Temporary Workers in California Are Twice As Likely As Non-Temps to Live in Poverty: Problems with Temporary and Subcontracted Work in California
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Temporary Workers in California are Twice as Likely as Non-Temps to Live in Poverty: Problems with Temporary and Subcontracted Work in California Miranda Dietz August 2012 ACKNOWLEDGEMENTS I want to thank IRLE and the staff of the Labor Center, especially Ken Jacobs and Laurel Lucia, for spon- soring the project and for ongoing guidance. Caitlin Vega, Maurice Emsellem, Ian Lewis, and David Rosenfeld gave generously of their time and were immensely helpful. anks to Gene Bardach and the Tuesday night crew for getting me down the eight-fold path and through the semester. I am grateful for comments, edits, and other assistance from Dave Graham-Squire, Katie Quan, Jenifer MacGillvary, Elizabeth Lytle, Sylvia Allegretto, Luke Reidenbach, Tian Luo, Emily Gerth, and Philip Zeyliger. And special thanks to the contingent workers and organizers who spoke at the California Labor Committee hearings for sharing their stories. e author conducted this study as part of the program of professional education at the Goldman School of Public Policy, University of California at Berkeley. is paper is submitted in partial fulfillment of the course requirements for the Master of Public Policy degree. e judgments and conclusions are solely those of the author, and are not necessarily endorsed by the Goldman School of Public Policy, by the Center for Labor Research and Education, by the Institute for Research on Labor and Employment, by the University of California, or by any other agency. Copyright © 2012 by the Regents of the University of California. All rights reserved. Cover photo: Michael Lorenzo/Nazreth, www.sxc.hu. 2 Problems with Temporary and Subcontracted Work in California CONTENTS Executive Summary . 4 I. Introduction . 5 II. Contingent Workers in California . 6 Who are California’s contingent workers? . 6 In the U.S. 1 to 2 percent of the workforce (around 2 million people) work for . 7 temp agencies Temporary workers face lower wages, fewer benefits, and less job security . 9 III. Problems With Contingent Work . 11 Temp staffing lowers wages, increasing state safety net costs . 11 Temps enable employers to benefit from avoidance and non-enforcement of . 13 worker protections The business case for using temps . 14 Using temps to avoid contributing to employee protections and benefits . 15 Government enforcement of existing labor laws fails temporary workers . 16 IV. Alternatives and Solutions . 18 Wages . 18 Equal pay for equal work: The UK’s Agency Workers Regulations . 18 Enforcement and updating employment law . 19 More enforcement . 19 A rebuttable assumption of retaliation . 19 Joint liability . 19 Move liability from the employer to the entity best able to deter violations . 20 IV. Conclusion . 22 Bibliography . 23 Appendix A. ACS data on employment services workers . 27 Appendix B: Sectoral analysis of contingent work . 32 Miranda Dietz 3 EXECUTIVE SUMMARY e nature of employment is changing. Employees sex, and English proficiency, temps make about are increasingly seen as liabilities rather than as- 18 percent less per hour than their non-temp sets, and so workers are kept at arm’s length from counterparts. e wage differential is even larger the companies they ultimately serve. Middle-class for blue-collar workers. long-term jobs are shifting to precarious, low-wage work. ese contingent relationships include tem- Temporary and subcontracted work presents two porary and subcontracted workers, whose ranks basic public policy problems: have been growing over the past two decades. 1. Temporary and subcontracted arrangements In California almost one-quarter of a million erode wages. ese lowered wages mean that people worked in the temporary help services contingent workers rely more on the state industry in 2010; another 37,000 people worked safety net. Temps in California were twice as for employee leasing firms totaling 282,000 work- likely as non-temps to live in poverty, receive ers in these two industries. is accounted for food stamps, and be on Medicaid. approximately 2.0 percent of all non-farm employ- 2. Temporary and subcontracted arrangements ment in California in 2010, approximately the undermine existing worker protections first same ratio as for the U.S. as whole. Employment by allowing employers to avoid certain worker services workers span a wide range of occupations, provisions, and second by making enforce- from professional white collar occupations like ment of the remaining protections difficult. nursing, accounting, and computer programming, e ability of some employers to avoid pay- to blue collar work in transportation and material ing into the system of employer-provided moving, housekeeping and landscaping, and worker benefits