Minnesota’s economy continues to recover from the Great Recession, but an increasing number of workers are finding employment through temp agencies and subcontracting firms. That trend drew scrutiny from the Legislature’s Select Committee on Living Wage Jobs at a hearing Dec. 19 in St. Paul.
Jobs in the economy’s “employment services” sector, which includes subcontractors and temp agencies, is up 42 percent since November 2009, Steve Hine of the Minnesota Department of Employment and Economic Development told lawmakers on the committee, chaired by DFL Rep. Ryan Winkler of Golden Valley.
Temporary work is known to be cyclical, dropping off at the start of economic downturns and picking up at the beginning of recoveries. But Hine also attributed the increase in temporary jobs to “an outsourcing of many business services … that used to be done in-house.”
Staffing agencies and subcontractors enable businesses to outsource everything from maintenance to human resources, shifting the legal responsibilities of employment onto the subcontractor.
Owners of staffing firms and temp agencies claim their business attract workers looking for experience, flexibility or a foot in the door to a new career.
But those benefits come at a steep price for workers and the state, according to Jessica Webster, an attorney with Legal Aid who has represented temps in unemployment-insurance cases.
Webster said the temp-agency industry has a “carve-out” in Minnesota law that makes it difficult for their workers to qualify for unemployment benefits. Even when temps are legally eligible for unemployment, Webster said, agencies fight unemployment claims at an inordinate rate, compared to other employers.
That creates an extra burden on state administrators who process workers’ appeals, she said, but unemployment appeals aren’t the only burden the recent explosion of temp work has created for government agencies.
As agencies compete to provide staffing for businesses at lower costs, it depresses the wages they are able to pay. Many temp workers, Webster added, rely on public assistance to support themselves or their families.
“We see them on our SNAP, we see them accessing child-care dollars in Minnesota, we see them accessing (public) health care,” Webster said. “They are a cost to Minnesota in many ways.”
The “race to the bottom” benefits only those at the top, said Enrique Barcenas, who works for Prestige Maintenance, one of several cleaning contractors retained by Target in the Twin Cities.
“I don’t need to be a big business owner to understand the policy they use,” Barcenas told lawmakers through a translator. “If I see someone is going to charge less, I’m obviously going to contract with them, and then the people who work are making less.
“The only people who benefit are the ones at the top, and maybe in the middle, but the ones at the bottom, they get stepped on.”
By the very nature of their employment conditions, temp workers are difficult to organize, but the Greater Minnesota Worker Center, a community-based coalition that supports low-wage workers in the St. Cloud area, has had some success.
Stephen Philion, chair of the Worker Center and a sociology professor at St. Cloud State, told lawmakers that temp workers, backed by community leaders supportive of the Worker Center, approached management at a Jennie-O turkey-processing plant in the area and asked them to drop its relationship with a temp agency and hire workers directly.
Jennie-O agreed, and workers at the plant, Philion said, report a “very real and very dramatic” improvement.
By linking workers with labor unions, nonprofit charities and faith communities, worker centers put employers on notice that temp workers “are part of a broader community that is concerned about their fate and sees their fate tied in with the broader community’s ability to experience economic development,” Philion added.