MEDIA RELEASE: Growth of contingent work harms workers, report finds

NC needs more permanent jobs, not temporary ones, for families to earn a stable living

RALEIGH (Oct. 21, 2015) – The American economy has witnessed the explosive growth of temporary work over the past 30 years, transforming the employer-employee relationship in ways that pose great risks to workers, a new report finds.

Contingent employment—any job in which an individual does not have an explicit or implicit contract for long-term employment—has grown by leaps and bounds over the past few decades, said Clermont Ripley, an attorney with the NC Justice Center’s Workers’ Rights Project and one of the report’s authors.

“The rise of contingent work is a problem for workers, because contingent work is characterized by low wages, lack of access to benefits, and higher incidents of health and safety violations,” said Ripley. “While some benefit from the flexibility of these arrangements, it is harmful to those workers who find themselves stuck in arrangements like this involuntarily. North Carolina needs more permanent work, not less, in order to provide workers with the stable, regular incomes they need to make ends meet.”

The report examines several key trends related to the growth of contingent work in general and one form in particular—temporary work—and charts their impacts on workers, the overall economy, and the fundamental relationship between employer and employee.

“Employers have increasingly relied on temp workers as a strategy for keeping down labor costs, a strategy that has cushioned corporate bottom lines and contributed to middle class wage stagnation,” said Allan Freyer, director of the NC Justice Center’s Workers’ Rights Project and co-author of the report. “Despite historic productivity gains boosting record levels of corporate profitability, employers have sought to keep labor costs low. Instead, they spent these productivity gains on executive compensation and income distributions to shareholders — benefitting wealthy investors at the expense of workers and their wages. That’s why North Carolina’s workers saw their productivity increase by 86 percent, while their hourly compensation increase by just 22 percent.”

Key report findings include:

• About one-third of the entire American workforce can be classified as contingent workers. This includes part-time workers (13.2 percent of the total workforce), independent contractors (7.4 percent), self-employed workers (4.4 percent), and a combination of temporary workers hired through agencies, temps hired directly by an employer, and temps hired as contractors (5.6 percent).
• Although some workers may benefit from the flexibility afforded by voluntary nonstandard work, many workers are stuck in contingent work relationships involuntarily—a trend that increases the distance between employers and their employees, reduces wages, weakens worker bargaining power, and presents challenges that our nation’s outdated, employment-related regulatory structure is unable to adequately address.
• Temp work is growing much faster in North Carolina than in the nation as a whole, a troubling trend since temp work pays a lot less the state’s average wage. Between 2009 and 2014, the number of temp workers grew by 52 percent in North Carolina, compared to 39 percent in the national economy as a whole. North Carolina temp workers earned just $30,627, far less than $45,022 average wage.
• Temp work in North Carolina has grown as a share of the economy over the past five years, from 2.4 percent in 2009 to 3.4 percent in 2014. This trend matters for workers because it suggests that temporary work is growing at the expense of more permanent and stable work—and that there’s proportionally less stable work available in North Carolina than in the nation as a whole.

Policymakers can lead the way to a better future for North Carolina’s workers by recognizing the harmful growth of contingent employment, the report says. Policymakers should consider the following recommendations:

• Forbid public contracts from using contingent workers. State and local money should only be used to create stable, quality jobs. Public contracts funded by government money should include restrictions on using temp workers and sub-contractors and ensure that all public contractors pay their workers a living wage.
• Rein in the over-use of temp workers. North Carolina policymakers should recognize that this temporary workforce model has become a permanent part of the state’s economy and adopt policies that discourage companies from using temps as a means to evade legal responsibilities—including legislation that requires businesses to provide the same wages, benefits, and safety standards to temps that they provide to their standard employees.
• Explicitly impose joint liability to prevent workplace abuses. The most effective way to ensure that labor intermediaries comply with all workplace laws is to motivate their clients to monitor compliance. Imposing liability on the companies that are purchasing labor and controlling market conditions will force those companies to evaluate whether subcontractors or labor suppliers will comply with workplace laws.
• Enforce wage and hour laws in contingent employment arrangements. The NC Department of Labor should issue guidance to employers and employees about who is liable for wage violations, and include specific examples for the industries where outsourcing is common, such as janitorial work, homecare work, and construction. The NCDOL should also be more strategic about targeting its resources to industries known for labor violations and trying to evade responsibility through many layers of contracting.
• Enact policies that provide contingent workers with outside supports and benefits that are mostly available through standard, full-time work, including raising the minimum wage. As contingent work grows, so will the number of workers without access to the basic features of a quality jobs—paid sick days, access to pensions or retirement savings, health insurance, or even pathways for career advancement. The state and federal governments need to promote policies that provide workers with these vitally important supports that contingent workers can rarely get through their jobs.

The report is available online here: https://www.ncjustice.org/?q=workers-rights/age-contingent-employment-how…

FOR MORE INFORMATION, CONTACT: Allan Freyer, allan@ncjustice.org, 919.856.2151; Clermont Ripley, clermont@ncjustice.org, 919.856.2154; Jeff Shaw, jeff@ncjustice.org, 503.551.3615 (cell).