Tuesday, September 2, 2014

Why the Growth of Temp Worker Industry is a Serious Problem for Millions of Americans

by Nomad

California legislators have finally taken steps to tackle a serious labor problem that has held low income workers back from finding long term employment. The often exploitative practice of hiring outsourced temporary staff in place of employees may now- finally- be coming under closer scrutiny.

For decades now, one closely-held secret by US companies was how often and to what degree temporary workers, or temps, could be used to circumvent federal laws regarding labor rights. For the honest business owners, a temp could be a live saver in an emergency but to the less scrupulous, a temp is a worker primed for exploitation. 

The Perfect Victims?

Temps, by law, are cheaper to employ since they are paid on the lowest legal scale (receiving wages well below the standard for any regular employee that would work in the same position). In addition, temps do not qualify for overtime wages nor do they receive health insurance. Forget accumulated vacation time or even sick days. 
So why would anybody want to be a temp? The main reason is the most obvious one. In a word: Desperation.
Temp staff agencies are always hiring and for the desperate, any job- even a temp job- is better than nothing.

It is no coincidence that temporary work is now an industry unto itself, with an estimated 2.7 million workers—one of the fastest growing sectors in the economic “recovery.” That could be, some might say, only a sign of the level of desperation and an economic recovery based on temporary staffing is an illusionary one.  The temp worker rarely earns enough to boost any economy out of its doldrums.

The Full Time Deception

Another attraction is that temp companies say that temp workers can sometimes find full-time employment from a temporary position. Work hard and you will get a permanent position. This is the pitch (but not the actual promise) of temp agencies.
As journalist Michael Grabell for ProPublica explains:
Temps have worked for the same company for as long as 11 years, never getting hired on full-time. Companies have assigned temps to the most dangerous jobs. In several states, data showed that temps are three times more likely than regular workers to suffer amputations on the job. And even some of the country’s largest companies have relied on immigrant labor brokers and fly-by-night temp agencies that have cheated workers out of their wages.
As the economy slowly improved the number of temp jobs soared at a rate 10 times faster than private-sector employment as a whole.
Meanwhile,  the figures for full-time employment limped and hobbled along. That shouldn't come as a surprise. 
Corporate reliance on temp workers hurts all workers.
Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.
In the end, it boils to hard cold business sense: why should an employer pay any more than absolutely necessary unless mandated by law? I

As we have heard so often, companies are not charities. They claim no social responsibilities. Today many employers feel no obligation to the welfare of their employees. And since temps are not actual employees of the firm, then they are even less of a concern.

The workers at some of the most abusive companies in the country are not actually employees, and their bosses aren’t technically the ones who pay their wages. In the twenty-first-century workplace, the activity formerly known as work is now a tangle of subcontracts, temp jobs, 1099s and freelance gigs, allowing companies to atomize their workers across many firms in a diffuse production chain. At the same time, firms limit their responsibilities to pay fair wages or respect workers’ rights. Many workers, in turn, are multilaterally disempowered—alienated from the worksite’s firm at the top of the chain, detached from the staffing agency in the middle, and unprotected by the government or unions.
The article also explains that low pay and dangerous conditions are only half the story when it comes to exploitation. There's also to rather common problem of outright theft of wages.
Nearly 90 percent of fast-food workers reported experiencing wage theft in one survey. Similar patterns of labor violations are prevalent in home healthcare and warehousing industries, where much of the workforce is supplied through contracting agencies. And while many of these workers, in large part immigrants and people of color, face extraordinarily high injury rates and constant job insecurity, they are often cheated out of workers’ compensation insurance and excluded from their states’ unemployment insurance benefits.
If that wasn't bad enough, it isn't just temps who suffer. The problem has a trickle down effect on labor in general. According to a recent report from the National Employment Law Project (NELP)
these outsourced or “contingent” labor structures have become “one of the central factors driving down wages and working conditions in the post-recession economy.”
In addition, the use of non-unionized temp workers reduces the effectiveness of unions to present and protect its member workers.

A Particularly American Shame

When it comes to protecting temps, the US lags far behind many countries. According to data compiled by the Organization for Economic Cooperation and Development (OECD), which produces research on behalf of 34 of the world’s industrialized nations, the United States has some of the weakest labor protections for temp workers in the developed world. 

In the European Union, since 2008, a European Union Directive mandates that temporary workers receive treatment equal to that of permanent employees from day one rather than after a period of time. Temps are given the same access to employer facilities and training, The Directive gives temporary workers equal treatment in relation to pay, holidays and maternity leave as their permanent colleagues.

In Brazil, temps have been legally protected by a 1993 law which generally prohibited outsourcing, except under limited circumstances. However, this year those restrictions were somewhat relaxed. 
Even so, the terms in which a company may legally employ a temporary worker are far tighter than in the US. For instance, a temp can only be hired to temporarily substitute a regular worker on leave; or to provide services during an extraordinary increase in workload. 
Also, the duration that a temp can work is limited to a maximum of three months. The period can be only be extended with the approval of the Ministry of Labor and Employment. That's a major headache that most Human Resources managers would prefer to avoid. (Naturally, these laws apply only to legal employment. The real world could be quite different.)

In the US, the usual response from the business world is that any laws restricting the use of temps- even ensuring they are even paid- undercuts competition with foreign companies. They will tell you that this kind of workforce flexibility makes American corporations stronger. (And besides, hiring a temp is perfectly legal.)

Of course, competition has become to catch-all defense for any abuse of labor in our times. Following that logic to the next step, slave labor would make American corporations even more competitive. As yet, no CEO has openly proposed this. 

Meanwhile, nearly 3 million workers employed currently in temporary or contract positions are caught in the temp trap.

Now for a little good news. The legislature in one state has begun to take a closer look at the problems of temp workers.

California Legislature Passes Bill to Protect Temp Workers