----- Original Message ----- From: radman <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Monday, August 28, 2000 12:57 PM Subject: Making Millions off the Homeless > Company Criticized for Making Millions Off Homeless Laborers > Sunday, August 20, 2000 > > BY PEGGY ANDERSON > THE ASSOCIATED PRESS > TACOMA, Wash. > Labor Ready made more than $850 million last year linking unskilled > worker -- often homeless men in desperate straits -- with small businesses > desperate for no-hassle part-time help. > > But what exactly are they profiting from? > "Labor Ready is making all that cash off the homeless," says Larry Geo, 40, > interviewed at a Seattle tent city of homeless people. > The Tacoma-based company, which operates 839 "stores" in 50 states, Canada > and the United Kingdom, takes heat from unions and homeless advocates for > exploiting those with no skills, no prospects and nowhere else to turn. > "They take too big a cut," added James Fradenburg, 43, like Geo a potential > member of Labor Ready's work force of low-income urban men. > The company takes at least 30 percent of incoming wages to cover workers' > comp insurance costs, payroll taxes and other deductions and overhead, says > its general counsel, Ron Junck. > But defenders say Labor Ready brings order and accountability to the > marketplace. > "Welcome to the real world," says Christopher Jenks of Harvard University, > author of The Homeless. "This is called capitalism." > Founded in 1991, Labor Ready went public in 1996, becoming the day-labor > equivalent of a fast-food chain. Business boomed, and its stock hit a high > of $23 last summer. The Utah office is located in Kearns. > There have been some missteps since then founder Glenn Welstad has resigned > and shares these days fetch $4 to $5. But the company has opened more than > 150 new stores since January. > For client companies, Labor Ready takes the risk and the paperwork out of > hiring from a high-risk labor pool. > Many customers "are probably not making enough money to hire a full-time > person," says analyst Jeanne Ernst with First Security Van Kasper in San > Francisco. "It's probably a godsend to have somebody come in for two hours" > or a couple days a week. > Advocates for the homeless worry Labor Ready is part of a > contingency-worker trend that could create a permanent underclass with no > job security, no health insurance and few rights. > "People who are homeless need jobs that pay living wages," said Barbara > Duffield at the National Coalition for the Homeless. > Labor Ready "is an interim kind of measure that grows and becomes the > answer, and then people don't look at the long-term answer," she said. > But Junck counters that workers typically work for Labor Ready just 100 > hours before they move on often to "full-time employment they've landed > through working with us." > The company has organized what used to be street-corner operations with no > worker protections, said analyst Karan Sodhi with Stephens Inc. in Boston. > "They're performing a valuable service." > But Labor Ready is being sued over the cash-dispensing machines at the > heart of its "work today, paid today" slogan. > Workers pay a $1-and-change fee to use the machines a worker who earns > $38.57 takes away $37. They can also be paid by check, but that is > problematic for those without addresses or bank accounts. > The company's 10-K filing with the Securities and Exchange Commission (SEC) > characterized the fees as insignificant, but they brought in $7.7 million > last year. > "The machines are . . . a convenience for our workers," Junck said. > The Atlanta lawsuit over the machines is one of several salvos fired by > the AFL-CIO's Building and Construction Trades Department. > The union agency, which holds 515 Labor Ready shares, also accuses the > company of "seriously misleading statements" to the SEC. > > The typical Labor Ready customer wants two temporary workers. > The typical daily payout is less than $50. > But it adds up. The company had 254,000 customers in 1999 and filled 6.5 > million work orders. > > "Last year we employed 700,000 workers," Junck said virtually all earning > more than the $5.15 minimum wage. > As the employer of record, Labor Ready handles government paperwork and > even safety training through videotapes when warranted. The company tracks > offices and workers by computer. No-shows and substance abusers are > blackballed systemwide. > Labor Ready represents "in some sense the privatization of employment > offices" without the accountability required of public agencies, says Cathy > Ruckelshaus at the National Employment Law Project in New York. > There have been growing pains. > A 1999 purge of middle managers about 300 account > representatives who hustled prospective clients undermined morale and > growth, Ernst said, though "for several quarters they were performing above > expectations" as a result of the cuts. > > Then there was Welstad's unauthorized $3.5 million loan from the company to > meet a margin call and prevent further decline of its stock. The move > prompted his June resignation as president and chief executive officer. > "They were very lucky they had Dick King in place when that happened," > Ernst said, referring to Welstad successor Richard King, former president > of the Albertson's grocery chain, hired in May. > Ernst rates the company a hold. > "While the economics of their business are compelling, I'm not totally > convinced they can get back where they were," she said. > With a 4 percent unemployment rate, "even people with very low skills can > get full-time jobs." > > Sodhi gives Labor Ready a neutral rating, concerned that "they grew a > little faster than they could manage." > > Copyright 2000, The Salt Lake Tribune >
