councilor.org
| Source | Steve Zeltzer |
| Date | 99/10/23/09:47 |
| OVER FOUR MILLION SERVED Labor Ready wants to be the McDonald's of the day labor industry. Given that they treat workers like meat, they're right on track. by Ben Jacklet photos by Alice Wheeler Nine of the 15 workers awaiting assignment are asleep, crashed out in chairs with their necks crooked at painful-looking angles, or sacked right out on the floor inside sleeping bags. Labor Ready a day-labor shop on 14th and Jackson in Seattle opens early; 5:30 every morning, right around the time the downtown shelters kick out their residents for the day. The men who are not asleep are milling around, bullshitting, and drinking coffee from a crusty pot on the counter. There is a tense exchange between an older man who has found God and a younger man who hasn't, but it fizzles out before it gets too far. The office smells of body odor and looks like a prison waiting room. A television blares a morning news program. The door to the foul-smelling bathroom doesn't close, much less lock, and there's no toilet paper. The walls are covered with signs spelling out Labor Ready's rules and regulations: No alcohol on the premises; anyone injured on the job will be tested for drugs and alcohol; anyone working a construction site must have steel-toed boots and a hard hat; neglecting to return your hard hat will cost you $10, rubber boots $20; gloves cost $2 to buy, rain gear $11. Another placard reads: You are history if you: 1. Tell me how to do my job. 2. Disturb the peace once. 3. Walk-off/No-show twice. The last thing this place looks like is a local outpost of one of the fastest growing companies in the country. But that's what it is. Labor Ready, the first and only company to go national with chains of exclusively low-wage, day-labor temp agencies, made $607 million in 1998. Its stock price has jumped 1,400 percent in the last four and a half years. In August, Fortune magazine ranked Labor Ready the seventh fastest-growing company in the nation. Not bad for an outfit that serves as the middleman between businesses desperate for help and unskilled laborers who earn around six bucks an hour before taxes, with no benefits and few rights. A group of about 20 workers, all men, just through with the night shift at Safeco Field, show up and are looking to get paid. Labor Ready provides 300 workers for each home game at Seattle's new $500 million baseball park. For $6.25 an hour, these laborers fill trash bags with plastic beer cups and peanut bags, use gasoline-powered leaf blowers to blast away at the peanut shells under the seats, and sell overpriced food and drinks. The man in the chair to my left, fresh from a night shift of cleaning up the ballpark, shakes his head. "I hope I never see another peanut. I'm gonna dream about peanuts." Five minutes later, the man is snoring lightly, mouth open and dark sunglasses crooked on his face dreaming of peanuts. He wakes suddenly when a Labor Ready manager calls out his name and asks, "Voucher or check?" "Voucher." "Return or no?" "No way." He moves up to the counter, gets his voucher, and punches numbers into the Labor Ready ATM machine under a rather large "CASH NOW$" sign. If he holds any grudge against the company that just skinned him for half the wages that were paid for his work, plus an ATM charge, he doesn't show it. He walks back to his seat, folding the cash neatly and placing it into his front pocket. Within minutes he is asleep again. Cashing In Founded in Tacoma in 1989 by President and CEO Glenn A. Welstad, Labor Ready has cashed in big-time on America's $100-billion-a-year temp-staffing industry. In 1989, Labor Ready consisted of one office in Kent. By 1993, the company had 17 dispatch offices. Today there are 687 Labor Ready branches throughout the U.S., Canada, England, and Puerto Rico, including 201 that opened in the first half of 1999. The company's revenues are skyrocketing last year's $607 million in income was nearly double the $335 million it made in 1997. In June, The Seattle Times named Labor Ready the top public company in the Northwest, due to its outrageous growth and rate of return. Welstad forecasts continued success, boasting that the company will soon have 2,500 branches: "We will be the McDonald's of our niche in the market," he recently told the Wall Street Corporate Reporter. There are many companies that put unskilled people to work for a fee, but only Labor Ready has been slick enough to go public, draw in big investors, expand nationally, and start squeezing out the competition. The company's "work today, paid today" marketing message has resonated well with the neverending supply of transient workers floating around in our "booming" economy. Labor Ready offers huge benefits to its clients not the workers who show up each morning at 5:30, but rather the companies who phone in requests for temporary help. Labor Ready promises to transport workers to the job, replace any inadequate employees immediately, deal with all paperwork, file all government reports, and protect employers from all potential legal claims. In an online pitch to potential clients, Labor Ready boasts: "You will save money on Worker's Compensation, FICA, IRS withholding taxes, state unemployment taxes, federal unemployment taxes, administrative costs, health care premiums, life insurance payments, pension plan deposits, paid time off, help wanted ads, [and] auditing headaches." In one decade, Welstad, a former owner of Dick's