'Labor Ready' wants to be the McDonald's of the day labor industry
Source Steve Zeltzer
Date 99/10/23/09:47


Labor Ready wants to be the McDonald's of the day labor

Given that they treat workers like meat, they're right on

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?"


"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

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

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

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

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.

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