Computer Workers Feel the Byte: Temp Jobs in Silicon Valley

As the global center of innovation in high-technology industries, Silicon Valley has grown dramatically in recent decades, while leading the nation into the new "information economy." But more recently job insecurity has found its way to this valley just south of San Francisco.Silicon Valley is leading the way in creating unstable jobs for many millions of workers. Permanent workers are being replaced by "contingent" work -- temporary, part-time and contract workers. These trends exist throughout the U.S. economy, but are particularly pronounced in the Valley. As employers demand "flexibility" to help them adjust to increasing global competition and rapid market shifts, hundreds of thousands of Valley residents are being turned into economic shock absorbers.Labor unions and community groups in Silicon Valley are responding to these dramatic changes by developing new models of labor organization and calling for major shifts in public-policy that will address employment insecurity. The goal of these efforts is to build organizations that can represent contingent workers and provide security for workers even as they are forced to move from job to job and employer to employer. Representation for workers at all skill levels must go beyond a single worksite and focus on building career or employment security, even if job security is impossible to achieve. These recent initiatives are beginning to provide models for labor organization in the new economy.WHAT ARE THE SIGNS? Current government statistics don't track contingent employment as a single category. But if all categories of contingent workers are included ~ temporary, part-time, self-employed and contract work ~ almost 40% of all employees in Silicon Valley are contingent workers. This is up from 32% ten years ago. The contingent workforce is growing two to four times as fast as overall employment, and is responsible for nearly all net job growth in the county in the last 10 years. The most visible sign of this trend is the rapid rise of temporary agencies in the region. Here re a few facts:* Between January 1991 and January 1995, employment in temporary agencies in Santa Clara County grew by 48%, while overall employment in the County declined by 2%. In 1995, a time of economic recovery in the area, employment in temporary agencies grew by another 40%.* According to the California Employment Development Department, since 1984 employment in temporary help agencies has grown by 150%, more than 15 times the overall employment growth rate in the region.* Temporary agencies now employ 32,000 people in the county, out of a workforce of some 800,000. The percentage of workers employed in temporary agencies has grown from 1.5% to 4% in the last ten years. This is nearly triple the national average.* More than 250 offices of temporary agencies operate in Silicon Valley.* Manpower Temporary Services (now the largest employer in the United States with over 800,000 workers) operates 15 offices in Silicon Valley, placing over 5,000 people a week.Temporary agencies are now hiring people of all skill levels, including computer programmers, systems analysts and physicians. "The time has long passed since the clerical/light industrial sector was considered 'the center of the universe' of the temporary help industry," boasts Ray Marcy, President of Interim Personnel Services, the second largest temp agency in the Valley. "Today, virtually any skill can be, and is, provided on a temporary basis." The use of temporary employees has become a permanent and central part of corporate personnel strategies, as companies seek shelter from unstable economic conditions, rapid technological change and shorter product life cycles. The central motivation isn't always reducing labor costs, but can also include avoiding long-term commitments to permanent employees and the costs of lay-offs. "It often costs us more to hire temporary employees," according to a human resources manager from Cisco Systems who wished to remain anonymous, "but we avoid the embarrassment and costs associated with lay-offs."The rise in employment in temporary agencies is only one strategy among many that corporations are using to maintain "flexibility" in their hiring practices. Many corporations increasingly hire temporary employees directly. Pacific Bell, for instance, hires temporary (up to one year) and what they call 'term' (up to three years) employees in their operator services division. The use of part-time workers has also increased, growing from 15.6% of the workforce in 1972 to 17.5% in 1993. Nearly all of that growth is in involuntary part-time work.Perhaps the most significant increase in contingent employment, however, comes in the form of corporations out-sourcing and contracting-out functions that previously had been performed in-house. Much of the assembly work in the Valley is now done by a range of contract electronic assembly companies employing large numbers of immigrant Asian women. Such contracting out helps corporations ramp-up production of new products, but leaves employees vulnerable to shifts in the market. Corporations avoid the negative publicity and costs associated with 'downsizing' their operations,by simply not renewing