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The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed

By hiring temporary workers, big companies can shield themselves from complaints about poor working conditions.

| Mon Jul. 1, 2013 5:00 AM EDT

This story first appeared on the ProPublica website.

It's 4:18 a.m. and the strip mall is deserted. But tucked in back, next to a closed-down video store, an employment agency is already filling up. Rosa Ramirez walks in, as she has done nearly every morning for the past six months. She signs in and sits down in one of the 100 or so blue plastic chairs that fill the office. Over the next three hours, dispatchers will bark out the names of who will work today. Rosa waits, wondering if she will make her rent.

In cities all across the country, workers stand on street corners, line up in alleys, or wait in a neon-lit beauty salon for rickety vans to whisk them off to warehouses miles away. Some vans are so packed that to get to work, people must squat on milk crates, sit on the laps of passengers they do not know, or sometimes lie on the floor, the other workers' feet on top of them.

This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.

The people here 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 2013 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.

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Many get by on minimum wage, 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.

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 June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association, the temp industry's trade group, the pool is even larger: Every year, a tenth of all US workers finds a job at a staffing agency.

a chart on the number of temp workers

The proportion of temp workers in the labor force reached its peak in early 2000 before the 2001 slump and then the Great Recession. But as the economy continues its slow, uneven recovery, temp work is roaring back 10 times faster than private-sector employment as a whole 2013 a pace "exceeding even the dramatic run-up of the early 1990s," according to the staffing association.

The overwhelming majority of that growth has come in blue-collar work in factories and warehouses, as the temp industry sheds the Kelly Girl image of the past. Last year, more than one in every 20 blue-collar workers was a temp.

Several temp agencies, such as Adecco and Manpower, are now among the largest employers in the United States. One list put Kelly Services as second only to Walmart.

"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 2013 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.
 

The Rise of 'Temp Towns'

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, Illinois, 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.

Locations of Temp Workers

These counties had high concentrations of temporary help service workers for counties with more than 100,000 workers in 2011. Overall, 2.1 percent of private-sector workers were temps in 2011.

County Concentration
Greenville County, S.C. 8.6%
Kane County, Ill. 6.1%
Kent County, Mich. 6%
Middlesex County, N.J. 5.8%
Shelby County, Tenn. 5.3%
San Bernardino County, Calif. 5.1%
Lehigh County, Pa. 4.6%
Camden County, N.J. 4.3%
Winnebago County, Ill. 4.2%
Ramsey County, Minn. 4%
Burlington County, N.J. 4%

Source: ProPublica analysis of Bureau of Labor Statistics’ Quarterly Census of Employment and Wages data

In Kane County, Illinois, where Rosa lives, one in every 16 workers is a temp. Such high concentrations of temp workers exist in Grand Rapids, Michigan; Middlesex County, New Jersey; Memphis, Tennessee; the Inland Empire of California; and Lehigh County, Pennsylvania. 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, Illinois, 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, South Carolina, near BMW's US manufacturing plant, one in 11 workers was a temp in 2011. 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.)

In some lines of work, huge numbers of full-time workers have been replaced by temps. One in five manual laborers who move and pack merchandise is now a temp. As is 1 in 6 assemblers who work in a team, such as those at auto plants.

To be sure, many temp assignments serve a legitimate and beneficial purpose. Temp agencies help companies weather sudden or seasonal upswings and provide flexibility for uncertain times. Employees try out jobs, gain skills and transition to full-time work.

"I think our industry has been good for North America, as far as keeping people working," said Randall Hatcher, president of MAU Workforce Solutions, which supplies temps to BMW. "I get laid off by Employer A and go over here to Employer B, and maybe they have a job for me. People get a lot of different experiences. An employee can work at four to five different companies and then maybe decide this is what I want to do."

Companies like the "flexibility," he added. "To be able to call someone and say, 'I need 100 people,' is very powerful. It allows them to meet orders that they might not otherwise."

But over the years, many companies have upended that model and stretched the definition of "temporary work."

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.

