Outsourcing hides hand of abusive boss—NELP report

Chain of Greed: How Walmart’s Domestic Outsourcing Produces Everyday Low Wages and Poor Working Conditions for Warehouse Workers

Authors: Eunice Hyunhye Cho, Anastasia Christman, Maurice Emsellem, Catherine K. Ruckelshaus, Rebecca Smith

Editing, excerpt by Carolyn Bennett

“A fundamental promise of America is that work will be a ladder to economic opportunity and an anchor of economic security for working families. But that promise has unraveled over the past three decades.

“Globalization has combined with domestic policy choices to yield an economy that creates too many low-wage jobs and not nearly enough good ones.

“Lax enforcement of workers’ rights, increased subcontracting and misclassification of employees as independent contractors, and failed immigration policies have heightened insecurity for all workers. Inequality has grown to historic levels, the middle class is imperiled, and many fear our best days are behind us.” [The National Employment Law Project (NELP)]

This June report of the National Employment Law Project “sheds light on the shady side of outsourcing by profitable corporations like Walmart and the devastating impact of the practice on U.S. workers.”

Few U.S. corporations have attracted more intense scrutiny of their business and labor practices than Walmart, the report says.  Poor working conditions and wage violations among the company’s retail employees have been documented and worker rights violations attributed to Walmart’s international suppliers have been well publicized; but a deeper breach has not been widely reported or addressed, the authors note.

“Far less understood are the pervasive labor abuses that take place outside” the Walmart’s stores but “within its domestic supply chain,” serving the corporation’s bottom line here in the United States of America. 

Sounds like finance industry's

Derivative, bundled, securitized, pyramid, hidden, enslaved workers and rights abuses

These worker rights violations are largely the product of Walmart’s signature and aggressive practice of ‘outsourcing’ elements of its warehousing, transportation, and goods-delivery systems to companies that, in turn, often further subcontract the work to still other entities or individuals.

These outsourced workers laboring on Walmart’s behalf toil at the bottom of a complex hierarchy of intermediaries and in alternative employment schemes that leave them vulnerable to significant worker rights abuses and unsure where to seek redress.

Boss behind abuse, labor-layered scheme

Walmart sets the parameters for the working conditions in these facilities, sometimes directly by having managers onsite, and sometimes indirectly through monitoring suppliers’ operating costs and setting ever more stringent price demands.

But when things go wrong, it’s the contractors that are blamed, while Walmart skirts responsibility for its actions and accountability for its influence over those engaged in its massive supply chain.

Latino workers hardest hit

“Domestic outsourcing imposes an especially severe toll on Latino workers in Southern California and around the United States:

Latinos often represent a large segment of those industries where domestic outsourcing by major corporations is most prevalent.

In addition, the same industries that implement contracting-out and employ vulnerable, often Latino, workers frequently also have the highest rates of workplace violations of core labor standards.

Further findings

Squeezing down chain

Walmart squeezes supply-chain contractors and U.S. workers: Walmart’s policy of enforcing ever-lower prices has serious implications for the working conditions throughout Walmart’s supply chain.

Manufacturing behemoths are not immune to the pressures Walmart can impose on their profit margins, and by extension, their employment practices. Walmart’s stated ‘Plus One’ bargaining strategy, which requires that all suppliers and contractors reduce their price of goods, increase quality or increase speed of delivery every year, vividly exemplifies the pressure that squeezes contractors’ margins and encourages low-road employment behavior like cutting corners on safety and violating wage and hour laws.

Shirking accountability

Walmart’s outsourced logistics operations raise critical labor concerns.

Walmart maintains a vast and sophisticated distribution system operated in-house but also relies on some of the nation’s largest third-party providers to ship and store its goods — shifting from one to another contracting firm in a complex web of temporary agencies supplying the warehouse workforce.

In major logistics hubs around the United States (Southern California to Chicago to New Jersey), workers employed by outsourced Walmart logistics operations have raised allegations of unpaid wages, health and safety and other serious labor violations.

Labor violations are rampant in Southern California’s Inland Empire, which is a warehouse nerve center for Walmart goods.

Under Walmart managers’ watch, the outsourced warehouse operations, for example, of Schneider Logistics and its temporary staffing firms (Rogers Premier and Impact Logistics) have produced rampant wage and overtime and health and safety violations that are the subject of a class action lawsuit.

The National Employment Law Project Report concludes

The challenge for policy makers and enforcement agencies is to use existing enforcement tools effectively to protect workers’ interests, while developing new models to hold these corporate entities accountable for the conditions they engender within the production and logistics pyramids they command.

They urge that corporations be held accountable for worker rights abuses that result from unfettered domestic outsourcing; and specifically

Enforce existing labor standards laws that hold multiple entities jointly responsible for any work performed in the business;

Promote innovative state and federal laws and enforcement strategies to target contracting abuses;

Secure agreement from Walmart and other supply chain controllers to adopt strong codes of conduct; and

Document the scope of contracting-out and its impact on U.S. workers.

Sources and notes

“Chain of Greed: How Walmart’s Domestic Outsourcing Produces Everyday Low Wages and Poor Working Conditions for Warehouse Workers”

Authors: Eunice Hyunhye Cho, Anastasia Christman, Maurice Emsellem, Catherine K. Ruckelshaus, Rebecca Smith, June 2012, National Employment Law Project

http://www.nelp.org/page/-/Justice/2012/ChainOfGreed.pdf?nocdn=1

NELP findings and conclusions (more):

Domestic outsourcing is on the rise across key U.S. industries: Contracting out is becoming increasingly common in many of the nation’s largest and fastest-growing industries, including construction, day labor, janitorial and building services, home health care, warehousing and retail, agriculture, poultry and meat processing, high-tech, delivery, trucking, home-based work, and the public sectors.

Even hotels have begun to outsource traditional functions, including cleaning services. Often relying on the use of temporary and staffing agencies, outsourcing in these industries has also resulted in comparatively lower wages for work similar to the jobs previously performed in-house.

National Employment Law Project Background

The National Employment Law Project (NELP) responds by working to restore the promise of economic opportunity in the 21st century economy. In partnership with national, state and local allies, NELP promotes policies and programs that create good jobs, strengthen upward mobility, enforce hard-won worker rights, and help unemployed workers regain their economic footing through improved benefits and services.

http://www.nelp.org/index.php/content/content_about_us/background/

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