Labor Ready’s business customers are billed for the temp workers’ wages, plus fees that cover things like workers compensation insurance, payroll taxes, and, of course, a significant markup. The clients save cash on HR and training, and they save even more by eliminating the need for health insurance, paid sick leave, vacation time, and other standard employee benefits.
But for Labor Ready clients, perhaps the biggest advantage is that they get workers who are “flexible” — that is, dispensable. If you are unhappy with a Labor Ready worker “for any reason,” the company will replace that worker free of charge. And temps quickly learn to neither expect, nor ask for, raises, health care, or job security of any sort.
This low-cost arrangement, which leaves workers largely powerless, helps explain why more industries are turning to perma-temp workforces. According to the Bureau of Labor Statistics (BLS), for instance, more than 15 percent of pickers, packers, movers, and unloaders — the warehouse workers who jump into action every time you order an item online — are temps. On average, they are paid $3 an hour less than their full-time counterparts.
“The McDonalds of the Temp Industry”
Supplying cheap workers was Labor Ready’s mission from the day it launched in 1989. “We don’t encourage them to stay here,” company co-founder Glenn Welstad once admitted to a reporter. “If we paid them more money or if we provided them with benefits, they would have a tendency to stick around.”
Welstad was a farm boy from North Dakota who amassed a small fortune running a string of Hardee’s restaurants. When another of his numerous franchise efforts failed, he paid $50 for a name change — Dick’s Hamburgers became Labor Ready — and set about applying the principles of fast food to the temp market. He quickly opened a slew of cookie-cutter offices around the country, serving up cheap labor instead of burgers. The goal, in his words, was to become “the McDonalds of the temp industry.”
In the meantime, the temp craze has expanded from air-conditioned offices to warehouses and construction sites. In 1990, a year after Labor Ready was founded, clerical workers made up 42 percent of the temp workforce, with blue-collar workers comprising about 25 percent. By 2000, the numbers were flipped, a phenomenon driven by the outsourcing of American manufacturing jobs. In 1989, according to a forthcoming article in the Industrial and Labor Relations Review, only 1 in 43 manufacturing jobs were temporary. By 2006, 1 in 11 were.
As the prospects for stable blue-collar employment soured, Labor Ready’s sales soared. In 1991, it had eight stores and booked a modest $6 million in revenue. The company went public in 1998, and by 2000 it had nearly $1 billion in revenue and 852 offices, covering every state in the nation, plus outlets in Canada, Puerto Rico, and the United Kingdom.
