Fee-splitting revisited: Concealing surplus value in the temporary employment relationship

Politics and Society

Volumn 29, Issue 4, 2001, Pages 589-611

  Gonos, George ^a  

^a NONE

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EID: 0035540971     PISSN: 00323292     EISSN: None     Source Type: Journal    
DOI: 10.1177/0032329201029004005     Document Type: Article

References (109)

1. Quoted in Randy Albeda and G.M.J. Veldcamp, Temporary Work and Modem Society: Part III-Proceedings of the International Conference (Boston: Kluwer, 1979), 123.
2. See, for example, Jackie Krasas Rogers, Temps: The Many Faces of the Changing Workplace (Ithaca, NY: ILR Press, 2000); Jamie Peck and Nik Theodore, "Contingent Chicago: Restructuring the Spaces of Temporary Labor," International Journal of Urban and Regional Research (forthcoming); Heidi Gottfried, "In the Margins: Flexibility as a Mode of Regulation in the Temporary Help Service Industry," Work, Employment and Society, 6, no. 3 (1992).
3. See, for example, Jackie Krasas Rogers, Temps: The Many Faces of the Changing Workplace (Ithaca, NY: ILR Press, 2000); Jamie Peck and Nik Theodore, "Contingent Chicago: Restructuring the Spaces of Temporary Labor," International Journal of Urban and Regional Research (forthcoming); Heidi Gottfried, "In the Margins: Flexibility as a Mode of Regulation in the Temporary Help Service Industry," Work, Employment and Society, 6, no. 3 (1992).
4. See, for example, Jackie Krasas Rogers, Temps: The Many Faces of the Changing Workplace (Ithaca, NY: ILR Press, 2000); Jamie Peck and Nik Theodore, "Contingent Chicago: Restructuring the Spaces of Temporary Labor," International Journal of Urban and Regional Research (forthcoming); Heidi Gottfried, "In the Margins: Flexibility as a Mode of Regulation in the Temporary Help Service Industry," Work, Employment and Society, 6, no. 3 (1992).
5. Susan N. Houseman, "Temporary, Part-time, and Contract Employment in the United States: A Report on the W. E. Upjohn Institute's Employer Survey on Flexible Staffing Policies" (Kalamazoo, MI: W. E. Upjohn Institute for Employment Research); Arne L. Kalleberg, Edith Rasell, Ken Hudson, David Webster, Barbara F. Reskin, Naomi Cassirer, and Eileen Appelbaum, Nonstandard Work, Substandard Jobs: Flexible Work Arrangements in the U.S. (Washington, DC: Economic Policy Institute 1997).
6. Susan N. Houseman, "Temporary, Part-time, and Contract Employment in the United States: A Report on the W. E. Upjohn Institute's Employer Survey on Flexible Staffing Policies" (Kalamazoo, MI: W. E. Upjohn Institute for Employment Research); Arne L. Kalleberg, Edith Rasell, Ken Hudson, David Webster, Barbara F. Reskin, Naomi Cassirer, and Eileen Appelbaum, Nonstandard Work, Substandard Jobs: Flexible Work Arrangements in the U.S. (Washington, DC: Economic Policy Institute 1997).
7. Edward A. Lenz, "Apples and Oranges: Some Key Operational and Legal Differences Between Temporary Help and Other Services," Contemporary Times (Fall 1990): 15.
8. Joseph B. Darby, "The Untouchable Topic: Agencies Explain Why They Charge Fees and What is Reasonable," Contract Professional (July-August 1998): 37.
9. From the "employees' agreement" signed by workers sent out by Career Blazers, quoted in William Lewis and Nancy Schuman, The Temp Worker's Handbook: How to Make Temporary Employment Work for You (New York: American Management Association, 1988), 62.
10. Washington state House Bill 2756 (2000); Mike Blain, "We Need Full Disclosure of Agency Fee Rates," Contract Professional (November-December 1998): 72; Brian O'Connell, "The Untouchable Topic Part II: Agency Fees and Lack of Disclosure Feed Contractors' Anger," Contract Professional (November-December 1998): 33-7.
