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Industrial Temps

The Next Big Thing in Temporary Labor
A new breed of temporary employer is supplying cheap labor for some of the nation's most dangerous occupations.

Unemployment rates may be hovering around a historically low 4%, but the downside of the U.S. economy continues to be the explosion of low-wage temporary jobs. Temp agencies such as Manpower Inc. have become infamously known as the nation’s fastest growing employers. But while data entry or office support are common types of temp work, a new breed of staffing agency is carving out a niche by providing cheap labor for some of the nation’s more hazardous occupations.

Labor Ready, a Tacoma, Washington-based company that was founded in 1989, is rapidly becoming the nation’s largest supplier of “light industrial” temporary labor. Billing itself as the “McDonald’s of temporary manual labor,” Labor Ready says it can supply workers for a wide range of jobs, including hospital work, freight handling, demolition, janitorial services, waste management, construction, meat packing and many others. Labor Ready has grown from only 8 branches in 1991 to 683 branches operating in 46 states, Canada, Puerto Rico, and the United Kingdom today. In 1998, the company provided temporary jobs to some 533,000 workers.

By providing employers with workers in as little as one hour and by paying workers cash at the end of the workday, Labor Ready says it has perfected a system that benefits both employers and workers. As usual, employers turn to companies like Labor Ready because they are seeking to avoid the responsibilities that come with full-time employees, such as paying for workers’ compensation insurance, unemployment insurance and other federal and state taxes. Labor Ready temps do not get health insurance, pensions, paid time off or other benefits. “It’s convenient to get some people when you need them, and then when you don’t need them, they go away,” said one Texas warehouse manager who uses Labor Ready’s services. “You don’t have to worry about laying them off” (Houston Chronicle 08/30/98).

This year, Labor Ready made big waves after hooking a couple of high-profile clients. In Miami, Labor Ready won a contract to supply 700 temp workers for setting up, selling concessions, and cleaning up at Super Bowl XXXIII. And in St. Louis Labor Ready supplied some 200 workers to make preparations for the Pope’s visit in January. (Ironically, the Catholic Church was among the first organizations to lobby for the living wage at the turn of the century. While the Church and Super Bowl viewers were not directly involved in hiring low-wage temps, it is important for people to be aware that behind-the-scenes labor is often being exploited at these events.)

Safety and Health Concerns

Working as a temp at the Super Bowl may sound like a fun job to some, but many of Labor Ready’s temps are assigned to more dangerous and less exciting job sites. Of the occupations for which Labor Ready advertises that it can provide workers, seven of them (light industrial laborers, hospital work, janitor, construction labor, assembly, restaurant work, and stock handling/baggage) were among the top ten occupations reporting the highest rates of lost-worktime injuries in 1997, according to the U.S. Bureau of Labor Statistics. Although Labor Ready says it provides safety and health training, the company said workers hired as unskilled labor usually do not receive training.

When Labor Research Association called a Labor Ready office in Brooklyn to ask how soon they could send over workers to remove insulation from an old building, the woman taking the order said four workers could be ready the next morning. She also said they would not have to receive training.

Building scaffolding, ripping out insulation, cutting trees, demolishing buildings or removing waste materials may be unskilled labor in Labor Ready’s opinion, but many of these jobs expose workers to serious occupational hazards. Light industrial work, unlike office work, can lead to serious injury or even death without proper training and supervision. And since employers are hiring these workers through temp agencies, it is doubtful that they will invest any time or money on training. What’s more, because employers who hire Labor Ready temps do not have to worry about paying workers’ comp premiums, they have less of an incentive to provide a safe work place.

The Secret of Labor Ready’s Success

At a location in Spring Branch, Texas, company officials estimated that Labor Ready makes $119 for each worker it provides in a given day. The company pays its unskilled workers between $5.60 and $6.50 an hour, while charging clients between $10.50 and $11.50 an hour for their worker’s services. Reaping profits of between 75% and 100%, Labor Ready makes a killing by providing workers on demand. Labor Ready also makes money off of the workers themselves by charging them a dollar, plus whatever change is on the check, as a service fee for cashing their work vouchers (a worker would receive $35 cash for a voucher for $36.99). As most of the workers have no bank accounts, they often have no choice but to use the cashing service Labor Ready provides. Charging a fee, however, is in violation of many states’ laws concerning the voucher system.

Labor Ready had revenues of $163.5 million in 1996, $335 million in 1997 and $606 million last year. The company’s success is evident in the rate at which it is expanding, as it is now opening branches throughout the Northeast and hopes to expand as far as Australia within the next few years. Chairman Glenn Welstad hopes to have “more than 2,500 offices” within the next five years.

Union Threat?

Labor Ready says that the company is not competing against union labor. But Bob Mariani, a district manager at Labor Ready in Westchester, New York, actually compared the company to a traditional labor union hiring hall, according to The Westchester County Business Journal (03/09). Union members, of course, are not buying Labor Ready’s line. According to Mike Potts, the business representative for the Los Angeles and Orange Counties Building and Construction Trades Council, “the company should be outlawed…as far as I can tell, they’re simply trying to be cheap labor barons.” (The Orange County Register 02/19). And on Long Island, New York, union official John M. Kennedy is concerned about the quality jobs that companies such as Labor Ready are supplying. “I don’t know how anybody is going to get a pension. It will set workers back,” he told Newsday (04/09).

This article first appeared in LRA's Trade Union Advisor (May 31, 1999).

© Labor Research Association 1999

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