In recent decades, there has been a transformation of employment relationships within those sectors employing low wage workers in the United States of America (USA). The direct, two-party relationship assumed in federal and state legislation and embodied in traditional approaches to enforcement no longer describes the employment situation on the ground. Consider the following vignette.
A maid works in a well known, internationally-branded hotel. However, the property where she works is owned by a Real Estate Investment Trust--a legally established investment entity--who is her employer of record. Her work is supervised on a daily basis, her performance is evaluated, and the job's hours and payroll are managed by staff of a national, third-party hotel management company. At the same time, her daily work routines regarding cleaning, room set-up, and other work routines are set by standards established and monitored by the hotel chain whose name the property bears. Where does 'employment' reside in this situation?
This vignette is not limited to the hospitality industry. As major companies have invested in building well-known products as cornerstones of their business strategy, they have also shed their role as the direct employer of the people responsible for providing those products and services. In many cases, the jobs have been shifted to employers who pay low wages, seldom provide benefits, and frequently subject their workforce to conditions that violate wage and overtime, health and safety, and other workplace protection standards. These conditions are not an inevitable result of the nature of those jobs, but a result of how those sectors are organised.
Enforcement of labour standards in the millions of workplaces covered by US laws has always been challenging. The agencies charged with labour inspections have limited budgets and stretched staffing levels relative to their statutory responsibilities. But this is not the crux of the challenge. Adding additional investigators is a necessary, but not sufficient, requirement to address the regulatory task. The fundamental changes in employment relationships require a revised approach to enforcement, one that is built on an understanding of how major sectors of the economy employing large numbers of vulnerable workers operate and then using those insights to guide enforcement strategy. Just as the forces driving compliance with labour standards have changed, so must the strategies that agencies employ to improve conditions.
The employment relationship in a growing number of industries--particularly those with large concentrations of low wage workers--has become 'fissured, where the lead firms that collectively determine the product market conditions in which wages and conditions are set have become separated from the actual employment of the workers who provide goods or services. Instead, the direct employers of low wage workers operate in far more competitive markets that create conditions for non-compliance. We examine this evolution in employment and its implications for public policy in the US. We start by discussing the factors driving fissured employment and sketching its main features and outcomes. We then look at the traditional methods use for labour standards enforcement in the US and discuss why they are poorly suited to address fissured workplaces. Finally, we survey how public policies might better address the realities of the modern workplace, including efforts in this regard by the Obama administration. (1)
2. The Fissured Workplace
Industry Concentration of Vulnerable Workers
It has been well documented that jobs with low wages tend to also have other undesirable characteristics: few benefits, high turnover, higher safety and health risks, and limited opportunities for using voice, rather than exit, in dealing with workplace problems. Not surprisingly, these jobs also tend to have some of the highest rates of violations of basic labour standards as well as other workplace protections and rights (e. …