11. Washington state House Bill 2756 (2000); Mike Blain, "We Need Full Disclosure of Agency Fee Rates," Contract Professional (November-December 1998): 72; Brian O'Connell, "The Untouchable Topic Part II: Agency Fees and Lack of Disclosure Feed Contractors' Anger," Contract Professional (November-December 1998): 33-7.
12. Elizabeth Mertz, "The Uses of History: Language, Ideology, and Law in the United States and South Africa," Law & Society Review, 22, no. 4 (1988): 682.
13. A Massachusetts critic referred to fee-charging agencies as "leeches engaged in sucking the life blood from the poor." Quoted by Alexander Keyssar, Out of Work: The First Century of Unemployment in Massachusetts (Cambridge: Cambridge University Press, 1986), 259. "The necessity of paying for the privilege of going to work," the U.S. Commission on Industrial Relations stated in 1912, "seems foreign to the spirit of American freedom and opportunity." Quoted in Adams v. Tanner, 244 U.S. 590, 604 (1917).
14. Adams v. Tanner 244 U.S. 590, 606 (1917).
15. E. L. Bogart, "Public Employment Offices in the United States and Germany," Quarterly Journal of Economics, 14 (1900): 341-377.
16. John R. Commons and John B. Andrews, Principles of Labor Legislation (New York: Augustus M. Kelley, 1967 [1916, 1936]).
17. Adams v. Tanner, 244 U.S. 590; John B. Andrews, "Fee-charging Employment Agencies Must Be Effectively Regulated," American Labor Legislation Review, 19 (1929): 367-70.
18. Ribnick v. McBride, 277 U.S. 350 (1928).
19. Chairman Tolan of the Select Committee of the House of Representatives, quoted by W. S. Woytinsky and Associates, Employment and Wages in the United States (New York: Twentieth Century Fund, 1953), 180. Seeking to close the gap in the Wagner Act which left workers using private employment agents unprotected, the Committee introduced legislation (backed by the Roosevelt administration) to impose federal regulation on employment agents under the supervision of the U.S. Department of Labor. The legislation failed to materialize.
20. Olsen v. Nebraska, 313 U.S. 236 (1941). In once again setting ceilings on employment agency fees, the states were guided by a uniform bill prepared by the U.S. DOL. See U. S. Department of Labor, Privale Employment Agencies: Laws Relating to Their Regulation as of Sept. 1, 1943, Bulletin No. 57 (Washington, DC: U.S. Department of Labor, 1943).
21. Council of State Governments [hereafter CSG], The Book of the States, Volumes 8-28 (Lexington, KY: Council of State Governments, 1950-1970).
22. U.S. Department of Labor. State Laws Regulating Private Employment Agencies, Bulletin 209 (Washington, DC: Bureau of Labor Standards, 1960), 14.
23. U.S. Department of Labor, State Laws Regulating Private Employment Agencies, Bulletin 252 (Washington, DC: Bureau of Labor Standards, 1962), 18; Arthur Goldberg, Growth of Labor Law in the United States (Washington, DC: U.S. Department of Labor, 1962).
24. U.S. Department of Labor, State Laws Regulating Private Employment Agencies, Bulletin 252 (Washington, DC: Bureau of Labor Standards, 1962), 18; Arthur Goldberg, Growth of Labor Law in the United States (Washington, DC: U.S. Department of Labor, 1962).
25. See George Gonos, "The Contest over 'Employer' Status in the Postwar United States: The Case of Temporary Help Firms," Law & Society Review, 31, no. 1 (1997): 81-110.
26. CSG 1972-73, 508-509.
27. CSG 1970-71, 502; 1974-75, 501; 1976-77, 535; Tomas Martinez, The Human Marketplace: An Examination of Private Employment Agencies (New Brunswick, NJ: Transaction, 1976).
28. The standard split in 1915 was reported as 40 percent of the fees to the foreman or employer. Frances A. Kellor, Out of Work: A Study of Unemployment (New York: Arno Press, 1971 [1904, 1915]), 187.
