Every morning, hundreds of thousands of workers show up for jobs that are unseen, uncertain and underpaid—and vital to the U.S. economy

Sally Ryan for ProPublica Temps pay to ride to work on a bus owned by a raitero, or local labor broker.

It’s 4:18 a.m., and the strip mall in Hanover Park, Ill., is deserted. But tucked in back, next to a closed-down video store, an employment agency is already filling up. Rosa Ramirez enters, as she has done nearly every morning for the past six months. She signs in, sits down in one of the 100 or so blue plastic chairs that fill the office, and waits. Over the next three hours, dispatchers will bark out the names of those who will work today.

In cities across the country, workers stand on corners, line up in alleys or wait in a neon-lighted beauty salon for rickety vans to whisk them off to warehouses miles away. Workers say the 15-­passenger vans often carry 22 people. They sit on the wheel wells, in the trunk space or on milk crates or paint buckets. Female workers complain that they are forced to sit on the laps of strangers. Some workers must lie on the floor, other passengers’ feet on top of them.

This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.

The people here are not day laborers looking for an odd job from a passing contractor. They load the trucks and stock the shelves for some of the U.S.’s largest ­companies—Walmart, Nike, PepsiCo’s Frito-­Lay division—but they are not paid by them; instead they work for temp ­agencies. On June 7, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Almost one-fifth of the total job growth since the recession has been in the temp sector. One list of the biggest U.S. employers placed Kelly Services second only to Walmart.

Outsourcing to temp agencies has cut deep into the U.S. job market: 1 in 5 manual laborers who move and pack merchandise is now a temp, as is 1 in 6 team assemblers, who often work at auto plants. This system insulates companies from workers’-­compensation claims, unemployment taxes, union drives and the duty to ensure that their workers are legal immigrants. Meanwhile, the temps suffer high injury rates, and ­many of them endure hours of unpaid waiting and face fees that depress their pay below the minimum wage. Many get by renting rooms in run-down houses, eating dinners of beans and potatoes and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.

The proportion of temp workers in the labor force reached its peak in early 2000, before the 2001 slump and the Great Recession. But now temp work is roaring back 10 times as fast as private-sector employment as a whole—a pace “exceeding even the ­dramatic run-up of the early 1990s,” ­reports the American Staffing Association. The overwhelming majority of the growth is in blue collar jobs in factories and warehouses as the temp industry sheds its refined, typing-­pool image of the past. Last year more than 1 in 20 blue collar workers were temps.

The rise of the blue collar permatemp helps explain one of the most troubling aspects of the recovery. Despite a soaring stock market and steady but meager job growth, many workers are returning to the workforce in temporary or part-time jobs. This trend is intensifying the U.S.’s decades-long rise in income inequality, in which low- and middle-­income workers have seen their real wages stagnate or decline. On average, temps earn 25% less than permanent workers.

Many economists say the growth of temp work will continue beyond the recession. One likely accelerant of the trend: the health-reform law known as Obamacare.

The Rise of “Temp Towns”

Ramirez, a 49-year-old mexican immigrant with a curly bob of brown hair and thin glasses, has been a temp worker for the better part of 12 years. She has packed free samples for Walmart, put together displays for Sony, printed ads for Marlboro, made air filters for the Navy and boxed textbooks for elite colleges and universities. None of the work led to a full-time job.

Even though some of Ramirez’s assignments last for months, every day is a crapshoot. She must check in at the temp agency by 4:30 a.m., wait and then, if she is called, take a school bus to a plant. Even though the agency, Staffing Network, is her legal employer, she is not paid until she gets to an assembly line at 6 a.m. Today the dispatcher will call most workers to pack razors for Philips Norelco.

