Are homelessness & poverty planned or unintended? FWD

Tom Boland (
Tue, 20 Jul 1999 10:11:48 -0700 (PDT)

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When homelessness and poverty rise, who benefits?  How?
Are homelessness and poverty unintended - or planned?
If planned, why, how and by whom?

See below for a related article:
FWD  Seattle Times - Tuesday, June 15, 1999


     by Patrick Harrington
     Seattle Times business reporter

It is just after 6 a.m., and 46-year-old Marquis Eckmann sits in a white
plastic chair in a large open room. Dressed in a pair of grimy jeans and a
T-shirt, he pulls a plate of fried chicken from a microwave and gnaws on it
with a wide smile, washing it down with gulps of coffee.

     Eckmann is one of about 40 men and women gathered at a Labor Ready
dispatch office on South Main Street in Seattle's Rainier Valley. They've
come looking for jobs as temporary day laborers, doing everything from
sorting sacks of frozen fish to sweeping sawdust at pay rates slightly
above minimum wage.

     "They're homeless - but they work," says Eckmann, looking around at
workers sleeping against the wall or gathered around the coffee machine.

      While it may seem like a routine observation, it is also a reality
that has made his employer rich. Eckmann is one of thousands of people in
North America and Europe who work for Labor Ready, the Tacoma-based
temporary employment agency for unskilled laborers.

     The company connects people who want to work, but have not been able
to find steady jobs, with businesses who need temporary help.

     Many of the workers are homeless; others, like Eckmann, haven't been
able to find steady jobs or just need the quick cash. Labor Ready is one of
the few temporary agencies that pays its workers in cash for the work they
do that day.

Profits have soared

     Founded in 1989 by Glenn Welstad, who made his first fortune from
owning Hardee's fast-food restaurants, the company now boasts nearly 700
dispatch offices in North America and the United Kingdom.

     With revenue of $607 million in 1998, Labor Ready expects to pass the
$1 billion mark next year, after it opens 300 more dispatch  offices.

     Its profit also has  soared, from $250,000 in 1993 to $19.8 million in
1998. Already, in the first three months of this year, profit rose to $3.2
million, up more than 2,000 percent from $145,000 during the same period
last year.

     Labor Ready's stock, adjusted for four splits, has risen from $7.26 a
share in 1996 to around $40 a share.

     According to Margaret Levi, a labor economist at the University of
Washington, it's all part of a larger trend: The economy is booming and
unemployment in Washington is at a 33-year low. But while skilled workers
are in short supply, there's still a pool of unskilled people willing to
work for low wages.

      Many are at the lowest rungs of the economic ladder; in leaner times,
they wouldn't be able to find jobs at all. A construction boom has helped
fuel a demand for manual labor, allowing Labor Ready to raise the rates it
charges customers faster than it has raised wages.

     Labor Ready pays workers an average of $6.40 an hour and $7.14 an hour
in Washington. It bills customers between $11 and $13 an hour.

     Levi says companies such as Labor Ready, the nation's largest employer
of temporary laborers, should employ the workers and give them benefits
such as health-insurance coverage.

      But Labor Ready spokeswoman Shannyn Roberts says that just wouldn't
make sense.

     "The type of worker and the demographic of worker we are dealing with
is the true temporary worker," says Roberts, adding that the average worker
stays with the company for only 90 hours. "It doesn't make a lot of sense
to pay benefits."

More blue-collar temps

      Until recently, blue-collar workers represented only a fraction of
the nationwide boom in temporary laborers used by companies from software
makers to banks. But that's all changed: Temporary laborers now occupy
about one out of every 20 manufacturing jobs, according to the Federal
Reserve Bank of Chicago. It's a trend the U.S. Labor Department predicts
will continue well into the next century.

      "Personally, I think it's a racket," says 26-year-old Peter Perthou,
digging up a pipe next to a house in an Issaquah housing development. He
got the job after showing up at the Labor Ready office early in the

     "If we were in the union, we'd be getting $14 an hour," he says.

     But while Perthou complains, he also admits that Labor Ready gave him
a job while he was homeless; he now rents a one-bedroom apartment in
downtown Seattle. He says he has another job as a chef lined up, but that
he continues to work for Labor Ready because they pay him every day.

     Inside one of the homes under construction, Samantha Ramsey sweeps
sawdust onto a piece of cardboard before dumping it into a trash bin. It's
her first day on the job, but she doesn't seem excited.

     "For me it's like a bummer," says the 32-year-old San Diego native.
"It's like a Catch-22," she says, explaining that she really wants to
become a bartender but that she needs money immediately. Working for Labor
Ready provides that income but distracts her from looking for a better job.

     As she sweeps, her foreman James Hickman barks commands. Four months
ago, Hickman, 31, also worked for Labor Ready as a laborer. But the
construction company on the site where he worked hired him after a week.

      "It's a good service for people who want to work," he says with
enthusiasm. "It's a good place to start if you want to help yourself."

High-tech advantage

     For all of Labor Ready's blue-collar roots, much of its success is due
to high-tech savvy. The company designed its own software, which it uses on
handheld computers,  to synchronize  data between branch offices all over
the country and the brain center back in Tacoma. The system means the
company can operate the branch offices cost-effectively.

      The average cost to open an office last year was $50,000. Offices
typically become profitable in less than six months; after 12 months, they
bring in an average $572,000 in annual revenue.

      One source of profit has been the company's cash machines, which
enable workers to get paid every day, in cash, without ever having to go to
the bank. Workers are charged an average $1.50 per transaction, about half
of what they would pay to use a local check-cashing service. In 1998,
almost half of the company's workers used the machines, netting the company
$1.2 million in fees during its last fiscal quarter, up from $175,000 a
year earlier.

       Despite the gap between the company's profits and the workers'
wages, Labor Ready provides a service that seems generally well-received
among agencies and social workers who help those who need work.

     "I'm glad there are places like Labor Ready around. It gives people
who need employment right away an opportunity," says George Zantua, who
works with the New Start Program, which is sponsored by the Metropolitan
Development Council to help employ the homeless in Tacoma.

      "We tell them to go to Labor Ready if they need work right away," he
says, adding that he would never suggest they work there for a long period
of time.

      Still, people who study labor trends, while they don't fault Labor
Ready directly, fear that its success is an ominous sign.

     "I think you are going to see a much more segregated labor force with
increasingly fewer people who have good jobs," says Helene Jorgensen, who
researches labor trends at the 2030 Center in Washington, D.C. "Job
security and benefits will go to people with higher education. The rest of
the people will have close to zero job security."

     But for employers, its clear that Labor Ready is a blessing.

     "They bend over backwards to get people," says Dave Champman, day
manager at Cityice, a massive cold-storage facility at the Port of
Seattle's Terminal 91.

     He says that when a shipment of frozen fish arrives, the company often
must work through the night to quickly move it from the ship into a
freezer. Before Labor Ready, he had difficulty finding people on short
notice or to work through the night.

      "With the seafood industry, it's really unpredictable. A lot of the
product just appears. When it comes, we need people for two or three weeks,
but we can't afford to keep them on the payroll," he says.


**In accordance with Title 17 U.S.C. section 107, this material is
distributed without charge or profit to those who have expressed a prior
interest in receiving this type of information for non-profit research and
educational purposes only.**

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