29. As explained by the U.S. Commission on Industrial Relations in 1915: "The foreman agrees to hire men of a certain employment agent on condition that one-fourth or one-half of every fee collected from men whom he hires be given to him. This leads the foreman to discharge men constantly in order to have more men hired through the agent and more fees collected." Quoted by Goldberg, Growth of Labor Law, 140.
30. Grace Abbott, "The Chicago Employment Agency and the Immigrant Worker," American Journal of Sociology, 14, no. 3 (1908); Bogart, "Public Employment Offices."
31. Grace Abbott, "The Chicago Employment Agency and the Immigrant Worker," American Journal of Sociology, 14, no. 3 (1908); Bogart, "Public Employment Offices."
32. George H. Trafton, "Employment Agencies Officially Exposed: Sworn Testimony Shows Urgent Need of State Action," American Labor Legislation Review, 20 (1930): 27-36.
33. Goldberg, Growth of Labor Law, 1962.
34. Woytinsky, Employment and Wages in the United States.
35. This arrangement came to be known as the "three gang system," as it meant having one group of workers on the job, another on its way from the agency, and a third group returning there to be rehired. Thus, workers complained of employment agents having "three men for one job . . . and receiving compensation (fees) from all." Commons and Andrews, Principles of Labor Legislation, 7; see also Adams v. Tanner, 244 U.S. 590, 602-3 (1917).
36. Kellor, Out of Work, 187.
37. In many cases, employers refused to hire directly, insisting that workers secure their job through a preferred agency, and possibly even one the employer himself owned or controlled. By arrangement with employers, some employment agents could receive fees for workers they never saw, that is, those who were actually hired directly, a practice the contemporary staffing industry calls "payrolling." See Kellor, Out of Work, 140-1.
38. U.S. DOL, State Laws, 1962.
39. Florida Industrial Commission v. Manpower of Miami, 91 So.2d 197, 199 (1956).
40. Gonos, "The Contest Over 'Employer' Status."
41. N.J.L. 1918 Chap. 227, Sec. 1(b).
42. Mack A. Moore, "The Legal Status of Temporary Help Services," Labor Law Journal, 16 (1965): 622.
43. Mack A. Moore, "Proposed Federal Legislation for Temporary Labor Services," Labor Law Journal, 26 (1975): 773.
44. Nebraska v. Manpower of Omaha, 73 N.W.2d 692 (1955); Manpower, Inc. of New Jersey v. Richman (Attorney General of New Jersey), Superior Court of New Jersey Law Division, Essex County. Docket No. L-22576-56 (June 24, 1957, unpublished).
45. "The mark-up included in the billing rate is as legitimate as profit is in any other kind of business venture, and should not be treated as a fee under any conditions." Moore, "The Legal Status of Temporary Help Services," 634.
46. Ibid., 633.
47. See Gonos, "The Contest Over 'Employer' Status."
48. U.S. DOL, State Laws, 1960.
49. Manpower v. Richman, 12.
50. U. S. Congress, Hearings Before the Special Subcommittee on Labor of the Committee on Education and Labor on H.R. 10349, A Bill to Establish and Protect the Rights of Day Laborers (92nd Congress). (Washington, DC: Government Printing Office 1971), 177.
51. Labor Management Relations Act, Section 8(b)(5).
52. Goldberg, Growth of Labor Law, 135.
53. CSG, 1976-77, 535. New York, for example, eliminated statutory ceilings on "employer-paid" fees provided the worker was not also charged a fee. Ibid., 536.
54. CSG, 1974-1991. Throughout this period a continuing narrow battle was waged in the state legislatures between "competing bills" or "sharply divergent proposals" brought by state regulatory agencies supporting continued regulation and industry forces seeking a policy of deregulation or "self-regulation." CSG, 1974-75, 501; 1976-77, 535. Most new legislation "incorporated industry objectives almost entirely." CSG, 1972-73, 508.