contracts with their suppliers. Corporate strategies for labor 'flexibility' translate into employment insecurity, declining wages and no access to health care and benefits for large sectors of the workforce. "Even if you have a job, you are constantly worried about when it will end and where your next job will come from," says Keith Copeland of Compression Labs Inc. Contingent workers can lose their job at any moment, without any recourse.Contingent employment drives down wages and economic security for even highly skilled workers. For instance, between 1989 and 1994 wages in professional specialty occupations (a category that includes systems analysts) within temporary help agencies have declined 9% in real terms, according to data from the Bureau of Labor Statistics. Temporary workers employed in technical occupations (including computer programming) saw their wages decline by 28% in real terms during those years.NEW MODELS OF LABOR ORGANIZATIONS The dramatic rise in contingent employment is sparking new thinking within labor organizations in Silicon Valley. "Labor in Silicon Valley needs to be at the forefront of confronting these new ways of organizing work," says Amy Dean, head of the South Bay Labor Council (AFL-CIO) and founder of Working Partnerships USA, a labor/community alliance formed to help develop new directions for the labor movement. "We need to be developing new models of labor organizations, at the same time that we continue to fight the elimination of permanent positions." Organizations representing contingent workers must aim to provide security for workers even as they are forced to move from employer to employer, say community and labor leaders in the area. These organizations must recognize that although workers will typically have multiple employers, many will stay within the same occupation and the same geographical region.These facts indicate the need to develop a model of unionism with members organized around broad occupational areas within a region. Membership would not be based on workers' place of employment, but rather on the sense of solidarity developed through their occupation and position in regional labor markets. In addition, the primary goal of such organizations would be career or employment security, rather than job security. Their functions should include:* Coordinate Training Programs: These would be geared towards improving workers' career paths, providing training that can allow them to move into better jobs. This requires identifying opportunities for job mobility, while having the organizational flexibility for workers to maintain membership in the union as they move from job to job.* Defend Employee Rights: Employee rights (such as anti-discrimination and occupational safety and health legislation) have actually expanded over the last 25 years, at the same time as union membership has been declining. But in environments without collective organization, many workers don't know their rights, or don't have the organizational strength to pursue grievances. Occupational/geographic unions could provide education and representation for members based on their legal rights, even without collective bargaining agreements.* Develop Multi-Employer Regional Collective Bargaining: The goal is to prevent companies that are competing within the same industry from taking the low-road by cutting labor costs, and instead force them to take the high-road toward competing through improved productivity.New organizations, however, must also represent workers prior to achieving collective bargaining. Such pre-collective bargaining representation can be achieved through an expanded associate membership program, or through representation in guild-type associations. In addition, while collective bargaining needs to build wage floors and minimum standards for employment conditions, it should also allow individual flexibility in conditions and compensation, depending on workers' skills.* Provide Portable Benefits: These new organizations should provide workers with benefits, particularly health care and pension programs, that they can maintain as they move from employer to employer and even during periods of unemployment. Collective bargaining programs need to be geared toward employer contributions to these portable benefit plans.PRECEDENTS Precedents exist for many of the ideas presented here. The building trades have long developed aspects of this model, representing workers with temporary attachments to particular firms, while developing multi-employer bargaining units. In these industries, the unions themselves provide stability in wages, health benefits, and pensions, and in many cases actually control the hiring process. Arts and entertainment unions which represent workers with short-term, project-based jobs provide services to ease job transitions, and have developed multi-employer bargaining that sets compensation procedures across the industry.Aspects of this model also have been developed in organizing campaigns in low-wage service sectors. The Justice for Janitors campaign in San Jose, for example, built on strong social ties within the Latino community to develop unionization across the industry, and it recently won a regional multi-employer master contract in the