The Warehouse Archipelago – The American Prospect Leave a comment

This article appears in the July/August 2021 issue of The American Prospect magazine. Subscribe here.

Every six seconds, the sorting machine would spit out bags of candy as Rebecca Wells waited, robot-like.

She had to grab the bags, weighing up to nine pounds, stuff them into shipping boxes, and then feed the boxes into a taping machine.

The bags coming at her at the Mars, Inc., warehouse in Joliet, Illinois, were filled with American favorites—Skittles, Life Savers, Juicy Fruit.

But it wasn’t a mindless task since the size of the bags and boxes varied continually, based on customer orders. And so she had to pack each box differently and keep up with the sorting machine, even as the smaller bags started popping out at an even faster pace. Given the variations, Wells would fill only a third or a half of each box, leaving the rest for her co-workers.

They worked eyeball to eyeball, with their arms sometimes touching as they reached for the boxes. But Wells couldn’t speak with many of those around her, not even about personal safety as COVID-19 raced through the warehouse.

Some were Spanish-speaking immigrants, and Wells—who is African American—spoke only English. Others were simply strangers, new arrivals on the line. So many people quit, workers say, that out of the 75 workers in the packing area, only about 15 were still there nine months later.

And as the warehouse wiped away her hope for a better future, she started to dream of joining the exodus.

“When I started, I said I liked this job. I used to tell my mom everything, every day: what I learned and new people who I talked to, new everything,” Wells said during an interview. “But now it’s like, ‘Why do I have to be here? Why do I have to wake up and go?’ And I shouldn’t feel like that.”

Part of the problem was that management wouldn’t defend her as workers argued from time to time over things like who would be next for a bathroom break off the line.

And then there was the agonizing lack of money.

Before applying at Mars, Wells had worked in food service, earning $13 an hour. She saw Mars as a step up since it paid $15.50 and promised steady work, unlike the food business during the pandemic. But it didn’t quite work out that way. For some weeks, when she missed a day or when the packers filled their quotas and got sent home early, she barely took home $300 a week.

Like almost all the 500 people in the warehouse, Wells didn’t work directly for Mars, the seventh-largest privately owned company in the U.S., according to Forbes. Since its founding in 1911, the company has generated a $137 billion fortune for founding family members, who still control the company, according to Bloomberg. But Wells worked for a temporary staffing company called Staffmark, which in turn had been hired by XPO, one of the country’s largest logistics companies.

Even though Staffmark expected her to show up at Mars every day, she never stopped being classified as a temporary worker. She received no health care, no retirement savings, and no paid sick or vacation time.

The company paid a $3-per-hour bonus during the pandemic, but only for a few weeks.

Wells spent hours each week driving back and forth from her suburban Chicago home to the heart of the nation’s largest inland warehouse center. But she had trouble saving any money. When asked to meet at a family restaurant to talk about her work, she said yes. Then she texted ahead to say she had no money for the meal.

REBECCA WELLS IS not her real name; we use this pseudonym to protect her from warehouse managers and staffing agencies who routinely blackball workers who dare to speak out. But she’s a real person, and she’s talking about a plight shared by millions of Americans in the 21st century.

They live and work in the warehouse archipelago, a vast and growing sprawl that extends far beyond Amazon to hundreds of companies that are smaller, less visible, less technologically adept, and more likely to rely on temporary staffing companies for their workers, as a primary way to cut costs and stay competitive.

Unions are few, injuries are high, and workers rarely speak up about the discrimination or problems they face—because they desperately need the work or are undocumented or ex-convicts or fear getting blackballed by the staffing companies. They are mostly Black and Latino, and many are women.

In the 1930s, these workers might have lined up at stockyards, steel mills, and garment factories—vulnerable workers with no rights or promises of a better life. But they rose up and advanced financially, thanks to unions, an activist federal government, and the sustained gusher of postwar economic growth.

Those ladders have disappeared. Today, millions of workers are stuck in the archipelago in a daily battle for low-wage survival. They’re concentrated in vast clusters in Southern California, New Jersey, and the Chicago area, in warehouses that are hollowed-out relics of the nation’s industrial legacy.

“People like to talk about warehousing as a replacement for manufacturing,” says Beth Gutelius, a researcher at the University of Illinois at Chicago. “But it’s not a production function like a factory; it’s a circulation function. It doesn’t create goods, it moves them.”

“The profit margins in warehousing as a circulation activity are very tight, so employers look for ways to cut costs, and labor cost is often the first place they look,” Gutelius continues. “Without power, like the unions that were built in manufacturing, frontline workers are forced to absorb this pressure on profit margins by accepting lower wages and worse working conditions.”

Warehouse work wasn’t always this way. But the rate of unionization of warehouse workers nationwide fell to 6.7 percent in 2018 from 28.1 percent in 1983, government figures show. The drop was due to the fight put up by companies like Amazon this year in Alabama, and in the preceding decades by Walmart, XPO, and others to keep unions out of their newly built suburban warehouses. It was due to unions’ weakened capabilities and repeated failures to mount a broad effort. Temp workers are cheaper than full-time workers, especially full-time union members. It was also due to an increasingly deficient labor law that enabled employers to thwart their workers’ attempts to unionize.

Unionizing those workers is a particular challenge because the jobs are temporary or seasonal, making it difficult to reach or organize them. Nearly 80 percent of the workers hired by staffing companies in Illinois are Black or Latino, according to figures from the state’s Department of Labor. Four out of five never are hired full-time, according to one study. They may work alongside others who are direct hires and get higher wages for doing the same work.