55. The same reasoning was applied also to what the staffing industry called "liquidated damages," the charges made by staffing firms when temps are hired "away from them" by client firms. Many states provided that such charges would not be considered as "fees" (and would therefore be exempt from regulation) as long as client firms and not workers were held liable. For example, CSG, 1972-73, 509; 1976-77, 536. Since "liquidated damage" charges appeared to many observers to be identical to placement fees, their use threatened to undermine staffing firms' claim to be something other than traditional employment agencies. The industry's position, which became widely accepted in practice, was that staffing firms made these charges "not as payment for arranging the hire of their temporary employees, but for breach of the customer's promise not to hire them." Edward A. Lenz, "Liquidated Damages Revisited: A Discussion of the Legalities and Pitfalls of Liquidated Damages Provisions in Temporary Help Agreements," Contemporary Times (Spring 1986): 10, emphasis in the original.
56. Brace Kaufman, "The Postwar View of Labor Markets and Wage Determination," in B. Kaufman, ed., How Labor Markets Work(Lexington, MA: Lexington Books, 1988), 180.
57. Lenz, "Apples and Oranges," 15. Interestingly, at the same time states were deregulating firms that relied on client-paid fees, they were simultaneously establishing more restrictive regulations for the "relatively few" employment agencies that were not exempted from coverage. To maintain their legal capacity in this area, it was important for the states to keep the regulation of employment agencies "on the books," even though the law now applied to a very small segment of the industry. This strategy allowed states to keep a regulatory unit open, and to continue to utilize the rhetoric of consumer protection, even in a deregulatory phase, and served the industry's needs as well. Indicative of this was the practice devised in New Jersey and other states whereby staffing firms that were no longer required to seek licensure continued to be "registered" by the state, a practice that kept the "regulatory" office busy, and allowed the state to continue to charge annual fees to deregulated firms. (Agency operators complain about these fees, referring to them as "G and C" - graft and corruption.) Quite keenly, staffing firms had found a way out of regulation, not by defeating the idea of regulation itself, but by dissociating specific types of practices and firms from identification with the regulated "employment agency" business. Surely this way around fee ceilings was smarter than a direct assault on fee regulation (or worker protection) as such. Regulation was fine, as long as it was aimed at someone else.
58. Kellor, Out of Work, 164-5.
59. The same point was made early on by labor's opponents of the plan for compulsory "employer-paid" unemployment insurance. Especially in the nonunion sector, such employers could unilaterally reduce wages to pay for premiums. Kenneth Casebeer, "Unemployment Insurance: American Social Wage, Labor Organization and Legal Ideology," Boston College Law Review, 35, no. 2 (1994).
60. Andrews, "Fee Charging Employment Agencies."
61. N.J.L. 1918, chap. 227, sec. 1(d), author's emphasis.
62. Convention No. 34 Concerning Fee-Charging Employment Agencies, 1933, Article 1, author's emphasis.
63. International Labour Office. "Interpretation of Decisions of the International Labour Conference: Fee-charging Employment Agencies Convention (Revised)," Official Bulletin, 49, no. 3 (1966): 393.
64. Mark Granovetter, Getting a Job (Chicago: University of Chicago, 1995); Martinez, The Human Marketplace. See also the discussion of "the pass-along economy" in Mark Green and John F. Berry, The Challenge of Hidden Profits: Reducing Corporate Bureaucracy and Waste (New York: William Morrow and Co., 1985), 296, 315. As one study puts it, low business failure rates in the temporary help industry reflect the "efficiency with which agencies are able to pass on the costs of order-book fluctuations to the workforce." Peck and Theodore, "Contingent Chicago," 30.
65. Mark Granovetter, Getting a Job (Chicago: University of Chicago, 1995); Martinez, The Human Marketplace. See also the discussion of "the pass-along economy" in Mark Green and John F. Berry, The Challenge of Hidden Profits: Reducing Corporate Bureaucracy and Waste (New York: William Morrow and Co., 1985), 296, 315. As one study puts it, low business failure rates in the temporary help industry reflect the "efficiency with which agencies are able to pass on the costs of order-book fluctuations to the workforce." Peck and Theodore, "Contingent Chicago," 30.
