Public Comment

A Route To Poverty: The Decline of Conventional Employment

Harry Brill
Friday February 24, 2017 - 01:53:00 PM

It doesn't take a genius to realize that the standard of living is declining despite the claims of many public officials and corporate CEOs. Among the important problems that have been battering working people is that millions of jobs have been and continue to be OUTSOURCED abroad. Since the year 2000, about 5.5 million jobs in manufacturing have been outsourced. A conservative estimate of the total shipped abroad since the year 2000 would be at least 9 million jobs This does not include the substantial number of jobs that have disappeared because of the steep decline in consumer spending as a result of moving jobs abroad.

Since the 1980s many businesses have employed another weapon -- DOMESTIC OUTSOURCING. In addition to sending work abroad, many establishments are also replacing their own workers with less expensive employees from subcontracting firms. Apparently they have decided that the very last thing they intend to do is to increase their workforce even if their business volume is expanding. Unless this development is successfully confronted a lot more working people and their families will be joining the ranks of the poor. 

Among many of the large corporations about 20 to 50 percent of their total workforce is procured from the many thousands of domestic subcontracting businesses. Bank of America, Verizon, Proctor & Gamble and FedEx Corporation each do business with many of these contractors. In certain industries, including oil, gas and pharmaceuticals, outside workers sometimes outnumber employees by at least 2 to 1. According to the Wall Street Journal there are currently about 20 million workers that are not employed directly by the company where they work. Moreover, many of these workers are leased for only part-time work and for a short period of time. 

The advantage to business is that compared to the wages paid to regular employees, labor costs are considerably lower. Subcontracted workers are paid up to 30 percent less than regular workers, and in agriculture, the wages are up to 40 percent lower. = Moreover, as many workers have experienced, even the highly exploitative poverty wages they receive do not satisfy their employers. So in addition many workers are also victimized by wage theft. They are paid below the minimum wage, not paid for working overtime, forced to work off the clock, and suffer unlawful paycheck deductions. According to a survey of workers in the food industry, 70 percent of the subcontracted workers are not paid for their overtime. About 25 percent reported minimum wage violations. Some of these violations are egregious. The Los Angeles Times reported that 11 bakery workers were paid just two dollars an hour over a two year period. Incredibly, 8 out of 10 Los Angeles workers experience wage theft.  

The obvious question is how do employers get away with their outrageous and illegal conduct? The obvious answer is that for one reason or another many workers feel too vulnerable to complain or for good reason feel that complaining would be futile. These subcontractors know how to recruit workers who will pose no serious problems. Among these "safe" employees are undocumented immigrants, workers who have been arrested, and a growing number of desperate workers who have been long term unemployed.  

Since these workers are not paid by the firms they work in, there is little or nothing they can do about their dismal situation. If they complain to the subcontractor they will not be dispatched to another firm. In effect, they are fired. Generally speaking, workers who are lucky enough to procure employment via subcontractors work in a climate of insecurity and fear that is encouraged by the establishment. 

The public recently learned, for example, of the almost 700 documented workers in 12 states who were arrested by the Immigration and Custom Enforcement agency and now face deportation. To understand the significance of these arrests, keep in mind that terrorizing these workers is not just a screwball idea of the Trump administration. The Obama administration also engaged in massive arrests of undocumented workers. In fact, in some weeks arrests exceeded 2000 undocumented workers. An advocate of these workers explained that stirring fear is the main motive of the establishment. Not surprisingly, the news of these arrests puts many of these workers on edge. It is certainly one way of assuring compliance among the 8 million highly exploited undocumented immigrants who are in the workforce. 

Although it is understandable that working people attempt to seek assistance from government, both federal and local, government has done very little to alleviate their problems. Over half of the subcontracted workforce who are employed in government programs receive no benefits at all. And very few receive paid sick leave and health insurance. Until President Obama signed an executive order that increased the wages of workers whose subcontractor has contracted with the federal government, 74 percent earned less than $10 an hour. Although the legal wage now is $10.20 an hour, Trump is threatening to rescind the executive order. But even if Obama's decision remains, it is still a poverty wage. 

Generally speaking, the laws that presumably protect contracted workers are too often ignored and violated. Among those workers who have legally challenged the theft of their wages, 83 percent who win a favorable decision never see a dime. Indeed, the enormous gains that corporations have made by employing subcontracted workers have been very costly to working people.  

It is very difficult to evaluate what lies ahead. However, if present trends continue, subcontracting rather than directly hiring workers will increase, and accordingly conventional hiring will continue to decline. As a result, the poverty that domestic outsourcing breeds will be engulfing a much larger share of the nation's workforce.