area. Within high technology industries, employee associations are emerging that embody aspects of this model. The Graphic Artists Guild assists free-lancers working in high-technology media. They provide suggestions for negotiating individual contracts (the free-lancers' equivalent of a collective bargaining agreement), and provide guidelines for pricing and ethical standards that help workers to coordinate the prices they charge even without collective bargaining.The National Writer's Union (already affiliated with the United Auto Workers) performs a similar function for many technical writers. The Association of Technical Communicators, the Systems Administrators Guild, Computer Professionals for Social Responsibility, the Association of Mexican Engineers and dozes of other associations all represent members' interests across the industry. Their weaknesses lie in their fragmentation and isolation. But just as affiliation with staff associations helped expand unionism in the public sector during the 1960s and 1970s, affiliating with these associations in high-technology industries could provide the basis for expanding unionism to the center of the information economy.PUBLIC-POLICY REFORMS Adequately protecting contingent workers will also require regulation. The temp industry in the United States is largely unregulated. In Europe, by contrast, hiring temporary help is highly regulated, with legislation to ensure that temporary work complements stable employment rather than undermining it. Many of these regulations could be adapted to suit U.S. conditions. Temporary employment remains essentially banned in Greece, Italy, and Sweden. In other countries, regulations: * Manage conditions for establishing a temporary help agency, including requiring licenses to operate and conducting regular reviews of operations. In some cases temp firms are prohibited from operating in particular sectors of the economy. This helps prevent abuses and provides channels for hearing grievances against corporations.* Govern conditions for the use of temporary workers, ensuring that such workers are not used to replace permanent employees, limiting the maximum number of jobs in an enterprise that can be filled by temps, or limiting the duration of temporary assignments.* Provide adequate social protection for workers in temp agencies, ensuring adequate wages and benefits. In France, for instance, temporary workers must be paid the same wage as permanent workers, and upon conclusion of their assignment, temporary workers also benefit from a* precarious employment allowance -- which is increased by 50% if the temp agency does not offer them a new assignment within a period of three days.These regulations, while not sufficient in themselves, would provide important legal protection for workers in the temporary industry, and help highlight problems of contingent employment. They would help ensure that the fly-by-night temporary agencies would disappear, and temp agencies would be forced to provide more support for their employees.LABOR AND WORK IN SILICON VALLEYAs the home to the most dynamic sectors of the U.S. economy, Silicon Valley in many ways represents the future of industrial America. Some analysts argue that unions have no place in this new information age. Yet a second look at labor in the region provides a entirely different story. Out of over 600 labor councils in the country, the South Bay Central Labor Council represents the 15th highest per capita level of unionization in the country. It is true that unions have not achieved significant presence in high-tech industries, but they are strong in the more traditional sectors -- including the public sector, building trades, retail sale and transportation -- and have grown in low-wage service sectors. Organized labor has developed a strong presence within the community and in regional politics.Amy Dean and other community and labor leaders believe that Silicon Valley can help lead labor's renaissance in the country. To get there, they believe labor needs to develop the next generation of unions in response to the changing organization of capital and to meet the needs of today's workforce. But to succeed they must draw significant resources to the area (from the national AFL-CIO and one or more international unions who share their vision), and they will need to attract talented organizers who are willing to develop new models of organizing and labor organizations. As Dean says, "Capital doesn't have a monopoly on entrepreneurialism and innovation. We intend to show that labor has that potential also.Resources: Shock Absorbers in the Flexible Economy: The Rise of Contingent Employment in Silicon Valley, Chris Benner, 1996, available from Working Partnerships USA, 2102 Almaden Road, Room 100, San Jose, CA 95125, (408) 269-7872, Fax: (408) 266-2653, email:;Contingent Work: A Chart Book on Part-Time and Temporary Employment, Polly Callagan and Heidi Hartmann, 1991, Economic Policy Institute, Washington, D.C.; Piecing Together the Fragmented Workplace: Unions and Public Policy on Flexible Employment, Francoise Carre, et al., in Unions and Public Policy: The New Economy, Law and Democratic Politics, Lawrence Flood, editor, 1995.

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