66. Mark Granovetter, Getting a Job (Chicago: University of Chicago, 1995); Martinez, The Human Marketplace. See also the discussion of "the pass-along economy" in Mark Green and John F. Berry, The Challenge of Hidden Profits: Reducing Corporate Bureaucracy and Waste (New York: William Morrow and Co., 1985), 296, 315. As one study puts it, low business failure rates in the temporary help industry reflect the "efficiency with which agencies are able to pass on the costs of order-book fluctuations to the workforce." Peck and Theodore, "Contingent Chicago," 30.
67. Mark Granovetter, Getting a Job (Chicago: University of Chicago, 1995); Martinez, The Human Marketplace. See also the discussion of "the pass-along economy" in Mark Green and John F. Berry, The Challenge of Hidden Profits: Reducing Corporate Bureaucracy and Waste (New York: William Morrow and Co., 1985), 296, 315. As one study puts it, low business failure rates in the temporary help industry reflect the "efficiency with which agencies are able to pass on the costs of order-book fluctuations to the workforce." Peck and Theodore, "Contingent Chicago," 30.
68. Quoted in U. S. General Accounting Office, Employment Service: More Jobseekers Should Be Referred to Private Employment Agencies, Washington, DC: Report to the Chairman, Committee on Governmental Affairs, U.S. Senate, 1986, 13-4, author's emphasis. When the question of whether public employment offices should fill job orders from temp agencies was raised, state representatives at the Interstate Conference of Employment Security Agencies in 1959 objected on the grounds that such practice would run against long-standing policy and tradition. William Haber and Daniel H. Kruger, The Role of the United States Employment Service in a Changing Economy (Kalamazoo, MI: Upjohn Institute for Employment Research, 1964), 67.
69. Quoted in U. S. General Accounting Office, Employment Service: More Jobseekers Should Be Referred to Private Employment Agencies, Washington, DC: Report to the Chairman, Committee on Governmental Affairs, U.S. Senate, 1986, 13-4, author's emphasis. When the question of whether public employment offices should fill job orders from temp agencies was raised, state representatives at the Interstate Conference of Employment Security Agencies in 1959 objected on the grounds that such practice would run against long-standing policy and tradition. William Haber and Daniel H. Kruger, The Role of the United States Employment Service in a Changing Economy (Kalamazoo, MI: Upjohn Institute for Employment Research, 1964), 67.
70. GAO, Employment Service, 30.
71. U.S. Senate, Employment and Training Policy: Joint Hearings before the Subcommittee on Employment and Productivity of the Senate Committee on Labor and Human Resources and the Subcommittee on Employment Opportunities of the House Committee on Education and Labor, Parts I and II (97th Congress, 2nd session) (Washington, DC: Government Printing Office, 1982).
72. At least one DOL official raised doubts about the reality of "employer-paid" fees. What, he asked, would "preclude the private agency from referring applicants from the State agency to employers who pay the private agency but recoup all or part of the fee from the employee?" GAO, Employment Service, 33.
73. ES staffers said in interviews that staffing firms make more extensive use of ES services than any other group of employers, some using it almost daily as an extension of their own offices. One staffer said he suspected that private agencies use "America's Talent Bank" (the ES's on-line job search service, which permits employers to search a pool of resumes) to circumvent the rule that they must have a signed agreement with the state to get ES referrals. Michigan contracts with Kelly Services to run the computerized "Talent Bank" for that state.
74. Some public ES offices have added their own "fee-based enhanced services" to their free "core" services.
75. See Michael Indergaard. "Retrainers as Labor Market Brokers: Constructing Networks and Narratives in the Detroit Area," Social Problems, 46, no. 1 (1999): 67-87.
76. Bruce Steinberg. "Temporary Help Services: An Annual Update for 1994," Contemporary Times (Spring 1995): 11-16, my emphasis.
77. Ellen Reese, "From Welfare Rights to Workers' Rights: Political Struggles over Welfare Reform in Los Angeles" (paper presented at the Annual Meeting of the American Sociological Association, Chicago, 1999).