In Kane County, Illinois, where Ramirez lives, 1 in 16 workers is a temp. Such high concentrations of temp workers exist in what researchers have begun to call “temp towns,” including places like Grand Rapids, Mich.; Middlesex County, New Jersey; Memphis; California’s Inland Empire; and Lehigh County, Pennsylvania. In New Jersey, white vans zip through an old Hungarian neighborhood in New Brunswick, picking up workers at temp agencies along French Street. In Joliet, Ill., a temp agency operated out of a motel meeting room once a week, supplying labor to the layers of logistics contractors at one of Walmart’s biggest warehouses. In Greenville County, South Carolina, near BMW’s manufacturing plant, 1 in 11 workers was a temp in 2011, twice as many as a decade before.

(MORE: Have You Worked With a Temp Agency? Help ProPublica Investigate)

In temp towns, it is not uncommon to find warehouses virtually without direct employees. Many temp workers say they have worked in the same factory day in and day out for years. José Miguel Rojo, for example, packed frozen pizzas for a Walmart supplier for eight years as a temp until he was injured last summer and lost his job. (Walmart spokeswoman Brooke Buchanan said that Rojo wasn’t the company’s employee and that it wants its suppliers to treat their workers well.)

To be sure, temp agencies help companies weather sudden or seasonal upswings and provide flexibility for uncertain times. Employees try out jobs, gain skills and if lucky transition to full-time work. “I think our industry has been good for North America as far as keeping people working,” says Randall Hatcher, president of MAU Workforce Solutions, which supplies temps to BMW. “I get laid off by Employer A and go over here to Employer B, and maybe they have a job for me. People get a lot of different experiences.” Companies like the flexibility, he adds. “To be able to call someone and say ‘I need 100 people’ is very powerful. It allows them to meet orders that they might not otherwise.”

But over the years, many companies have upended that model and stretched the definition of temporary. At least 840,000 temp workers are like Ramirez, working a blue collar job and earning less than $25,000 a year, according to a ProPublica analysis of federal labor data. Only about 30% of industrial temp jobs become permanent. African Americans make up 11% of the overall workforce but over 20% of temp workers. Latinos represent another 20%. In many temp towns, agencies have flocked to neighborhoods full of undocumented immigrants, finding labor that is kept cheap in part by these workers’ legal vulnerability: they cannot complain without risking deportation.

“You Are Not Driving Goats”

By 4:52 a.m., the chairs at staffing Network are filled as workers line the walls clutching plastic lunch bags. From behind the tall white counter, the voice of a dispatcher booms like a game-show host’s, calling out the first batch of workers: “Mendoza … Rosales … Centeno … Martinez …”

Ramirez lives in the living room of an old Victorian boardinghouse. There is a cheap mattress on the floor, and a sheet covers the French doors that separate her room and the hallway. The rent is $450 a month, which she splits with her boyfriend, who works as a carpet installer. She shares the kitchen and bathroom with another family. A trap by her door guards against the rats that have woken her at night.

Ramirez came to the U.S. in 1997 from Ecatepec, Mexico, where she struggled to raise two sons on her own as a street vendor selling beauty supplies. When she found out that a neighbor had hired a coyote to help her cross the border, Ramirez joined her, leaving her children with family and taking a bus to the frontera. They walked for three days across the desert to a meeting point, from which a bus took them to a safe house in Phoenix and then to Cullman, Ala.

“I worked in a poultry plant and a restaurant at the same time so I could get enough money to send back to Mexico,” she says. Like Ramirez, many immigrants who spoke for this story landed full-time jobs when they arrived in the 1990s. But many lost their jobs during the immigration crackdown after 9/11 or the recession, when factories closed, and have since found only temp work.

After raising enough money, Ramirez returned to Mexico and then took her sons across the desert to Alabama and eventually to Chicago. But the only work Ramirez could find was at temp agencies.

