Hard labor: one company’s exploits in day labor reveal what’s wrong with the temp industry – To the Point – Labor Ready Inc
It’s 5 A.M. on a downtown street in a metropolitan city. There is very little hustle and much less bustle; the buses are only just starting to trek down the main boulevards. Yet, some men begin to gather outside a storefront this early in the morning. They slowly filter through a swinging glass door and into a room with cold concrete floors. They sit down on plastic chairs, talk, and drink coffee. Many wear well-used clothes and broken-in boots and sneakers. Most are African American or Latino, some poor, some homeless. They all jot their names on a signup sheet. They gather here to put to the test the slogan displayed so prominently in this office: “Work Today. Paid Today.”
This scene of urban labor plays out in hundreds of cities and towns across the United States, Canada, Puerto Rico, and the United Kingdom. The daily routine recycles hundreds of thousands of individuals who line up before dawn to enlist the services of a company called Labor Ready. According to its own promotional material, Labor Ready provides “dependable temporary labor” to construction companies, manufacturers, retailers, and scores of other customers. With over 750 offices nationwide and in the United Kingdom, Canada, and Puerto Rico, Labor Ready is the premier intermediary, marketer, manager, and profiteer in the world of light industrial manual labor.
Despite its loud fanfare about putting people to work, Labor Ready makes millions of dollars by passing costs and risks along to the people it claims to be uplifting. In effect, the company exchanges cash for the low-wage and dangerous servitude of largely ignored and underrepresented classes of people: people of color, the homeless, the urban poor. Companies like Labor Ready take advantage of a large and continuously replaceable workforce, using to their advantage legislative and judicial loopholes and ultimately the need of its customers for quick production turnarounds and short-term profits.
On the surface, the list of Labor Ready’s questionable practices is predictably long and convoluted, and has been the stuff of headlines since the company began. Its business practices have inspired a number of press investigations. Also, the AFL-CIO has launched an active campaign against the company, releasing a steady barrage of press releases, research summaries, and analyses pointing to the unsavory nature of Labor Ready’s bread and butter.
What this wide and varied coverage has ultimately revealed boils down to a deceptively simple pattern. Labor Ready’s profits can generally be tied to a four-tiered modus operandi: maintain easy access to a vulnerable labor pool; draw quick bucks from nibbles at workers’ paychecks; enlist divide-and-conquer tactics among workers; and take full advantage of regulatory negligence concerning costly safety programs and insurance requirements.
Following this prescribed formula, Labor Ready has had an eventful history in terms of its treatment of workers. Its most flagrant and self-serving actions deal with fleecing its workers of their wages through excessive fees for “services.” Labor Ready has generated millions to its bottom line by charging its massive workforce a few dollars here and there, including fees for the use of protective and often legally required gear like boots and gloves, “conveniences” such as check cashing, and overcrowded and often dangerous transportation to worksites. Add to that combination a documented lack of proper safety training for its workers. A laborer under the charge of the company has a one in four chance of being injured on the job, according to OSHA, and a high likelihood of raking home less than minimum wage for that risk.
Labor Ready has the luxury of exploiting its workers without ramifications simply because they fly under the radar of mainstream media and regulatory agencies. Over half of Labor Ready’s workforce is homeless. And nearly every Labor Ready branch office in the United States is within 2.5 miles of major urban areas where more than a third of the population are people of color and nearly 15 percent live in poverty.
How does a company so notorious come to be? And how is it allowed to exist unrestrained? To understand this, one has to go back to the time when Labor Ready first broke ground. Founder and former burger franchise entrepreneur Glenn Welstad started Labor Ready when temporary labor was already a well-recognized and increasingly popular item on the business menu. What he concocted was a new and winning combo: a temporary employment agency fused with the street-corner day labor market, all to meet the needs of an increasingly competitive and demanding manual labor sector.
The rise and riches of Welstad’s Labor Ready benefited greatly from the political atmosphere of the late ’80s and early ’90s. Anti-immigration and welfare reform policies coincided with Labor Ready’s dramatic growth. America’s political dialogue in the mid-1990s spoke fiercely to accountability and regulation over welfare and illegal immigration. The “welfare queen” needed to get to work. The rising tide of immigrants needed to get off the streets. Who better to be the unseen fodder for Welstad’s chain of day labor hiring halls than vilified immigrant day laborers and underemployed welfare recipients?
In general, this period was fruitful for day labor and temp agencies, an economic era characterized by privatization and devolution in the social services arena. The government trend of ditching responsibility for the public safety net allowed temp companies like Maximus to capture profitable government contracts to move people off the welfare rolls, largely into low-wage temporary jobs. Labor Read/s annual revenues rose from a modest $6 million during the early ’90s to its current $976 million. Branch locations spread like wildfire during this decade, going from eight offices in 1991 to a high of over 800 in 2001.
Legislative Green Light
The temp labor sector is the fastest rising portion of labor, from white-collar office workers, to the folks who serve beer at baseball games, to construction workers and dean up crews. According to a General Accounting Office study, temp jobs in all their various forms and fashions rose 577 percent between 1982 and 1998. Nearly 90 percent of U.S. companies use temp labor in some capacity. The National Alliance for Fair Employment reports that three in ten workers are neither full-time nor permanent employees. The most recent Department of Labor statistics show that the majority of job creation and growth in the U.S. is in the form of temporary employment. Despite this massive growth and expansion, the federal government has done very little to regulate or protect temp workers.