78. John Pawasarat, "The Employer Perspective: Jobs Held by the Milwaukee County AFDC Single Parent Population, January 1996-March 1997," University of Wisconsin-Milwaukee, Employment and Training Institute, 1999.
79. The author's calculation of agency mark-ups is based on industry data from 1990-1998.
80. U.S. Bureau of Labor Bulletin No. 109, quoted in Adams v. Tanner, 244 U.S. 590, 601.
81. Martinez' study of the employment agency business concluded that, "The extent of fee-splitting today is probably less than it was in the early 1900s, largely because of the disappearance of large labor contractors and the increased risks of detection by a government agency or moral crusader." Martinez, The Human Marketplace, 48. Martinez' study considered only the traditional or permanent segment of the employment agency business and did not include the temporary help and staffing industry.
82. "Secondary sourcing" arrangements, in which a "primary vendor" subcontracts with other staffing agencies, a frequent practice in the high-tech field, amounts to splitting in multiple ways. Income may be split with other businesses as well, as when check cashing firms locate within agency offices in the industrial sector, or when transportation to work sites is contracted to an outside firm.
83. Abbott, "The Chicago Employment Agency," 294.
84. GAO, Employment Service, 22.
85. Indergaard, "Retrainers as Labor Market Brokers," 77.
86. James K. Galbraith, Created Unequal: The Crisis in American Pay (New York: Free Press, 1998); Michael Hout, "Inequality at the Margins: The Effects of Welfare, the Minimum'wage, and Tax Credits on Low-Wage Labor," Politics & Society, 25, no. 4 (1997): 513-524; Lucy Williams, "Rethinking Low-Wage Markets and Dependency," Politics & Society, 25, no. 4 (1997): 541-550.
87. James K. Galbraith, Created Unequal: The Crisis in American Pay (New York: Free Press, 1998); Michael Hout, "Inequality at the Margins: The Effects of Welfare, the Minimum'wage, and Tax Credits on Low-Wage Labor," Politics & Society, 25, no. 4 (1997): 513-524; Lucy Williams, "Rethinking Low-Wage Markets and Dependency," Politics & Society, 25, no. 4 (1997): 541-550.
88. James K. Galbraith, Created Unequal: The Crisis in American Pay (New York: Free Press, 1998); Michael Hout, "Inequality at the Margins: The Effects of Welfare, the Minimum'wage, and Tax Credits on Low-Wage Labor," Politics & Society, 25, no. 4 (1997): 513-524; Lucy Williams, "Rethinking Low-Wage Markets and Dependency," Politics & Society, 25, no. 4 (1997): 541-550.
89. Paul Osterman, Securing Prosperity: The American Labor Market: How It Has Changed and What to Do About It (Princeton: Princeton University Press, 1999), 20.
90. Robert Kuttner, Everything For Sale: The Virtues and Limits of Markets (Chicago: University of Chicago Press, 1999), 80.
91. Given the staffing industry's wage-setting practices, it becomes clear that the industry's use of the term "mark-up" is misleading. The term mark-up implies a certain ordering of events, namely, that the cost of the "merchandise" to be sold-here, the temp worker's wage-has been determined first by the agency, and then "marked-up" a certain percentage before being sold to the corporate user. For all but a small group of temps at the high end of the market, however, the flow of events is closer to being the other way around. In common practice, the prevailing pay rate at the time the client firm hires temps has been used as a guide in setting billing rates, that is, as a starting point for negotiations. Client firms, however, are normally unwilling to add the agency mark-up to the original quote. Hence, after the final purchase price (billing rate) is set in negotiation with the corporate customer, it is marked down by the staffing agency to arrive at the temp worker's wage, insuring the agency a certain margin. This process accounts in part for why temps usually make a lower wage than regular employees doing the same work, and for the downward pressure on wages caused by this wage setting process. Further, since the hourly wage of the clients' regular employees has been used as a guide in setting billing rates, the cost of temporary labor to client firms has typically been the same or very close to the hourly wage of their regular (or former) employees in the same job positions. The greatest part of the corporate customer's immediate "savings" have typically come not from lower hourly rates, but from savings on benefits. See Arne Kalleberg and Kathryn Schmidt, "Contingent Employment in Organizations: Part-time, Temporary, and Subcontracting Relations," in A. L. Kalleberg, D. Knoke, P. V. Marsden, and J. L. Spaeth, eds., Organizations in America: Analyzing Their Structures and Human Resource Practices (Thousand Oaks, CA: Sage, 1996), 253-275; Mack Moore, "The Temporary Help Service Industry: Historical Development, Operation and Scope," Industrial and Labor Relations Review, 18 (1965): 569; Houseman, "Temporary, Part-time, and Contract Employment."