It is now 5:03 a.m. at Staffing Network, and the first batch of workers waits to board the bus for Philips Norelco. The agency claims it offers complimentary transportation for its employees’ benefit, but worker advocates say the vans help temp agencies by ensuring that they provide their corporate clients with the right number of workers at the right time. Many metro areas don’t have adequate transportation from working-class neighborhoods to old farmland where warehouses have sprouted over the past 15 years. So a shadow system of temp vans has popped up, often contracted by the agencies. Workers in several cities said they felt pressured to get on the vans or lose the job. They usually pay $7 to $8 a day round-trip.

In New Jersey, a worker drew a diagram showing how his agency fit 17 people in a minivan using wooden benches and baby seats and having three workers crouch in the trunk space. “They push and push us in until we get like cigarettes in a box,” said an Illinois worker. “Sometimes I say, ‘Hey, you are not driving goats!’”

A New Temp Ecosystem

At 5:20 a.m. a second batch of workers is called to go to Philips Norelco. Ramirez’s name is not called, and she suspects there may be a reason. Two months before, in November, she walked into the agency with something to say. She had been attending meetings of the Chicago Workers’ Collaborative, a nonprofit that advocates for temp workers and is funded by religious and anti­poverty foundations. Though Ramirez became increasingly active, her only source of income is through temp jobs.

“My name is Rosa Ramirez,” she said, flanked by leaders of the workers’ collabo­rative, which recorded the speech on a cell phone. “We wanted to read some points that we want to change here in this office.”

“Stop forcing workers to wait without pay before the work shift,” Ramirez said, standing in the center of the room and reading from a paper she had brought. “Allow workers to go directly to the work site, because some people have children and they can’t find care that early.”

The workers sitting in the bucket chairs looked down nervously.

“Don’t force employees to wait outside of the office until transportation arrives during the winter months.”

Looking back on that day, Ramirez says she feels empowered but also defeated. “I no longer could stand the abuses,” she says. “I see people accepting them, and so I thought by standing up and speaking, people would join me and would agree and would stand up for themselves. But unfortunately, the majority of the people did not.”

Staffing Network said in a statement that workers aren’t required to go to the branch office. “Our track record of being a fair and lawful employer is evidenced by the fact that more than 65% of the temporary employees we hire and place have worked with Staffing Network for one year or more,” the company wrote. “We provide all employees opportunities to voice any ­questions or concerns about any aspects of their jobs—­without any retaliation.”

Unions, embattled nationwide, have ­done little for temp workers, partly because their legal options are limited. A 2004 ruling by the National Labor Relations Board barred temp workers from joining with permanent workers for collective ­bargaining—unless the temp agency and client company agreed to the arrangement.

“Unions have had two souls when it comes to temp workers,” says Harley Shaiken, a labor economist at the University of California, Berkeley. One is to try to include them, he says, but “the other is circle the wagons, protect the full-time workers that are there.” Will Collette, who led an AFL-CIO campaign against the temp firm Labor Ready in the early 2000s, said it was nearly impossible to organize workers with such high turnover.

Meanwhile, a whole ecosystem of contractors and subcontractors benefits from just-in-time labor. For example, Walmart’s two largest warehouse complexes are southwest of Chicago and east of Los Angeles, in the Inland Empire. Both are operated by Schneider Logistics, which subcontracts to an ever changing cast of third-­party logistics firms and staffing companies.

Such layers have helped Wal­mart avoid responsibility when regulators uncovered problems. When California inspected Walmart’s warehouse in the ­Inland Empire in 2011 and found that workers were being paid piece rate according to how many shipping containers they unloaded rather than by the hour, regulators issued more than $1 million in fines against the subcontractors for failing to show how the pay was calculated. Neither Walmart nor the main contractor, Schneider, faced penalties. Asked if the layers of subcontracting allow Walmart to escape blame, spokeswoman Buchanan said, “Absolutely not.”

“We work very hard to abide by the law,” she said, “and we expect all the businesses that we do business with and that they do business with to comply with the law.”

Schneider treats its associates with “dignity and respect,” spokeswoman Janet Bonkowski said via e-mail. “Our suppliers are independent. When we utilize third-party vendors, we contractually require full compliance with all required laws and that all parties conduct business ethically.”

