The temporary work industry has been around for a long time, but it exploded in the 1990s. The number of temp agency jobs has doubled in the past six years, to 3.5 million. Ever more young adults are using temp agencies as bridges into the work force and between jobs. Nearly one in six young adults today will take a temporary job at some point before turning age 35. Temps are part of a broader move to "contingent" employment--which includes part-timers and contract workers, often with substandard pay and benefit arrangements. The attractive aspects of "independent" work are much heralded: well-paid consultants can artfully balance work and family by setting their own hours while telecommuting. But the reality for most contingent workers is vastly different.
One of the most striking new developments is the rise of "permatemps." These are employees who, for all practical purposes, are part of a company's permanent work force. Yet they are actually employed not by that company, but rather by a temp agency. Permatemps are found in all sectors of the economy, from low-wage service jobs to high-tech, new-economy jobs.
Until recently, for example, nearly 35 percent of Microsoft's U.S. workers were not on the Microsoft payroll. Microsoft hired them (laundered them, really) through temp agencies that provide limited benefits and inferior wage scales. Many were working in core areas, such as Office software development. Microsoft fought off a legal challenge from the permatemps for years. But last year, the U.S. Court of Appeals for the Ninth Circuit ruled against Microsoft, and in January, the Supreme Court refused to hear Microsoft's appeal. This ruling, holding that many of Microsoft's "temps" were really permanent workers, could signal the beginning of real reform.
Most young temps want permanent jobs and careers but aren't getting them. For many, signing up with a temp agency means signing away fundamental protections and rights accorded to permanent employees. Few have employer-paid health insurance or pension coverage. By transferring the responsibility of being the employer to a third party, the staffing agency, companies can reduce net labor costs and liabilities and enhance flexibility. Thus, even though temp agencies charge high mark-ups, companies have a strong incentive to turn long-term workers into permanent temps in order to deny basic rights and protections.
Despite considerable economic growth, life for most young adults has, by economic measures, stagnated or declined since the early 1970s. Near-full employment has not produced much of an increase in bargaining power. Young adults today may have CDs instead of vinyl, and laptops instead of typewriters, but they have lost a great deal of their ability to raise families, buy a home, save for retirement, and otherwise support a standard of living that once was fairly typical.
According to U.S. Department of Education data, annual incomes for young adults tipped into a decades-long decline in the early 1970s that has barely nosed upward with the current expansion. Young people without a college degree--three-quarters of the age group--earned about 25 percent less in 1998 (after adjusting for inflation) than their counterparts did in 1973. Only women with a college degree have made modest progress, with a 12 percent increase in wages.
As a generation of the most highly educated young adults in American history leaves high school and college and enters the labor market, these job hunters often end up in the service sector with low pay and few, if any, benefits. Despite all the hype about young Internet millionaires, the occupations that will add the most to the pool of available jobs in coming years are retail salespersons and cashiers. Ranked nearly as high are home health care aides and teacher assistants. There are 12 million workers age 19-29 with no health insurance.
The rise of temporary work is an important contributing factor to the economic decline of young workers. Temporary workers age 20-34 earn approximately 16 percent less than their counterparts who do the same work but are regular employees. Only 5 percent have employer-provided health coverage, and a similar number have some sort of retirement plan administered by their employer.
The Temp Trap
Nevertheless, for many young workers, temping may be an effective way to enter the work force. A temp agency can provide exposure to a variety of business settings. Businesses love temps, and not just for exploitive reasons. They save on recruiting costs. Employers also may try out potential workers, just as the workers themselves may try out potential jobs. Most important, temp agencies allow businesses to meet short-term fluctuations in workload, without having to take on permanent staff.
But that flexibility would still exist if basic labor protections were extended to temps. Just as temporary work offers some benefits to employers as well as to workers, it also carries enormous potential for abuse. Rather than seeking to meet a real short-term need, many employers use temporary agencies to avoid responsibilities to workers. This maneuver excludes employees from benefit plans, pay scales, and collectivebargaining agreements. Labor standards that protect workers from abuse and ensure a modicum of civil rights protections also are ineffective without a clear identification of who is the employer: the staffing agency or client company.
In the temporary work arrangement, it is unclear whether the temporary agency or the client business is liable in the event that a temporary worker is injured, harassed, discriminated against, or wants to join a union. For example, the Occupational Safety and Health Act (OSHA) specifies that a company is required to provide employees with a safe work environment. Since many client companies do not consider their temporary workers to be employees, however, protections can be ambiguous. While temporary workers could turn to their legal employer for help, the agency is not likely to alienate a good customer--the client company--by aggressively pursuing the interests of their temps.
A client company, moreover, may use temporary workers for more dangerous jobs in order to reduce workers' compensation costs for its regular employees. If high proportions of those temporary workers are injured, the company will not generally be required to pay more for workers' compensation. Meanwhile, if an injury does occur, the temporary agency may also try to pass the buck by encouraging the injured worker to think that the client company is responsible. Since liability is not clear and there are few standardized procedures to enforce accountability, individual lawsuits are both prohibitively expensive and impractical.
Companies that abuse temporary work arrangements span the range of industries--from textiles to high tech. For the labor movement, the spread of temporary work is grounds for worry. Current labor law requires temporary workers to win a contract from a third-party agency rather than from the company where they work. Winning a contract from a temp agency is virtually impossible since there is no physical workplace in which to organize. Companies facing an organizing drive can also switch temp agencies for their labor supply, and if they use many temp agencies, the union must win a contract with each. Additionally, temp agencies can end the "placement" of a union supporter without actually firing that person--they have no obligation to provide an assignment.
