Pro Publica took aim during 2013 at the low wage temp industry. It reported that “Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.
“In June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows.”
It investigated labor brokers (raiteros) in Chicago:
Immigrant labor brokers known as raiteros have helped create a system where temp agencies and their corporate clients benefit from cheap, just-in-time labor. Raiteros don’t just drive workers to their jobs. They also recruit the workers, decide who works and doesn’t and distribute paychecks, making them unofficial agents of the temp firms.
But the temp agencies don’t pay the raiteros. [A state law forbad that practice years ago.] Instead, it’s the low-wage workers who pay them, ostensibly for transportation. Those fees, together with unpaid waiting times, depress workers’ pay well below the minimum wage.
Raiteros ferry as many as 1,000 workers a day to warehouses and factories in Chicago and its suburbs. Many of these workers end up making about $6 an hour, well below Illinois’ minimum wage of $8.25 an hour, because of the fees and unpaid waiting time…..At the end of the week, the raiteros pick up the workers’ paychecks from the temp agencies and bring them to check-cashing stores, where workers are charged $3 to $4 to cash them.
[A huge staffing agency, Select, has an informal relationship with the raiteros in Chicago.] In 2011, it was hit with a $50 million jury verdict in a civil fraud case brought by the California state insurance fund. The lawsuit alleged that the company lowered its workers’ compensation costs by lying about its payroll and falsely claiming its employees worked for another company. Select appealed and in January announced it had reached a confidential settlement with the state fund.