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"Everyone Only Wants Temps"

My stint doing "on demand" grunt work for one of America's hottest growth industries.

| Mon Jul. 16, 2012 6:00 AM EDT

A Labor Ready outlet in Sioux Falls, South Dakota, July 2006.

This story was produced with support from the Economic Hardship Reporting Project.

It's still dark when I show up at the Labor Ready storefront in downtown Oakland, California, just a few blocks from the plaza where the Occupy crowd threw up its tents against the one percent. From the sidewalk, the place looks vaguely illicit, with minimal signage and floor-to-ceiling shades that remain drawn 24/7. Later, I will come to think of this as the company "look"—unwelcoming and easy to miss—often tucked alongside a check-cashing business or payday lender.

The office opens at 5:30 a.m., but job seekers start appearing an hour early, hoping to snag a top spot on the sign-in sheet. By the time I arrive, 20 people, all but one of them men, are already inside—the space is essentially a waiting room with a long counter—standing or slouching in white plastic chairs. Behind the counter sits an African American woman with short hair and a bearing that suggests a low tolerance for bullshit. "I can't remember the last time I got eight hours sleep," a bleary-eyed man behind me announces to no one in particular.

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After signing in, I grab a chair from a stack in the corner and take a seat, studying a sign that implores me to be "true" and "passionate" and "creative." In reality, passion and creativity have nothing to do with it. Labor Ready provides warm bodies for grunt work that pays minimum wage or thereabouts. "Here's a sledgehammer, there's the wall," is how Stacey Burke, the company's vice-president of communications, characterized the work to Businessweek back in 2006.

Labor Ready's parent company saw profits soar 55 percent last year, and CEO Steve Cooper predicts "a bright future ahead."

It's not a pretty formula, but it works. With 600 offices and a workforce of 400,000—more employees than Target or Home Depot—Labor Ready is the undisputed king of the blue-collar temp industry. Specializing in "tough-to-fill, high-turnover positions," the company dispatches people to dig ditches, demolish buildings, remove debris, stock giant fulfillment warehouses—jobs that take their toll on a body. (See "I Was a Warehouse Wage Slave.") And business is booming. Labor Ready's parent company, TrueBlue, saw its profits soar 55 percent last year, to $31 million, on $1.3 billion in sales. The Bureau of Labor Statistics predicts that "employment services," which includes temporary labor, will remain among the fastest growing sectors through 2020. TrueBlue CEO Steve Cooper, who took home nearly $2 million last year, predicts "a bright future ahead."

The woman behind the counter, whom I'll call Natalie, turns on a television and pops in a video that job-seekers must tolerate every morning no matter how many times they've seen it. On the screen, a man who lost his arm in a workplace accident reminds us to be safe. A sign on the wall to my left states the number of consecutive days the branch has remained accident-free—330, which, given the physical nature of the work, almost seems too good to be true.

At one end of the room, a slender black man with a shaved head is leading an animated discussion of current events. "If it was a brother coming across the border, they would have sealed that shit up," he says. The people around him nod. Someone comments that Latino immigrants have it easy.

"No, I wouldn't say that," the man responds. "Don't forget: They have no recourse if they get hurt." And "they get 10 bucks an hour, but the men picking them up on the corner are going to get 30 or 40 bucks an hour out of them."

More than 15 percent of pickers, packers, movers, and unloaders are temps, earning $3 less per hour than their full-time counterparts.

Labor Ready's business customers are billed for the temp workers' wages, plus fees that cover things like workers compensation insurance, payroll taxes, and, of course, a significant markup. The clients save cash on HR and training, and they save even more by eliminating the need for health insurance, paid sick leave, vacation time, and other standard employee benefits.

But for Labor Ready clients, perhaps the biggest advantage is that they get workers who are "flexible"—that is, dispensable. If you are unhappy with a Labor Ready worker "for any reason," the company will replace that worker free of charge. And temps quickly learn to neither expect, nor ask for, raises, health care, or job security of any sort.