In fact, the National Labor Relations Board in 1990 allowed companies to refuse temporary employees the right to unionize alongside “regular” employees. The decision was recently reversed, probably not unrelated to increased national attention to the plight of the temp, albeit the high-tech, white-collar variety-notably, Microsoft’s highly publicized battle with its cadre of temp employees.
Judicial action toward immigrants, as well, has offered incentive for companies to continue to exploit undocumented workers. With the Supreme Court’s 2002 Hoffman decision, undocumented immigrant laborers have no legal standing to sue for back pay when fired for attempting to unionize. In effect, our nation’s highest judicial branch has given out a free pass for companies to hire and fire at will a silent, disarmed pool of laborers.
Danger on the Job
The fact that immigrant workers are most likely to be injured or killed in the workplace hasn’t inspired much action from federal agencies either. According to a recent series of articles in Newsday, immigrant workplace deaths are not investigated actively and occur at a much higher rate than non-immigrant incidents, especially in areas such as construction and manufacturing. In states with high percentages of foreign-born workers, injuries and fatalities of immigrant workers occur at an alarming rate. Nearly a third of workplace deaths in New York were of immigrant workers, even though the immigrant share of the state’s workforce is just over 20 percent. The Occupational Safety and Health Administration has been excessively slow and impotent in investigating labor injuries and fatalities. To its credit, OSHA has recently announced plans to begin collecting more and better data about immigrant worker fatalities.
How have companies like Labor Ready responded to these findings? In silence, it seems. In its most recent 10-K report to the Securities and Exchange Commisison, Labor Ready failed to offer even bare details about its safety record, facts they have traditionally revealed. Very little has moved Labor Ready to improve or prevent the dangerous conditions to which its workforce is subjected. The company maintains a 31 percent rate of injuries and illnesses, nearly four times higher than the eight percent average of the entire construction industry. OSHA’s list of investigations into Labor Ready reveals a high incidence of penalties for lacking proper safety programs such as training and other preventative measures.
The only instances in which federal or state authorities have displayed any interest in going after Labor Ready and its ilk are in cases where the government has been cheated of its slice of the fiscal pie, particularly in the realm of workers’ compensation insurance. The state of Washington recently fined Labor Ready nearly $1 million for underpaying workers’ compensation insurance. Obviously, Labor Ready’s creative misclassifications of its workers cut right into the states’ coffers. And truth is, government financial interests seem to far outweigh the obligations of ensuring the livelihood, safety, and rights of the people whom Labor Ready employs.
Work for Tomorrow
The National Campaign for Jobs and Income Support recently released a report entitled Permanent Struggle, Temporary Solution: Contracting out America, describing the contingent labor industry as an “informal economy.” One could argue that the ill-defined nature of Labor Ready’s business provides the necessary cover and context to continue unbound by any traditional regulations or guidelines.
However, for many years, grassroots organizers and advocacy groups have confronted that exploitation head-on. Through community organizing, establishing alternative hiring halls, and focusing on public policy, groups and individuals are acting to improve the lot of day laborers across the country. Yet questions remain about how best to organize and what the ultimate goals should be. Are unions the answer?
By the late 1990s, trade unions like the AFL-CIO saw proof that the growth of Labor Ready and the many back-alley operations that sprung up to reap similar bounty could no longer be ignored. These companies undermined the union’s ability to not only recruit and organize, but also to put its current members to work. “The percentages of [Labor Ready] workers that are in construction run between 25 and 30 percent, says Will Collette of the Building and Construction Trades department of the AFL-CIO. “We came to realize that Labor Ready is the single largest construction employer in the United States.”
To come up with a widespread solution against the Labor Ready giant, organized labor and grassroots groups have had to merge efforts. Up until about two years ago, though, immigrant day labor was seen as a threat by traditional avenues of labor protection and empowerment. “At local levels, the trades were against immigrant labor,” says German Martinez, co-founder of the San Francisco Day Labor Project. “Back in 1991, they were attacking day labor organizations.
By the time Labor Ready went public and began to expand its operations across the U.S. and beyond, it was due time for unions to realize that day laborers themselves were not enemies and were, in fact, allies, potentially in the millions. “Ultimately, I believe, within the next five years, there will be a national membership organization of day laborers in this country,” Collette says. “It may or may nor be part of the AFL-CIO. I hope it is.”
Whether the cooperative effort will lead to concrete change depends on the ability of organizers to gain the attention of unsympathetic political forces and an uninformed general public. New legislation may nor be the key, as laws are already in the books that offer protections to day laborers, though they are threatened with each new administration.
If organizing day laborers is the key to ending exploitation in the contingent labor world, then the challenge is a worthy one. Many groups simply don’t have the capacity to tackle long-term strategies. Far more important for many is the task of “focusing on the day-to-day job of organizing a very fluid, changing workforce,” as Mary Ochs of the Center for Community Change describes it.
But it’s important to realize that exploitative companies do not gain their stranglehold accidentally. Neither will the struggle for rectification be accidental. It will require extensive energy and formidable resolve to eliminate the political xenophobia and economic opportunism that allow Labor Ready to still be listed on some analysts’ lists of stocks to watch.
Gordon Hurd is ColorLines senior writer.
COPYRIGHT 2002 Color Lines Magazine
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