Hamburgers, has used the fast 'n' greasy, have-it-your-way burger model to develop the most profitable day-labor company in the nation. Amazingly, Labor Ready is the sixth largest employer in the U.S., filling 4.8 million work orders in the "spot labor" or "immediate need" market, which was never really thought of as a "market" before Labor Ready came along. One key to the company's success is its patented proprietary software system, LabPro. This system allows branch managers to download their daily reports into a network where headquarters can upload them. This is the system that allowed Labor Ready to go national, and it will be a barrier to other companies hoping to do the same because they will need similar software, and Labor Ready owns it. Labor Ready developed the system first, was smart enough to patent it as proprietary in the tradition of Microsoft, and is well-protected by intellectual property rights law. This software also allows Labor Ready to keep track of worker performance on a national level, which means workers can be blacklisted, and never allowed to work for any Labor Ready outlet ever again. As the company expands, getting banished will become akin to getting kicked out of public housing there won't be many places left to go. Mainly, though, Labor Ready makes money by giving its workers as little as possible. For one, the company pays low wages that barely surpass the minimum required by law. Company spokesperson Shannyn Roberts says Labor Ready charges the average company that uses its temp workers around $11 an hour, roughly $6.25 of which goes to the worker. The rest of the money covers payroll taxes, administrative costs, worker's compensation costs (which fluctuate wildly basically, the more dangerous a job, the more cost in worker's comp), and of course the standard 30 percent cut of pure profit that goes to Labor Ready. As far as benefits are concerned, Labor Ready provides the bare minimum worker's comp and unemployment but none of the things that blue collar workers in unions often take for granted, like health, dental, disability, and life insurance. As Welstad told the Wall Street Corporate Reporter, "We do not have to deal with benefits and things like that because of the short period of time that the employee works for us." So why would anyone put up with this? For one thing, workers are paid daily, in cash if they want it. They can use the ATM machines in each of the company's offices to get their daily wage, which Roberts calls "a great benefit for workers." What it really amounts to, however, is a way to skim yet more money off day laborers. The ATMs work this way: Workers pay a dollar charge for the cash withdrawal, plus whatever change is owed them. In other words, if your check for four hours of work totals $19.99, you get $18. Last year, more than half of the 533,000 workers employed by Labor Ready used the company ATMs to get their daily wages. In the first quarter of 1999, the company earned $1.2 million in ATM charges alone. Roberts, of course, doesn't see any problem with the way her company does business. Labor Ready isn't successful because of its shrewd management policies, she says; it's simply that "there is a tremendous demand out there for day labor." And conversely, "there is a subset of individuals who just want to work temporary labor." It's worth noting that the average laborer only works for Labor Ready for 90 days. Roberts claims that many people use Labor Ready as a stepping stone to move into full-time jobs that provide benefits. But pressed for statistics showing how often this happens, she can't provide any numbers. Roberts has little patience for the argument that Labor Ready scams the working poor. "We provide a service that wasn't there before, or wasn't organized," she says. "We're giving people a chance to go to work. We work with people who are transient. We work with people who are seasonal employees, like commercial fishermen. We work with people who are coming off of welfare and trying to get back into the workplace. Labor Ready offers a chance to people who don't have that many chances." Margaret Levi, a labor historian and professor of political science at the University of Washington, disputes Roberts' rosy view, arguing that it's impossible for anyone to truly get back on their feet at $6.25 an hour. "They may be helping people to get off of welfare, but they're not helping them get out of the shelter," says Levi. "They're chewing them up and spitting them out. And they're preying on the guys who have the biggest problems." In some ways, Labor Ready serves to undercut the strength and moneymaking potential of workers in general. The company is notorious among union organizers for providing temporary "scab" labor at work sites where union workers are trying to strike for higher wages and better benefits. Labor Ready has also been used to "clean up" traditional day-labor spots, where poor people stand beside the road and wait for employers to show up. Just outside Los Angeles, according to a recent Los Angeles Times article, Labor Ready built a store at a location that had been a constant source of neighborhood complaints. Local real estate developers were quoted as being thrilled with the change and its impact on property values. The workers, on the other hand, pointed out that they were now making half of what they used to make. Some names were changed to protect the identity of people critical of their employers. |
Copyright (c) 1998, Joongpil Cho