The claim that young workers like temping is a myth. On a two-to-one basis, young adults in a recent 2030 Center poll said that the rise of temp jobs is "bad" because the jobs provide lower pay and fewer benefits, rather than "good" because they offer more flexibility. Almost two-thirds of all temps say that they would prefer a regular job, and for most, temporary work is the only kind they could find.
Given the second-class status that is generally apportioned to temporary workers--particularly permatemps--it should be no surprise that a backlash is brewing. In Seattle, Wash-Tech (a union organized by young workers and affiliated with the Communications Workers of America) has played a critical role in the fight against Microsoft. And a coalition called the National Alliance for Fair Employment (NAFFE) launched recently, bringing together a wide array of organizations, from welfare-to-work and prison labor advocacy groups to the 2030 Center and the AFL-CIO. On a more cultural front, the Web site Temp24-7.com, which provides a weekly forum for temps to air their gripes, was named one of the hottest sites on the Internet by Yahoo!; the recent Hollywood movie Clock Watchers dramatized the tensions between "temps" and "perms."
On any given day, nearly one million young adults will head to work in temporary jobs. Typical tenure in the industry is a fairly lengthy five months, while more than 10 percent of workers will hold a temp job for more than two years. Overall, nearly one in four young workers does not have a permanent, full-time job. Policy solutions for the problems of the temporary work force are long overdue.
Still, an outright ban on temporary work, we believe, is neither feasible nor desirable. Temporary work may indeed contribute to economic efficiency. Some workers may prefer the flexibility that temporary work potentially offers; their personal or family needs may leave them no alternative but unemployment. And companies do have a legitimate need for temporary workers to meet unexpected fluctuations. We should start, therefore, by blocking companies from using temporary work on a long-term basis in order to stint on labor costs and labor rights.
One approach is to make the client company take on the responsibilities of an employer, by instituting "joint employer" status. This would discourage companies from classifying a part of their actual work force as temps or contractors for the purpose of excluding these workers from insurance pools, pay scales, and other benefits. This formulation provides a legal basis for workers to argue that the "temporary" classification has been used to deny them benefits and fair labor standards. Even existing law requires employees who are actually permanent and full-time workers not to be disguised as temps. This was the basis for the ruling in the Microsoft case.
Mandating equal pay and benefits for temporary workers (presumably on a prorated basis) also would limit the cost advantages enjoyed by companies that use temps on either a short- or long-term basis. Further labor law reform is needed to ensure that temporary workers enjoy the same rights and treatment generally as other workers.
NAFFE, the new alliance for contingent workers' rights, promotes a temporary agency code of conduct, designed primarily as a tool for local activists. Using this effort as a resource, a temporary worker bill of rights offers a starting point focused more directly on public-policy reform. It is a statement of principles that, translated into appropriate legislation, provides temporary workers with equal treatment and discourages employer abuse.
A Temp Bill of Rights
Here are some key elements of a bill of rights for contingent workers:
Agency Conduct: The temporary agency should represent the interests of the contract worker. If there is a conflict of interest--for example, unsafe conditions at the client company--the agency must act in the best interest of the contract worker.
Full Disclosure: A temporary agency should be required to notify its contract workers of their employment status. Further, workers should be fully informed of all charges and fees that the agency imposes in return for services the contract workers perform. They also should be informed in writing of what their rights are under the law and what to do when they have a grievance.
Joint Employer Status: Both the client company and the temporary agency should be liable as employers for all provisions of the law, eliminating the concept that workers are employers of a "third party" and client companies have no responsibility. With joint responsibility, both companies may be held liable for their actions and standards.
Prevailing Wages: Contract workers should be paid the same amount for doing the same job as regular employees in the same geographical location.
Prevailing Benefits: A company should contribute toward benefit provisions (health insurance, paid sick leave, paid holidays, and pension coverage) for its contract workers if they do not have full benefit coverage through the temporary agency.
The Right to Union Representation: Contract employees should have the right to be covered under an existing collective-bargaining agreement at the workplace of the client company. This would deter companies from excluding workers from the union contract by hiring them through a temporary agency.
Discrimination: It should be illegal for the client company to discriminate based on employment status. Contract workers must have the same rights and privileges as other employees of the client company. They also should have access to the same services and facilities at the workplace: for example, training programs, equipment and protective gear, and meal discounts.
Freedom to Work: Contract workers should have the right to terminate their employment without any penalty. The temporary agency should neither restrict a contract worker from accepting work with another temporary agency or direct employment with the client company nor penalize the client company for hiring the contract worker into a permanent job.
This set of framing principles is designed both as a tool for activists and as a framework for legislation. The temporary worker bill of rights is designed to stop companies from putting workers into a special category in order to deny them equal pay and equal protection under the laws. This will not only reduce or eliminate permatemping, but also will help those workers, a disproportionate share of whom are young, to cycle more briefly through the temporary industry on their way to a permanent job.
It is clear, however, that even if these reforms are enacted, many temp jobs will continue to provide low wages and poor benefits. Reforms for the temp industry must be part of a broader progressive agenda to expand opportunities for the millions of Americans who are only treading water in our economy. ¤