Day labor: investors' new dilemma?

Before the sun rises, poor and unskilled workers line up at meeting spots across the country for a shot at a day's pay for a day's work. By sunset, these "day laborers" commonly see their $5.15 per hour slashed by more than 10 percent after the hiring agency has extracted certain fees. These fees mean these workers earn less than minimum wage. At least one state has outlawed such practices. But for the most part, they occur day in and day out with little attention from government or nearly anyone else - including socially responsible investors.

"To the best of my knowledge, there is nobody [in the investment world] taking a look at this, and this is an issue I follow day in and day out," says Ruth Rosenbaum, executive director of the Center for Reflection, Education and Action, a Hartford, Conn., think tank for economic research and activism. "Everybody is upset about outsourcing, but you also have to look at outsourcing in the US because this is what's going on.... The whole system preys on those who are most vulnerable."

Day labor isn't an easy issue to sort out ethically. On the one hand, it lets people earn money, gain experience, and possibly move to full-time jobs. On the other hand, critics say, it can lead to abuses and exploitation of immigrants, the homeless, and other disadvantaged populations.

In other words, the issue is tailor-made for the kind of scrutiny that ethical-investment managers practice.

"You see the leaders in social investing saying labor is a high priority for them," says Timothy Smith, president of the Social Investment Forum, an association representing the socially responsible mutual-fund industry. But day labor is operating under the radar of social investors and social-justice groups, he adds. "It would be an appropriate fit for social investors to look at it."

In the absence of any comprehensive national study, the scope of day labor is unknown, although statistics gathered from the industry and the US Department of Labor suggest that upwards of 1 million people might be doing unskilled day labor through agencies each year. Some are illegal aliens, but by no means all. The biggest player in the industry, Labor Ready Inc., leads the unskilled niche with 600,000 documented workers, according to company spokeswoman Stacey Burke.

Tracking such labor is difficult because public companies don't have to disclose how much they rely on day labor or which temporary staffing agencies they use.

Some social activists support the practice. At the Davie, Fla., office of the Homeless Voice newspapers, for example, phones ring all week with requests from Labor Ready and a host of other agencies in search of homeless persons who are unskilled, able-bodied, and available. One day they might work at a south Florida hospital, another at Pro Player Stadium, where the Miami Dolphins and Florida Marlins play. Despite what critics say about day labor, Homeless Voice founder and advocate Sean Cononie is happy to provide them with names.

"I feel that they're giving [the homeless] a chance," Mr. Cononie says, noting that 35 percent of the homeless suffer from mental illness. "If they're depressed and can't come to work for a day or two, they won't lose their job."

That's just one of the benefits for day laborers, according to Jeffrey Burnette, chief executive officer at Labor Finders International, a private company franchising more than 200 offices in 27 states. The firm provides day laborers to companies of all sizes, including some on the Fortune 1000 list, he says.

"This may ultimately provide a bridge for them to get permanent employment," says Mr. Burnette, who also represents the day-labor sector on the board of the American Staffing Association. "If there's a person who has liked a person and offered them a job, we're happy to hear that."

In Chicago, 75 percent of homeless shelter residents had worked day labor within the prior year, one study found. Agencies abound to deliver these willing workers to wherever they're needed, as seen through the 548 day-labor franchises registered with the Illinois Department of Labor. In an age of cost-cutting, Chicago's many manufacturers of household products are among the growing number of big companies jumping at a chance to pay as little as $6.80 per hour for workers to pack boxes, move shipments, and haul trash, according to Nik Theodore, director of the Center for Urban Economic Development at the University of Illinois at Chicago.

Page: 1 | 2