they are sent to a worksite only to find out there is no job for them there.

Similar state bills have passed in New Jersey and Illinois in the past few years. But while the American Staffing Association has a code of ethics containing similar guidelines, it has fought against such laws and blocked them in California and New York. “All laws that apply to every other employee apply to temporary workers,” said Stephen Dwyer, the group’s general counsel. “We thought that heaping new laws on top of existing laws would not be effective.”

Even in states that have them, the laws are honored mostly in the breach. For example, Illinois prohibits temp agencies from charging for transportation. But many have gotten around the law by using so-called raiteros, who act as neighborhood labor brokers for the agencies and charge for transportation. The law also requires an employment notice stating the name of the host company, the hourly wage and any equipment needed. Out of more than 50 Chicago-area workers interviewed for this story, only a handful had ever received one.

Passing through Chicago’s working-class suburbs recently, Rosa pointed out the car window to a row of small redbrick homes

. “I’ve always dreamed of having a little house, a really small, little house,” she said. Asked if she thought she’d ever be able to buy one, Rosa laughed.

“Earning $8.25 an hour?” she said. “I don’t think I’ll ever be able to do that.”

Back at the temp agency, Rosa continues to wait with about 50 other people.

Around 6 a.m., she again inquires if there will be any work. The dispatcher tells her to give it 15 more minutes.

Then he breaks the news: There is no work today.