Employment

Helping The Poor For Profit

A handful of companies have sprung up to help the lowliest workers in the economy find jobs -- and to generate profits at the same time. By recruiting manual laborers -- including felons, alcoholics and homeless people -- for day-by-day work, these outfits are serving a group more or less ignored by big temporary staffing firms.

  • Recruiting manual labor has grown into a $14 billion a year business in the U.S.

  • Among the largest of these organizations is Labor Ready, headquartered in Tacoma, Wash., which sends people out to dig ditches, unload trucks and clear construction sites.

  • Its customers are mostly small contractors and factory owners in 300 cities.

  • Not only does it find jobs, Labor Ready will also handle payrolls, social security taxes and worker's compensation problems.

Labor Ready typically charges employers between $8 and $12 an hour. Of a $10 hourly charge, for example, $5.50 goes to the worker, 60 cents to payroll taxes and 60 cents to workers' compensation insurance. Office expenses and overhead claim another $2.85 -- leaving the firm with 45 cents an hour, a margin of not quite 5 percent.

Because its workers often show up for work only when they want or need to, Labor Ready pays by the day. About 30 percent of its workers eventually get hired full time.

Source: John Gorham, "Employer of Last Resort," Forbes, March 23, 1998.

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