As work is down-sourced through a cascade of subcontractors, some workers have seen their incomes decline. In 2007, Leticia Rodriguez was hired as a supervisor for Simos, the logistics contractor running the online part of Walmart’s warehouse outside Joliet. She said she worked on an annual ­contract for $49,500 with health insurance. In 2009, when she declined to work on what she described as a long-­awaited day off, she was fired.

Rodriguez returned to the warehouse six months later, this time starting at the bottom, loading trucks for one of Schneider’s staffing companies. She said she was paid $15 an hour, but within a year the staffing company lost the contract.

Another firm, Eclipse Advantage, took over, and Rodriguez went to work for it. There, she said, she was paid piece rate, averaging $9.50 an hour. But six months later, that company left. She and the other workers lost their jobs. Rodriguez has since interned at the union-backed campaign Warehouse Workers for Justice, earning $12,000.

Eclipse president David Simono declined to comment. Walmart said that it couldn’t comment on the specifics of a subcontractor’s employee but that it provides all its workers opportunities for growth.

A Temp Worker Bill of Rights

maybe so, but a sustainable standard of living is another matter. A 2005 Labor Department survey, the most recent available, found that only 4% of temps have a pension or retirement plan from their employer. Only 8% get health insurance from their employer, compared with 56% of permanent workers. What the employer doesn’t provide, the worker gets from the social safety net—that is, taxpayers.

And don’t look for Obamacare to fix it. Under the law, employers must provide health coverage only to employees who average 30 hours a week or more. After pressure from the temp industry and others, the IRS ruled that companies have up to a year to determine whether workers qualify.

Economists like Susan Houseman of the W.E. Upjohn Institute for Employment Research predict that 2013 will be a boom year for temping because of health care reform. This notion has even seeped into popular investment shows. Mad Money host Jim Cramer recently said, “That’s why businesses of all sizes are now searching for ways around the law, and the easiest way to avoid paying these expenses is to hire more temps.”

In contrast with how it monitors nearly every other industry, the government does not keep statistics on injuries among temp workers. But a study of workers’-comp data in Washington State found that temp workers in construction and manufacturing were twice as likely to be injured as regular staff doing the same work. Members of Congress have introduced a handful of bills to protect temp workers in the past two decades. None has made it out of committee.

But advocates say Massachusetts’ Temporary Workers Right to Know law, which took effect in January, provides a model for states. The law requires temp agencies to give workers written notice of the basics: for whom they will work, how much they’ll be paid and what safety equipment they’ll need. The law limits transportation costs and prohibits fees that would push workers’ pay below minimum wage. Agencies must also reimburse workers if they are sent to a work site only to find there is no job.

Similar bills have passed in New Jersey and Illinois in the past few years. But while the American Staffing Association, which represents the temp industry, has a code of ethics containing similar guidelines, it has fought such laws. “All laws that apply to every other employee apply to temporary workers,” says ASA general counsel Stephen Dwyer. “We thought that heaping new laws on top of existing laws would not be effective.”

State laws that do exist are honored mostly in the breach. Illinois prohibits agencies from charging for transportation. But many get around this by using so-called raiteros, who act as labor brokers for agencies and charge for transportation. The law also requires a notice stating the name of the host company, the wage and any equipment needed. Out of more than 50 Chicago-area workers interviewed, only a handful had ever received one.

Passing through Chicago’s working-class suburbs recently, Ramirez pointed to a row of small, red brick homes. “I’ve always dreamed of having a little house, a really small little house,” she said. Asked whether she thought she’d ever be able to buy one, she laughed. “Earning $8.25 an hour?” she said. “I don’t think I’ll ever be able to do that.”

Back at the temp agency, Ramirez continues to wait with about 50 other people. Around 6 a.m., she again inquires if there will be any work. The dispatcher tells her to give it 15 minutes. Then he breaks the news: There is no work today.

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