disadvantages both high- manufacturing. road employers who hire directly, and con- Temporary workers face lower wages, fewer tingent workers who receive only limited benefits, and less job security. Temporary and worker protections. Even these more limited contingent work by its very definition is less secure worker protections can be elusive for contin- than full-time direct hire work. is lack of stability gent workers who are particularly susceptible has implications for workers’ wealth, health and to employer retaliation. well-being. Temporary workers are not compen- Solutions to the problems of temporary and sub- sated for their willingness to accept less reliable contracted work range from efforts to increase low work; instead they tend to face lower wages than wages generally to mandates to pay temps and their non-temp counterparts. Median hourly non-temps the same wage. In addition, policies to wages were $13.72 for temps and $19.13 for non- combat retaliation and hold other actors in the temps in California in 2008-2010. Controlling for supply chain accountable are promising ways to the type of occupation as well as personal charac- uphold existing worker protections in the face of teristics of workers such as age, education, race, workplace changes. 4 Problems with Temporary and Subcontracted Work in California I. INTRODUCTION e nature of employment is changing. Wages have paychecks came from a temporary employment been stagnant, risk has been shifted onto workers, agency and did not have all the proper state deduc- and stability of employment has declined. Real tions (Flores, 2012). Complex chains of subcon- wages for the median American male have been tracting can complicate the story: a “Hilton” hotel stagnant through the last four decades (Bernstein, may be owned by a group of investors, run by a 2005). Concurrent with this trend has been a major hospitality operator such as HEI which buys change in the relationship between employers and the license to use the Hilton name, and use a com- employees. Jobs moved overseas as global markets pany like Pro-Clean Services to provide house- opened up and technology enabled worldwide keeping (Lewis, 2012; heihotels.com). At a hotel communication and coordination. At the same with a Hilton sign, there may be no employees of time, vertically integrated companies have given Hilton. way to longer and longer chains of subcontracting (Weil, 2010). As part of this pattern of subcontract- In the warehousing industry, long chains of sub- ing, workers are increasingly seen as liabilities contracting are also common. Wal-Mart and other rather than assets, held at arm’s length, dealt with large retailers contract with third party-logistics as a procurement issue rather than human re- firms, who in turn contract with warehousing serv- sources. e resulting contingent employment ices firms, who in turn contract with temporary situations, including the focus of this report, sub- staffing agencies. In some cases workers from mul- contracting and employment services agencies, tiple staffing agencies work side-by-side, or work- erect barriers between the powerful companies ers from staffing agencies and direct-hire workers that set the terms of engagement within a supply are indistinguishable (Jamieson, 2011). e work is chain and the workers themselves. physically demanding, fast-paced, and rife with opportunities for injury. Workers are constantly re- Examples of contingent work arrangements are minded that they are quickly replaceable and sub- well-documented in the U.S. and indeed world- tly or overtly discouraged from voicing concerns wide. Consider recent examples from the hotel and about health and safety or wages (McClelland, warehousing industries. In the hotel industry, the 2012). Brand name retailers like Wal-Mart and entire housekeeping staff at three Boston Hyatt Amazon reap the eventual profits of increasingly hotels was replaced by ‘temporary’ workers. In efficient logistics and supply chains, but are often 2009, 98 housekeepers earning $14 to $16 per hour many levels removed from the workers whose were fired en masse and workers earning $8 per employment conditions are too often below the hour at Hospitality Staffing Solutions, a Georgia- minimum threshold required by existing wage based staffing firm, were brought in to replace and hour and health and safety laws. them (Greenhouse, 2009). More recently in Califor- nia, a former housekeeper at a Hilton in Southern Worker protections and benefits largely rely on the California came before the California Assembly existence of an employer-employee relationship. Labor Committee to describe a two-tiered system Some contingent workers—independent contrac- of employment, with some workers hired through tors and the self-employed—have no employer a small employment services agency without being and therefore receive very few protections.