BW Focuses on the Temp Economy

BusinessWeek’s good cover story this week looks at the temping of the American workforce.

Wait a second, you say. Haven’t we read about that for years? Yes, but it’s still going on, it’s important, and it’s worsening.

Capital has had the upper hand—to put it mildly—on labor for a good while now and reporters Peter Coy, Michelle Conlin, and Moira Herbst report how that’s gotten worse in this downturn:

That’s because this recession’s unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions’ influence, new management techniques, and regulatory changes—that already had been eroding workers’ economic standing.

And the outlook is poor, no pun intended:

Their situation isn’t likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power.

This is good labor coverage, which you can never have enough of. See this paragraph:

At the bottom of the ladder, workers are so powerless that simply getting the minimum wage they’re entitled to can be a struggle. A study released in September and financed by the Ford, Joyce, Haynes, and Russell Sage Foundations found that low-wage workers are routinely denied proper overtime pay and are often paid less than the minimum wage. It followed a Government Accountability Office report from March 2009 that found that poor oversight by the Labor Dept.’s Wage & Hour Div. leaves low-wage workers “vulnerable to wage theft.” Some companies have been fined for misclassifying employees as freelancers and then denying them benefits. Meanwhile, the George W. Bush Administration made it easier for people earning as little as $23,600 a year not to be covered by overtime-pay rules.

BW gets a revealing quote from the CEO of one of the temp agencies:

“We want to do for the world of work what eBay did for commerce,” says LiveOps CEO Maynard Webb, a former chief operating officer of eBay (EBAY). “You have access to the talent you need. And when the need is gone, the talent goes away.”

That’s pretty much the perfect tagline for BW’s “Disposable Worker” headline. Of course, this is all happening while the safety net has been weakened over the last few decades, though the current administration has shifted course on that somewhat.

One of the critical factors in the decline of worker power has been free trade, which opens up a near-limitless supply of labor to compete against on often-unfair terms:

Even after the recession is history, employers are likely to continue to offshore and automate jobs out of existence. If they don’t, they’ll lose out to competitors that do. In a November update of previous research, Princeton University economist Alan S. Blinder estimated that 22% to 29% of all U.S. jobs will be offshorable within two decades. Of course, even working in a job that’s not offshorable—say, landscaping—is no guarantee of job security or decent pay. That’s because people in those jobs must compete with the millions of former factory workers and such whose jobs have already been offshored, notes Josh Bivens, an economist at the Economic Policy Institute in Washington.

IBM may strike many people as the quintessential American company, but 71% of its workforce was outside the U.S. at the end of 2008, a figure even higher than the non-U.S. share of its revenue (65%). In 2009 the company reduced its U.S. employment by about 10,000, or 8%. It also announced a program offering certain employees the opportunity to move their jobs to emerging markets; in turn, the company will foot some of the relocation costs.

How generous, Big Blue.

Good work by BusinessWeek.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.