Temped Out: How Domestic Outsourcing of Blue-Collar Jobs Harms America’s Workers

The employment services industry, which includes both temporary staffing agencies and more permanent employee leasing firms, is expected to rank among the fastest-growing sectors in the country in the next decade.

Staffing work is one part of a larger story about the declining middle class in our country. More and more, major corporations are separating themselves from the workers who make their products and supply their shelves by inserting labor intermediaries who are nominally the “employers” of these workers.

The competition between staffing agencies to undercut rivals’ bids places downward pressure on wages and working conditions. Staffing agencies may take over all of the former employer’s responsibilities for wages, health and safety, compliance with discrimination laws, and provision of workplace benefits. But they still need to make a profit. This means that working conditions almost necessarily must degrade when a host company turns to a staffing agency. Intense competition produces intense pressure to cut costs by whatever means necessary, leading some to seek out the most vulnerable workers, cut corners, and cheat.

This report finds:

The number of U.S. workers in temporary help jobs has reached an all-time high. Fully 2.8 million Americans are currently employed in temporary help services, which constitute the majority of staffing industry jobs.

The industry has shifted from largely clerical to largely industrial. In 2013, production and material moving jobs made up 42 percent of the industry, while office and administrative jobs made up just 21 percent.

Major corporations now use staffing as a permanent feature of their business model. Seventy-seven percent of Fortune 500 firms now use third-party logistics firms, who may then contract out to an army of smaller firms to move their goods.

Staffing agencies often hire the most vulnerable. Latinos make up 16 percent of employed workers, and African Americans, 11 percent, but each group accounts for 20 percent of the staffing industry. Research shows that up to 40 percent of former welfare recipients who became employed after 1996 reform legislation obtained jobs in temporary help services.

Staffing work has serious impacts on workers’ health. A 2010 analysis of Washington State data found that workers employed by temporary help agencies reported higher rates of injury than workers in standard employment arrangements.

Staffing work means a pay cut for workers. The median worker in the staffing industry earns $12.40 an hour, compared to an hourly wage of $15.84 earned by all private-sector workers, regardless of industry—a whopping 22 percent wage penalty.

The pressure to deliver more for less leads some staffing agencies to break the law. In a recent Massachusetts case for unpaid overtime, the staffing agency defendant claimed it was unable to pay overtime because of the low rates paid to it by the host company.

Staffing workers are effectively excluded from the right to organize and bargain with their employers under the National Labor Relations Act (NLRA). Where working conditions and wages are poor, workers can normally come together to negotiate with their employers and try to improve them. This is not true for staffing agency workers. A 2004 National Labor Relations Board decision requiring consent from the staffing agency and host employer makes it next to impossible for staffing workers to take advantage of their rights under the NLRA.

Despite these barriers, however, staffing workers are coming together and developing new forms of organizing. They have won raises, ended discrimination, and increased their health and safety protections in a Walmart consolidation center in Indiana. They have won a $21 million judgment for wage and hour violations in California. They have stood up to the practice of transporting workers in overcrowded vans to an overheated warehouse in New Jersey. And in Massachusetts and Illinois, they have won changes to state law that establish reasonable regulation of staffing agencies and the companies that use them.

This report concludes with recommendations to restore good jobs to staffing workers. If increased use of labor intermediaries, including in growing sectors of our economy, is in our future, decent jobs and the restoration of the right to organize must also be part of that future. National laws passed in the 1930s, 1960s, and 1970s have not kept up with the changing forms of work in our economy. The companies at the top of the contracting chain must take responsibility for the workers at the bottom whose lives and livelihoods are in their hands.

Related to

About the Authors

Rebecca Smith

Director of Work Structures, National Employment Law Project

Claire McKenna

Senior Policy Analyst, National Employment Law Project