This low-cost arrangement, which leaves workers largely powerless, helps explain why more industries are turning to perma-temp workforces. According to the Bureau of Labor Statistics (BLS), for instance, more than 15 percent of pickers, packers, movers, and unloaders—the warehouse workers who jump into action every time you order an item online—are temps. On average, they are paid $3 an hour less than their full-time counterparts.   

"The McDonalds of the Temp Industry"

Supplying cheap workers was Labor Ready's mission from the day it launched in 1989. "We don't encourage them to stay here," company cofounder Glenn Welstad once admitted to a reporter. "If we paid them more money or if we provided them with benefits, they would have a tendency to stick around."

Welstad was a farm boy from North Dakota who amassed a small fortune running a string of Hardee's restaurants. When another of his numerous franchise efforts failed, he paid $50 for a name change—Dick's Hamburgers became Labor Ready—and set about applying the principles of fast food to the temp market. He quickly opened a slew of cookie-cutter offices around the country, serving up cheap labor instead of burgers. The goal, in his words, was to become "the McDonalds of the temp industry."

In 1989, only 1 in 43 American manufacturing jobs were temporary. By 2006, 1 in 11 were.

Welstad's timing was ideal. During the 1990s, employers were developing an insatiable appetite for short-term labor to cut costs and respond to fluctuating demand. In the early 1980s, employment in the "temporary help services" industry—which covers both temp workers and employees of the firms that supply them—stood in the several hundreds of thousands. Now it's 2.5 million, a seven-fold increase in less than four decades. By 2020, the BLS foresees more than 440,000 new jobs in the sector.

In the meantime, the temp craze has expanded from air-conditioned offices to warehouses and construction sites. In 1990, a year after Labor Ready was founded, clerical workers made up 42 percent of the temp workforce, with blue-collar workers comprising about 25 percent. By 2000, the numbers were flipped, a phenomenon driven by the outsourcing of American manufacturing jobs. In 1989, according to a forthcoming article in the Industrial and Labor Relations Review, only 1 in 43 manufacturing jobs were temporary. By 2006, 1 in 11 were.

As the prospects for stable blue-collar employment soured, Labor Ready's sales soared. In 1991, it had eight stores and booked a modest $6 million in revenue. The company went public in 1998, and by 2000 it had nearly $1 billion in revenue and 852 offices, covering every state in the nation, plus outlets in Canada, Puerto Rico, and the United Kingdom.

Labor Ready had other trends on its side as well. Welstad credited welfare reform with dumping more cheap workers at his door: Depending on the state, somewhere between 15 and 40 percent of former welfare recipients found work as temps. It certainly didn't hurt that people who'd gotten tangled up in the drug war were finding regular employment was hard to come by.

"I've never seen a multinational company whose workforce turns over every 21 days," notes a union researcher.

Soon after Labor Ready went public, it became a target of the AFL-CIO's Building and Construction Trades Department, which was seeking to unionize temporary workers. "From a corporate campaign perspective it was like a dream come true," remembers Will Collette, the lead researcher in the endeavor. In the end, the union gave up on Labor Ready. While high injury rates were documented in the company's SEC filings, "workers were almost impossible to organize," Collette says. "They were angry, but didn't stick around. I've never seen a multinational company whose workforce turns over every 21 days."

In 2000, CEO Welstad resigned abruptly after taking out an "unauthorized loan" of $3.5 million. While the loan was quickly repaid, the fallout left Labor Ready reeling, and it took a few years to regain its footing. In 2007, the company changed its name to TrueBlue, but it retained Labor Ready as its primary brand, which today accounts for nearly two-thirds of overall revenue.

Rather than continue Welstad's aggressive expansion, which required severe cutbacks during recessions, current CEO Steve Cooper has instead focused on managing costs and diversifying: TrueBlue now owns four other small staffing companies specializing in industries like aviation and trucking, and is focused on landing big national accounts such as Walmart, which has utilized Labor Ready's services. There's also been a marked shift in public relations. At times, Welstad seemed hardly able to contain his disdain for temp workers—"The segment we deal with lacks discipline," he told the Chicago Tribune. But Cooper now characterizes TrueBlue as a socially conscious firm dedicated to "changing the world by putting people to work." Labor Ready, its website boasts, is the place for companies who need people that will put in "an honest day's work for an honest day's pay."

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