The struggle that workers face at the NFI warehouses in Chino, Calif. A growing industry of temp agencies supplies -- and exploits -- workers that move the products sold by big box stores like Walmart. In sprawling warehouse areas in places
January 9, 2012

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The struggle that workers face at the NFI warehouses in Chino, Calif.

A growing industry of temp agencies supplies -- and exploits -- workers that move the products sold by big box stores like Walmart. In sprawling warehouse areas in places like California and Illinois, a new wave of so-called 'logistics' companies hire temp workers to run warehouse distribution facilities that get products from manufacturers -- mostly overseas -- to stores like Walmart. The logistics companies hire large workforces on a daily basis, paying them low wages, giving them no benefits and putting them in grueling working conditions that lead many of the best workers to suffer from debilitating injuries that end their careers. The jobs are frequently given to African Americans and immigrants from Latin America.

Companies like Walmart hire logistics companies who then subcontract out to smaller companies who directly employ the warehouse workers, adding layers of bureaucracy that prevent the big box companies from suffering any negative blowback if the workers exploited or treated illegally.

Walmart may have been the end beneficiary of Dickerson's sweat, but the big-box retailer wasn't directly responsible for her low pay or her aching body. That's one of the many benefits to an employment arrangement based on outsourcing and subcontracting: The corporation at the top indemnifies itself from any unpleasantness at the bottom, thanks to the smaller corporate players in the middle. Many American companies have woken up to this fact, with broad implications for the future of blue-collar work.

"It seems to be spreading like wildfire," Nelson Lichtenstein, a professor of American labor history at the University of California, Santa Barbara, says of such outsourcing, particularly as it relates to temp workers like Dickerson. "All of these companies, wherever they possibly can, they want to create a workforce that doesn't work for them. The question is, Why? What is the incentive?"

"They're smart," he says. "They run the numbers."


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.

Many of the workers are assigned individual truck to unload during a day and are paid based on how many items they unload, regardless of how heavy the boxes on the truck happen to be. Supervisors closely watch over the workers and demand faster and faster work under the threat of loss of work, particularly during the holidays. Jobs rarely have any security and workers that call in sick or injured frequently lose their jobs and most have no sick or vacation days. Because of the piece rate for pay, workers have no stability in wages and can be sent home with no pay if there aren't enough trucks to unload. Because of the high unemployment rate, any workers that complain, try to unionize or don't work hard enough are quickly replaced.

Female workers face additional obstacles, including sexual harassment and work conditions that don't provide enough break time, creating conditions that lead to increased chances for bladder infections.

Some companies, like Costco, refuse to use temp workers in their warehouses:

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."

Many hoped that the warehouse industry would replace the well-paid manufacturing jobs that have been shipped overseas in recent years. The rise of the temp worker has prevented that from being as widespread as it could've been.

There are now more than 125,000 direct-hire, full-time jobs in the Inland Empire's logistics industry. Available data makes it difficult to know just how many temp jobs there. Husing doubts it's more than 10,000. Others believe it's several times that number -- perhaps even half of all jobs in logistics, according to Warehouse Workers United, a union-backed group that now advocates on behalf of the area's lowest-paid warehouse workers. (Husing dismisses the group's numbers: "The people who throw that stuff around are ideologues. They don't want that sector to survive because they consider it to be dirty.")

The group says the number of temp jobs in the region has skyrocketed in the last two decades, thanks largely to the explosion in the number of warehouses. The industry relies so heavily on temp work that many temp agencies actually have offices inside the warehouses themselves.

Sheheryar Kaoosji, an organizer with Warehouse Workers United, says a decade ago, the ratio of direct hires to temps was 80 percent to 20 in many warehouses.

"Now, it's the opposite. And it's accelerated with the [economic] crash," Kaoosji says. "The way that these guys work -- the way a Walmart operates -- every year they're going to push costs down on each of their contractors. Every year, they're coming back, 'This is going to cost less.' Every year you do that, it's going to have an effect. The conditions are going to go down.

"At this point, the wages in some of the facilities have gone down below the federal and state minimums," he says.

Many of the logistics companies, it seems, want a high turnover rate in order to keep wages down:

But about six months in, he says he started to understand how everything worked by design. He was shocked by the warehouse's turnover rate, as new workers constantly came and went, often leaving under bad terms. He guesses the average worker lasted three months, many of them eventually being "pointed out." As in many of Joliet's warehouses, he and his colleagues were working under a demerit system, receiving points for being tardy, missing shifts or not "making rate." Once you hit 10 points, you're gone, he says.

He now argues that workers don't last in part because they're not supposed to. New workers, after all, are cheaper workers. And he also says the little-known temp agencies are there largely to facilitate the churn.

As with many other aspects of corporate greed seen in recent years, there is no reason for the companies to pay workers as poorly as they do:

"Despite the fact that these workers are paid poverty-level wages, we estimate that about a trillion dollars comes through Chicago on an annual basis," says Meinster. "That's about $6 million per warehouse worker. Each worker is responsible for moving $6 million worth of goods through that supply chain. These are the workers who, collectively, if they don't show up for a day, these companies would stand to lose a lot of money.

Workers responsible for millions of dollars of goods moving through the supply chain are given sub-living wages to do backbreaking work under terrible conditions.

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