Occupations of Temp Workers

These occupations had high concentrations of their workers in the employment services industry in 2012.

Occupation Concentration
Production helpers (entry-level jobs that require less skill) 29.2%
Laborers and freight, stock and material movers by hand 18.4%
Assemblers who work in a team 17.6%
Human resources specialists 16.2%
Packers and packagers by hand 16.2%
Packaging and filling machine operators and tenders 16.1%
Data entry keyers 15.1%
Demonstrators and product promoters 11.5%
Metal and plastic cutting, punching and press machine setters, operators and tenders 10.1%
Construction laborers 9.4%

Source: ProPublica analysis of Bureau of Labor Statistics’ Occupational Employment Statistics data

By 4:52 a.m., the chairs at Rosa's temp agency are filled, and workers line the walls, clutching plastic bags that contain their lunches. From behind the tall white counter, the voice of an unseen dispatcher booms like a game-show host, calling out the first batch of workers: ___ Mendoza, ___ Rosales, ___ Centeno, ___ Martinez…

It is a practice that George Gonos, a sociologist at the State University of New York-Potsdam who has spent his career studying the temp industry, calls the modern version of the "shape-up" 2013 a practice in which longshoremen would line up in front of a boss, who would pick them one by one for work on the docks.

The day after Thanksgiving 1960, Edward R. Murrow broadcast a report called "Harvest of Shame," documenting the plight of migrant farmworkers. Temp workers today face many similar conditions in how they get hired, how they get to work, how they live and what they can afford to eat. Adjusted for inflation, those farmworkers earned roughly the same 50 years ago as many of today's temp workers, including Rosa. In fact, some of the same farm towns featured in Murrow's report have now been built up with warehouses filled with temps.

As before, the products change by the season. But now, instead of picking strawberries, tomatoes and corn, the temp workers pack chocolates for Valentine's Day, barbecue grills for Memorial Day, turkey pans for Thanksgiving, clothing and toys for Christmas.

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.

BMW did not return calls for this story.

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.
 

Labor Sharks and Kelly Girls

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 State University of New York-Buffalo sociologist and author of The Temp Economy. And they marketed the advantages of workers that the host company wasn't responsible for 2014 a theme that continues today.

One 1971 Kelly Girl ad that Hatton found, called "The Never-Never Girl," featured a woman biting a pencil. 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.)

Gradually, temp firms began moving into blue-collar work. At the end of the 1960s—a decade in which the American economy grew by 50 percent—temp agencies began selling the idea of temping out entire departments. Relying on temps only for seasonal work and uncertain times was foolish, the agencies told managers over the next two decades. Instead, they said companies should have a core of, say, five employees supplemented by as many as 50 temps, Hatton wrote.

The temp industry boomed in the 1990s, as the rise of just-in-time manufacturing drove just-in-time labor. But it also gained by promoting itself as the antidote to bad publicity over layoffs. If a company laid off a large portion of its workforce, it could make big news and leave customers feeling sour. But if a company simply cut its temps, it was easy to write it off as seasonal 2014 and the host company could often avoid the federal requirement that it notify workers of mass layoffs in advance.

More recently, temp firms have successfully lobbied to change laws or regulatory interpretations in 31 states, so that workers who lose their assignments and are out of work cannot get unemployment benefits unless they check back in with the temp firm for another assignment.
 

"You Are Not Driving Goats"

Rosa lives in the living room of an old Victorian boarding house. There is a cheap mattress on the floor, and a sheet blocks the French doors that separate her room from the hallway. The rent is $450 a month, which she splits with her boyfriend who works as a carpet installer. She shares a kitchen and bathroom with another family. A trap by her door guards against the rats that have woken her up at night.

Rosa came to the United States in 1997 from Ecatepec, Mexico, where she struggled to raise two sons on her own as a street vendor of beauty supplies. When she found out a neighbor had hired a coyote to help her cross the border, Rosa joined her, leaving her children with family and taking a bus to the frontera. They walked for three days across the desert to a meeting point, where a bus took them to a safe house in Phoenix and then to Cullman, Alabama.

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