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Temp Economy vs. American Dream

David Callahan

If you're part of the 9-to-5 crowd, chances are you wish you had more flexibility. But many low-income workers have the exact opposite problem: their hours vary wildly and they rarely know if they will get a full forty hours of work in a given week. Or even get work at all.

This problem is growing as businesses get more sophisticated at using just-in-time labor strategies. In the same way that corporations have boosted their bottom-line through just-in-time production and stocking strategies -- only having the merchandise on hand they know they can sell -- so too have they added to profits by applying this approach to workers.

The one hitch is that we're talking about human beings. 

I have written here often on the destructive effects of just-in-time work scheduling by employers, who try to have the exact number of workers they need, and no more, at any given time to respond to the ebbs and flows of business. Or to make sure that workers don't log more than 30 hours a week and then qualify for benefits. New software programs have greatly aided just-in-time scheduling. But the result is to create havoc for workers, who have a hard time organizing their lives -- particularly if they are parents -- when they can never be certain of their hours. 

Another way that employers are cutting labor costs by jerking around workers is relying ever more heavily on temp agencies. ProPublica has a big investigative piece out on this trend by Michael Grabell, and it's deeply disturbing.

If you read the government's monthly reports on job growth closely, you'll notice that one area of consistent growth is the hiring of temporary workers. A fifth of all job growth since mid-2009 has been in temp work, according to ProPublica, and there are now 2.7 million temp workers. 

But forget any images you have of temps doing secretarial work or word processing while they wait for their acting careers to take off. Most temporary workers are now in blue-collar industries and employers are hiring this way to evade the responsibilities of having regular employees. In many cases, "temporary" workers will labor in the same job for years -- yet never qualify for benefits or key labor protections:

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. . . . Temp agencies consistently rank among the worst large industries for the rate of wage and hour violations, according a ProPublica analysis of federal enforcement data. A 2005 Labor Department survey, the most recent available, found that only 4 percent of temps have pensions or retirement plans from their employers. Only 8 percent get health insurance from their employers, compared with 56 percent of permanent workers.

Pretty ghastly, and this is one of the fastest growing parts of the labor force. A big driver of inequality, it turns out, is that corporations have learned how to turn mediocre jobs into terrible jobs. 

Meanwhile, the middlemen who run temp agencies are doing great, and this is one more example of profiteering in the low-wage economy. Along with subprime lenders and others who see profit in poverty -- a topic that Gary Rivlin wrote about in his book Poverty, Inc. -- many temp agenices make their money by pushing low-income people even further down the economic ladder. 

The growing temp economy is further evidence of the need for a new labor regulation regime in the United States. The current framework was established in the middle of the last century and has now been bypassed by savvy employers, new technology, and changing norms around work. 

How we regulate work is just not working.