On a recent Tuesday morning, single mom Tammy DePew Smith woke up in her tidy Florida town house in time to shuttle her oldest daughter, a high school freshman, to the 6:11 a.m. bus. At 6:40 she was at the desk in her bedroom, starting her first shift of the day with LiveOps, a Santa Clara, Calif., provider of call-center workers for companies such as Eastman Kodak (EK, news, msgs), Pizza Hut (YUM, news, msgs) and infomercial behemoth Tristar Products.
She's paid by the minute -- 25 cents -- but only for the time she's actually on the phone with customers. By 7:40, Smith had grossed $15.
But there wasn't much time to reflect on her productivity; the next child had to be roused from bed, fed and put onto the school bus. Somehow she managed to squeeze three more shifts into her day, pausing only to home-school her 7-year-old son, make dinner and do the bedtime routine. "I tell my kids, unless somebody is bleeding or dying, don't mess with me."
As an independent agent, Smith has no health insurance, no retirement benefits, no sick days, no vacation, no severance and no access to unemployment insurance. But in recession-ravaged Ormond Beach, she's considered lucky. She has had more or less steady work since she signed on with LiveOps in October 2006.
"LiveOps was a lifesaver for me," she says.
You know American workers are in bad shape when a low-paying, no-benefits job is considered a sweet deal. Their situation isn't likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That's because this recession's unusual ferocity has accelerated trends -- including offshoring, automation, the decline of labor unions' influence, new management techniques and regulatory changes -- that already had been eroding workers' economic standing.
The forecast for the next five to 10 years: more of the same, with paltry pay gains, worsening working conditions and little job security. Right on up to the C-suite, more jobs will be freelance and temporary, and even seemingly permanent positions will be at greater risk.
"When I hear people talk about temp versus permanent jobs, I laugh," says Barry Asin, chief analyst at Los Altos, Calif., labor-analysis company Staffing Industry Analysts. "The idea that any job is permanent has been well proven not to be true." As Kelly Services CEO Carl Camden puts it: "We're all temps now."
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"Employers are trying to get rid of all fixed costs," Cappelli says. "First they did it with employment benefits. Now they're doing it with the jobs themselves. Everything is variable." That means companies hold all the power, and "all the risks are pushed on to employees."
The era of the disposable worker has big implications both for employees and employers.
For workers, research shows that chronic unemployment and underemployment cause lasting damage: Older people who lose jobs are often forced into premature retirement, while the careers of younger people are stunted by their early detachment from the working world. Even 15 years out of school, people who graduated from college in a recession earn 2.5% less than if they had graduated in more prosperous times, research has shown.
Diminishing job security is also widening the gap between the highest- and lowest-paid workers. At the top, people with sought-after skills can earn more by jumping from assignment to assignment than they can by sticking with one company. But for the least educated, who have no special skills to sell, the new deal for labor offers nothing but downside.
Employers prize flexibility, of course. But if they aren't careful they can wind up with an alienated, dispirited work force.
In a typical downturn, the percentage decline in payrolls is about the same as the percentage decline in gross domestic product. But in the recessions that began in 2001 and 2007, the decline for payrolls was much steeper -- 1.8 percentage points more during the latest downturn. Worse yet, only about 10% of the layoffs are considered temporary, versus 20% in the recession of the early 1980s.
All that cutting has been good for corporate profits. Earnings rebounded smartly as companies kept payrolls down after the 2001 recession; by 2006 profits had hit a 40-year high as a share of national income, at 10.2%, according to Bureau of Economic Analysis data. The credit bust sent that figure plunging to 5.6% during the final quarter of 2008. But over the past year corporate profits' share has rebounded to 7.4% of national income, equaling the 40-year average.
The trend toward a perma-temp world has been developing for years. Bosses are no longer rewarded based on how many people they supervise, so they have less incentive to hang on to staff. Instead, the increasing use of bonuses tied to short-term profit performance gives managers an incentive to slash labor costs.
The Iowa Policy Project, a nonpartisan think tank, estimates that 26% of the U.S. work force had jobs in 2005 that were in one way or another "nonstandard." That includes independent contractors, temps, part-timers and freelancers. Of those, 73% had no access to a retirement plan from their employer and 61% had no health insurance from their employer, the Iowa group said.
Continued: Most jobs shipped to China will stay in China
