An Economy Built on Worker Insecurity

Desperate economic times (for workers that is, since most companies are thriving) has led to the growth of a new industry: temporary jobs that exploit people’s willingness to take whatever they can get given the low job prospects. Mother Jones reports:

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

Worse still, the trend shows little sign of abating:

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.

And while many think that temp jobs may offer some sort of gateway into better employment in the future, that’s sadly not the case:

Yet there’s little evidence to support the claim that temp agencies help impoverished workers. In fact, a 2010 study by economists David Autor of the Massachusetts Institute of Technology and Susan Houseman of the Upjohn Institute for Employment Research found that temp jobs play a negligible—and if anything, negative—role in boosting people’s earnings. Looking at welfare-to-work participants in Detroit, the authors found that after a short spike in earnings, temp workers eventually saw a net decrease in income and employment, even when compared to workers who’d had no help securing work. Providing low-skill workers with a temp job, they wrote, “is no more effective than providing no job placements at all.”

We’re creating an underclass of people who may be indefinitely stuck with these barely passable jobs. Given the growing popularity of this option, and the increasing unwillingness of companies to provide for their workers, I wonder how many more people will find themselves in this awful predicament?

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