I've written a few times in recent months about the breakdown of traditional employment relationships. Organizations of all kinds—mainly in the private sector, but also universities and other nonprofits—have grown super savvy about outsourcing any number of functions they used to do in-house to contractors. And, no, I'm not talking about shipping jobs to China. I'm talking about, say, firing your long-time janitors and putting office cleaning up for competitive bidding—which can do wonders to lower costs.
But domestic outsourcing achieves those savings by lowering wages and skimping on benefits—or, in many cases, violations of labor law related to how employees are classified and paid for overtime.
Tackling this problem is tough, because it can be hard to identify just who to hold accountable for how workers are paid and treated. In the traditional employment model, the firm was clearly in the driver's seat on such matters. Now these firms contract out any number of operations and don't ask a lot of questions. The firm itself may have no clue as to how well its janitors or food workers or drivers are treated. And so when abuses come to light, executives can just shrug their shoulders: Those aren't our workers. We didn't know.
But advocates for workers are now fighting back. They've researched and analyzed the labyrinths of domestic outsourcing and are figuring out how and why abuses occur—and what to do about them.
The report is both disturbing and effective on many levels. It clearly explains how these opaque employment relationships operate and shows how they foster a harsh race to the bottom, as vendors try to offer the lowest possible bids. And it puts a human face on the many downsides of this unbridled competition, profiling workers who are employed by contractors.
Most disturbing is how the report shows there are huge incentives for violating labor laws and how this is a world where good guys last. If you're a law-abiding firm that properly classifies your workers and pays them what the law says, you can find yourself driven out of business by competitors who are cheating and saving big on labor costs. There is no fair or level playing field, the report finds.
That finding lines up with my own research on cheating, which showed how today's harsher bottom line can lead even good people to break the rules—if only to keep up with the other cheaters.
But the most important contribution of the NELP report is that it lays out a policy agenda for dealing with the abuses around outsourcing. NELP isn't the only place where you can find solutions to this problem—David Weil's new book on this problem also offers solution—but NELP has a knack for boiling things down to a multi-pronged plan, and they've done that here, laying out seven strategies, along with what they call a new approach to accountability:
policy-makers should create a broader accountability framework in which some subset of the players and creators of these chains are recognized as responsible. This framework would hold responsible any subset of individuals and entities that have the power to impact the working conditions in their contracted arrangements. It assigns accountability in outsourced work to those that are in a position to know of and control the operations around that work, improving the chances that labor standards and protections will hold.
That all sounds good to me.