92. Given the staffing industry's wage-setting practices, it becomes clear that the industry's use of the term "mark-up" is misleading. The term mark-up implies a certain ordering of events, namely, that the cost of the "merchandise" to be sold-here, the temp worker's wage-has been determined first by the agency, and then "marked-up" a certain percentage before being sold to the corporate user. For all but a small group of temps at the high end of the market, however, the flow of events is closer to being the other way around. In common practice, the prevailing pay rate at the time the client firm hires temps has been used as a guide in setting billing rates, that is, as a starting point for negotiations. Client firms, however, are normally unwilling to add the agency mark-up to the original quote. Hence, after the final purchase price (billing rate) is set in negotiation with the corporate customer, it is marked down by the staffing agency to arrive at the temp worker's wage, insuring the agency a certain margin. This process accounts in part for why temps usually make a lower wage than regular employees doing the same work, and for the downward pressure on wages caused by this wage setting process. Further, since the hourly wage of the clients' regular employees has been used as a guide in setting billing rates, the cost of temporary labor to client firms has typically been the same or very close to the hourly wage of their regular (or former) employees in the same job positions. The greatest part of the corporate customer's immediate "savings" have typically come not from lower hourly rates, but from savings on benefits. See Arne Kalleberg and Kathryn Schmidt, "Contingent Employment in Organizations: Part-time, Temporary, and Subcontracting Relations," in A. L. Kalleberg, D. Knoke, P. V. Marsden, and J. L. Spaeth, eds., Organizations in America: Analyzing Their Structures and Human Resource Practices (Thousand Oaks, CA: Sage, 1996), 253-275; Mack Moore, "The Temporary Help Service Industry: Historical Development, Operation and Scope," Industrial and Labor Relations Review, 18 (1965): 569; Houseman, "Temporary, Part-time, and Contract Employment."
93. Given the staffing industry's wage-setting practices, it becomes clear that the industry's use of the term "mark-up" is misleading. The term mark-up implies a certain ordering of events, namely, that the cost of the "merchandise" to be sold-here, the temp worker's wage-has been determined first by the agency, and then "marked-up" a certain percentage before being sold to the corporate user. For all but a small group of temps at the high end of the market, however, the flow of events is closer to being the other way around. In common practice, the prevailing pay rate at the time the client firm hires temps has been used as a guide in setting billing rates, that is, as a starting point for negotiations. Client firms, however, are normally unwilling to add the agency mark-up to the original quote. Hence, after the final purchase price (billing rate) is set in negotiation with the corporate customer, it is marked down by the staffing agency to arrive at the temp worker's wage, insuring the agency a certain margin. This process accounts in part for why temps usually make a lower wage than regular employees doing the same work, and for the downward pressure on wages caused by this wage setting process. Further, since the hourly wage of the clients' regular employees has been used as a guide in setting billing rates, the cost of temporary labor to client firms has typically been the same or very close to the hourly wage of their regular (or former) employees in the same job positions. The greatest part of the corporate customer's immediate "savings" have typically come not from lower hourly rates, but from savings on benefits. See Arne Kalleberg and Kathryn Schmidt, "Contingent Employment in Organizations: Part-time, Temporary, and Subcontracting Relations," in A. L. Kalleberg, D. Knoke, P. V. Marsden, and J. L. Spaeth, eds., Organizations in America: Analyzing Their Structures and Human Resource Practices (Thousand Oaks, CA: Sage, 1996), 253-275; Mack Moore, "The Temporary Help Service Industry: Historical Development, Operation and Scope," Industrial and Labor Relations Review, 18 (1965): 569; Houseman, "Temporary, Part-time, and Contract Employment."
