Labor Equity: The Contract Worker
The COVID-19 pandemic has disrupted every part of our society in extreme ways that we may not fully understand for years. Some of these disruptions continue to impact the workforce in ways we can manage for decades. As American businesses continue to navigate through a pandemic, we have witnessed the “great quit,” widening income inequality and persistent gender gaps. Many businesses struggle to hire and retain workers. Yet there is a perception that tech employees are immune to this type of hiring. Even though the profits of Google, Apple, Tesla and Facebook have continued to climb into the trillions, as we continue to battle COVID, the people employed by these companies have not done as well as the profits made by these companies.
There is a dichotomy in the types of workers in the tech world. These two types of workers are temporary employees, also called contract workers, and full-time employees, also called permanent workers. In the world of technology, the employment of temporary workers seems to be growing at a faster rate than that of permanent employees. According to the New York Times, in 2019, with approximately 121,000 temporary employees to 102,000 full-time employees, contract employees outnumbered permanent employees at Google. These temps are usually employed by outside agencies. They tend to earn less money, have no paid vacations, and have different benefits. According to a former Google contract worker, contract workers made up about a third of the workforce more than 10 years ago and that share has been growing.
Workers who tend to experience levels of stability and prosperity are usually permanent employees. Contract or temporary workers are going through difficult times. Although the two types of employees work side by side in essential roles for the company, their experiences are very different and less equal than those of their permanent colleagues. This process of two different types of employees was also seen as a two-tier system with different results for different types of employees. Contract employees tend to be less likely to benefit from traditional avenues of industry entry and more often than not they are members of underrepresented racial and gender groups than permanent employees. The use of outsourcing agencies to meet staffing needs has increased across industries, but has become more evident for Silicon Valley companies, “to gain massive market share and valuation as quickly as possible.” “.
The practice of shifting permanent labor to temporary labor needs has been in place in the American workforce since World War II. According to the U.S. Bureau of Labor Statistics, employers are increasingly relying on temporary workers, typically provided by temporary help agencies, to provide greater flexibility in meeting their staffing needs. During the most recent recessions (1990-91, 2001 and 2007-09), temporary workers increased labor flexibility for companies. However, during the Great Recession, temporary jobs increased by about 75%, or 1.3 million jobs in the United States at the end of 2018. According to the American Staffing Association, despite the impacts of the pandemic COVID-19, Temp Agencies ended 2020 having increased revenue by 175% over the past two decades.
The experience of contract or temporary employees was recently highlighted in a survey conducted by The Tech Equity Collaborative. The survey, known as the Contract Worker Disparity Project, takes a close look at the conditions that create inequality for workers. Their research identified that a two-tier or two-tier system management structure inhibits the possibility of promotion; there is very little self-advocacy for employees who fear retaliation; unequal pay; and an overrepresentation of specific gender and racial groups. Contract workers have a limited reporting structure, as their day-to-day work is overseen by a manager at the tech company, while their benefits and compensation are provided by the temp agency that hired them. Both management structures complicate their daily work and complicate defending themselves or denouncing inequalities. Because parent companies can cancel contracts at any time, temporary workers tend not to speak out against workplace injustices. Also, they don’t want to be seen as difficult or suffer retaliation. Often, contract workers do the same work as their permanent counterparts, but are paid less for the same work. According to the TechEquity survey, 75% of software developer contract workers are in the 25th percentile or lower for average industry earnings. The overrepresentation of contract workers along racial and gender lines has created a level of occupational segregation. Industries with a large number of contract workers also tend to have the most diverse levels of employee representation. According to TechEqutiy, in every dataset they looked at, one obvious fact was that contract tech workers are disproportionately populated by people from underrepresented racial, ethnic, and gender groups.
In the fight for workforce equity, data becomes invaluable, according to the National Fund for Workforce Solutions. For organizations, workers and employees to successfully engage with their communities, the workforce must be fair. Using data can help us ensure that the future of the workforce is fairer. The ability to address deep-rooted inequalities in labor systems is only as good as the data available to identify the evidence. The National Fund has partnered with Policylink and the National Equity Atlas from the University of Southern California (USC) Equity Research Institute to create a Equity Equity Dashboard. workforce. The dashboard disaggregates data that helps measure and track the state of equity in communities. The Equity Index ranks the 150 largest metropolitan areas on a holistic score of inclusion and prosperity. Some researchers recommend the Workforce Equity Scorecard as a tool to help reduce inequalities between contract and non-contract employees in the workplace.
As the country is on the road to economic recovery, contract labor is paramount to staying in an era of growing inequality. We must ensure that workers re-entering the labor market are not exploited, but are on the path to a secure career. Businesses should not seek to abdicate their legal responsibilities to the workers they rely on and should strive to ensure overall healthy work environments free from discrimination and harassment. Companies must look for ways to bridge racial and gender gaps between contract and non-contract employees. For contracting to be fair, companies must streamline a more ethical process designed to support workers and implemented through best practices. The National Fund and TechEquity recommend a few key areas:
- Companies must provide contract workers with sustainable wages and employment opportunities. Companies should work with suppliers to ensure that they offer decent wages to workers and benefits comparable to those offered to direct employees.
- Companies should provide clear written guidelines on the contract renewal and evaluation process and what the employee must do to begin the contract renewal.
- Companies should prohibit contracts that prevent contract workers from obtaining permanent employment.
- Companies should ensure that employees receive adequate paid vacation and parental leave and they should use a pro-rated model for the participation of temporary employees.
- Companies should pay workers equal pay for equal work. This is a federal requirement under the Equal Pay Act. Contract workers are disproportionately Indigenous, Black, Brown, female, and non-binary. They are often paid less with lower benefits than permanent employees, and they should be paid equal pay for equal work.
- Companies should develop protocols for reporting workplace safety violations. Companies should develop an independent complaints process led by contract workers.
- Companies should require all suppliers to provide detailed information to all workers, including pay rate, benefit options, employee contribution, vacation pay, grievance procedures, HR protocols, agency fees and duty station.
- Companies must provide a breakdown of agency fees for the service, salary rates, recruitment methods, mentoring opportunities and retention rates.
- Companies must create opportunities for contract workers to access internal jobs. They should build bridges to direct employment.
The Contract Worker Disparity Project grew out of TechEquity and Silicon Valley Rising in their examination of the harms suffered by low-wage workers at tech companies. Shedding light on ghost labor in tech companies is critical in the fight for fairness. Workers and the companies that employ them must work together to remove barriers to permanent employment and implement wage transparency, safety protocols, fair pay rates and benefits options. Finding solutions for contract workers is the first step to democratizing the workforce and increasing equity.