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The New Blue Collar: Temporary Work, Lasting Poverty And The American Warehouse

First Posted: 12/20/2011 8:19 am Updated: 12/21/2011 11:11 am

Earlier this year, temporary workers at a Pennsylvania plant packing Hershey products staged a mass walkout over what they described as abusive working conditions. The workers, who were students from Asia and Eastern Europe here on J-1 guest visas for the summer, said they were required to lift 50-pound boxes throughout the day and were threatened with deportation if they couldn't keep up. Although they packed Hershey goods, the students were employed by a staffing company twice removed from Hershey, which had more than $5 billion in revenues last year. Similar outsourcing has spread to much of the American food-packing industry.

But such sub-contracting isn't contained to warehouses and plants. In an effort to cut costs, even hotels have started quietly contracting out a considerable chunk of their back-of-the-house workforce to labor agencies. Hyatt, for example, has replaced many of its housekeepers with cheaper temp workers. Hyatt's direct hires now work alongside many lesser-paid agency workers, some of whom work on a temporary basis for years on end, tracking the minimum wage.

Such subcontracting enables corporations to essentially take workers off their books, foisting the traditional responsibilities that go with being an employer -- paying a reasonable wage, offering health benefits, providing a pension or retirement plan, chipping into workers' compensation coverage -- conveniently onto someone else. Workers like Dickerson, of course, aren't accounted for when Walmart touts that more than half of its workforce receives health coverage.

Infographic by Chris Spurlock.

As manufacturing jobs continue to head overseas, Americans need new sectors that can provide good, middle-class work for millions of people. Driven as it is by the consumer economy, the retail supply chain should be one of those sectors. But plenty of workers who are lucky enough to have jobs in the industry find themselves earning poverty wages. And while workers get squeezed in the name of lower prices, the overall benefits to consumers may be illusory. By many measures, the middle class is shrinking -- and not just because of the Great Recession. There are simply fewer jobs that pay good wages. More than 46 million Americans -- roughly one in six -- are now living in poverty, the highest number ever recorded by the Census Bureau. Between 2001 and 2007, as the economy boomed, poverty expanded among working-age people for the first time ever during a period of growth. Workers on the whole made less at the end of the boom than they did at the beginning.

In the case of the warehouse industry, where permanent temps are now common, many workers performing the most difficult jobs don't even enjoy the status of basic employees. They work at the pleasure of the agencies employing them. For many of them, getting hurt or slowing down means the end of their gig with no parting compensation -- similar to the arrangement detailed in a devastating expose of an Amazon warehouse by the Pennsylvania Morning Call in September.

"We have the re-industrialization of America in this distribution nexus," says Lichtenstein. "It's a booming sector of our economy. The kind of work they do is factory labor, and they should be earning [good wages] with benefits. But instead, it's insecure, and it's low-wage.

"This is the blue-collar working class that should be replacing the steel worker," he says.

* * * * *

Until a year ago, Debora Terkelson worked in the Costco warehouse near Mira Loma, Calif. She ran one of the cigarette machines, handling boxes of smokes, until she threw her back out moving a heavy load in April 2010, she says. She worked a few months of light duty but eventually even that proved too painful. No longer able to work, she's now collecting workers' compensation.

"I don't think I'll ever be able to lift again," says Terkelson, 48. "Just doing my laundry each day is a new adventure in pain."

Her life-altering injury notwithstanding, Terkelson had it pretty good by warehouse standards, and in many ways she's lucky to be collecting workers' comp benefits. She says the Costco distribution center is one of the good players in the Inland Empire, an area of Southern California that encompasses San Bernardino and Riverside counties and is now home to one of the largest warehouse clusters in the world.

Costco's well-earned reputation for treating its in-store employees well carries over to its warehouse. The Costco warehouse does not rely on temp workers. It hires employees directly, it pays pretty well and it has a safety representative and even stretching classes. Despite all that, the company still manages to provide some of the lowest prices available to consumers.

"We tend to not outsource even if we could save money by doing it," says Richard Galanti, Costco's chief financial officer. "We recognize it might cost more but we think it's the right thing to do. ... Everyone in the building feels like they're employed."

That attitude makes Costco an outlier in the area, Terkelson says. Her son worked in a nearby shoe warehouse for a temp agency. He came home exhausted each day, with little to show for it, though she guesses the agency made pretty good money off of his work. "They hire them, and as soon as they don't need them, they get rid of them," she says. "They don't care. They treat them like a slave. I'm sorry."

Despite the economic downturn, the Inland Empire is still in the midst of a long-term warehousing boom. Some of the first arrived in the 1990s, when retailers and developers took notice of the area's relatively affordable land and lax regulatory atmosphere. Walmart, Target, Home Depot, and Lowe's all picked up warehouse space in the area. They continue to sprout up today, creeping further eastward, some of them with footprints covering more than a million square feet.

As in Joliet, locals and politicians in Southern California have hoped warehouse work might replace the decent blue-collar jobs that disappeared with much of the American manufacturing sector in the late decades of the last century. Even if we no longer manufacture much in America, we will always need workers to handle all the clothing, electronics, furniture and toys that come here from Asia. And with its proximity to the ports in and around Los Angeles, where the cheap imports from China and elsewhere tend to land, the Inland Empire seemed poised as well as anyone to net a lot of working-class jobs.

There's no doubt that retailers and logistics companies have benefited from the Inland Empire's warehouse boom. The question is whether blue-collar workers have benefited in kind.

John Husing says they have. An economist who's consulted to local governments dealing with the logistics industry, Husing says, "for blue collar workers, the decline in manufacturing shut off their access through that sector to the middle class. In Southern California in particular, logistics has become an alternative to get to the same place."

Others are less boosterish, including Juan De Lara, an assistant professor at the University of Southern California who's studied the logistics industry in the region. "It's been good to many workers who get paid decent wages for higher-skilled jobs as direct employees," says De Lara. "But it's also been pretty terrible for the workers that work for these temporary agencies."