94. Elaine McCrate, "Welfare and Women's Earnings," Politics & Society 25 no. 4 (1997): 417-442.
95. Lawrence F. Katz and Alan B. Krueger, "The High-Pressure U.S. Labor Market of the 1990s," Working Paper No. 416, Princeton University Industrial Relations Section 1999, 43.
96. E. Epstein and J. Monat, "Labor Contracting and its Regulation: I," International Labour Review, 107 (1973): 462. The labor market intermediary "makes a profit out of the earnings of the workers for whom he finds employment."
97. Louis Adamik, Dynamite: The Story of Class Violence in America (New York: Vintage, 1958 [1931]), 23.
98. See Robert Tillman and Michael Indergaard, "Field of Schemes: Health Insurance Fraud in the Small Business Sector," Social Problems, 46, no. 4 (1999): 572-590.
99. Randy Hodson, "Companies, Industries, and the Measurement of Economic Segmentation," American Sociological Review, 49 (1984): 335-348.
100. Michael Burawoy, Manufacturing Consent: Changes in the Labor Process Under Monopoly Capitalism (Chicago: University of Chicago Press, 1979).
101. Vicki Smith, "The Fractured World of the Temporary Worker: Power, Participation, and Fragmentation in the Contemporary Workplace," Social Problems, 45, no. 4 (1998): 411-30.
102. Martinez, The Human Marketplace, 43.
103. Elizabeth Mertz, "The Uses of History," 682. The "overall division between worker incentives and capitalist incentives is embedded in the structure of the legal system." Arthur L. Stinchcombe, Economic Sociology (New York: Academic Press, 1983), 183, 140-43. On "legitimized distribution," see also Pierre Bourdieu, "The Force of Law: Toward a Sociology of the Juridical Field," Hastings Law Journal, 38 (1987): 837.
104. Elizabeth Mertz, "The Uses of History," 682. The "overall division between worker incentives and capitalist incentives is embedded in the structure of the legal system." Arthur L. Stinchcombe, Economic Sociology (New York: Academic Press, 1983), 183, 140-43. On "legitimized distribution," see also Pierre Bourdieu, "The Force of Law: Toward a Sociology of the Juridical Field," Hastings Law Journal, 38 (1987): 837.
105. Elizabeth Mertz, "The Uses of History," 682. The "overall division between worker incentives and capitalist incentives is embedded in the structure of the legal system." Arthur L. Stinchcombe, Economic Sociology (New York: Academic Press, 1983), 183, 140-43. On "legitimized distribution," see also Pierre Bourdieu, "The Force of Law: Toward a Sociology of the Juridical Field," Hastings Law Journal, 38 (1987): 837.
106. See Kitty Calavita, Henry N. Pontell, and Robert H. Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis (Berkeley, CA: University of California, 1997) for analysis of an illegal example of "looting" or "collective embezzlement."
107. Washington Alliance of Technology Workers (www.washtech.org).
108. Fred Block and Jeff Manza, "Could We End Poverty in a Postindustrial Society? The Case for a Progressive Negative Income Tax," Politics & Society, 25, no. 4 (1997): 473-511; Kevin Duncan, "Incentives and the Work Decisions of Welfare Recipients: Evidence from the Panel Survey of Income Dynamics, 1981 -1988," American Journal of Economics and Sociology, 59, no. 3 (2000): 433-449.
109. Fred Block and Jeff Manza, "Could We End Poverty in a Postindustrial Society? The Case for a Progressive Negative Income Tax," Politics & Society, 25, no. 4 (1997): 473-511; Kevin Duncan, "Incentives and the Work Decisions of Welfare Recipients: Evidence from the Panel Survey of Income Dynamics, 1981 -1988," American Journal of Economics and Sociology, 59, no. 3 (2000): 433-449.