Only three states have comprehensive laws overseeing staffing companies, leaving many workers elsewhere prey to wage theft, discrimination, and unhealthy and hazardous conditions.

Their plight is also the result of weak enforcement at the national and local levels. Only three states have comprehensive laws overseeing staffing companies, leaving many workers elsewhere prey to wage theft, discrimination, and unhealthy and hazardous conditions.

Meanwhile, the warehouse sector is booming. Even as the COVID-19 pandemic wiped out millions of jobs, the ranks of warehouse workers have grown. That took place as online sales jumped 44 percent in 2020, the highest such increase in at least two decades.

The archipelago is fed by an endless procession of containers arriving mostly from China aboard ever-larger ships at overcrowded ports that transfer them to two-mile-long trains and massive trucks lumbering around the clock, fouling the air and clogging highways. As a cluster of largely unmarked warehouses, the archipelago is easy for the public to miss, but it looms steadily larger in the nation’s economy, and in millions of Americans’ lives.

“Focusing on Amazon is OK, but it distracts from the other warehouses,” says Gutelius. “There are also the people who make Weber grills, who brew beer, who sell cosmetics. All of them need warehouses, and because of e-commerce, what’s doing inside them didn’t exist before.”

Nearly 1.5 million people work full-time in U.S. warehouses, a figure that’s more than doubled in the past ten years. But no one knows for sure how many temporary and even full-time workers should be added to this number, because they’re scattered in dozens of other occupational codes the government tracks for retail, packing, and manufacturing. Gutelius estimates the actual number is closer to four million.

Despite all the job growth, inflation-adjusted earnings actually fell in the warehouse industry during the 18 years ending in 2019, Gutelius says. To this insult is added injury: Warehouse workers, she adds, are twice as likely as other workers to get injured on the job.

Irma Mosqueda is one of those casualties. She’d heard plenty of grumbling about unsafe conditions at her suburban Chicago warehouse, but she never saw her bosses address them as they pressed workers to keep the machines going. She never heard any workers complain to the bosses and didn’t speak up herself.

“I was scared they would fire me,” she says. She was in her mid-fifties, a single parent, and needed the job that paid her $12.40 an hour after five years.

Then one day, her machine had a problem, and she started to move to another. She didn’t see the forklift coming, nor, apparently, did the forklift’s driver see her. The forklift plowed into her, forcing the amputation of her left leg from the hip downward. Three months in the hospital and a changed life followed.

Mosqueda no longer works, nor gets around by herself.

Jose Rivero, her attorney, who won a settlement for Mosqueda in 2019, two years after her accident, cites a video of the accident to explain what happened. “You’ll see forklifts zipping around the place where people are working,” he says. “I couldn’t believe there wasn’t an accident every second.”

By shifting the burden of compensating injured workers to staffing companies, Rivero says warehouse operators have diminished incentive to fix dangerous conditions.

“We remain incredibly saddened by the unfortunate workplace accident involving Ms. Mosqueda and have taken several additional measures to further enhance our strong safety protocols and underscore the role each associate must play in keeping themselves and their coworkers safe,” said an e-mail reply from LSC Communications, which was taken over by Atlas Holdings in 2020.

The rise of temporary staffing companies began several decades ago when major employers like Walmart started contracting with them to provide workers for their warehouses, even as they hired logistics companies to run those warehouses. This kind of “fissured workplace” reduced labor costs, made the prospect of unionization even more remote, and enabled companies like Walmart to deny responsibility for injuries, for which they’d otherwise be liable.

In the wake of the 9/11 terror attacks, when many employers fired workers who lacked papers showing they were legally in the U.S., staffing companies stepped into the breach. According to Tim Bell of the Chicago Workers’ Collaborative, they told employers they could have the same workers back on the job but at the lower pay rates of the agencies.

The fissuring of the warehouse economy accelerated accordingly, and the pay of the people who worked there was reduced, as a lawsuit that involved several Walmart warehouses in Southern California made clear.

The company had hired Schneider Logistics, one of the nation’s largest logistics firms, and Schneider had turned to two staffing firms to hire the predominantly Latino immigrant workforce. A nearly three-year court battle resulted in a $21 million class action suit settlement in 2014 for the workers.

Under an alleged scheme triggered by the hiring of the staffing companies, according to the workers’ complaint, employees’ wages were lowered. They weren’t paid for overtime work. They also were fired or threatened with retaliation if they inquired about their pay.

Once Walmart’s effort to be dismissed as a defendant was rejected by the court, and it saw that a jury trial would expose its role, Walmart, then the world’s largest company by revenue, agreed to a settlement (as did Schneider). It’s not clear, says Michael Rubin, an attorney for the workers, which company made the payment, since Walmart and Schneider were both sued by the workers. What made the suit unique, according to Rubin, was that it laid out the dealings of the giant retailer, the logistics firm, and the staffing company. “It was a three-tiered joint employer case,” he explained.

Staffing companies have been cited for several questionable strategies. They have been cited for price-fixing and agreeing not to hire from other firms. Laura Padin, an attorney with the National Employment Law Project, points to other staffing company strategies.

One is their use of the federal Work Opportunity Tax Credit (WOTC), which rewards companies for hiring minorities and workers with troubled histories, such as former prison inmates. It can provide more than $6,000 for each worker. The problem with this, she explains, is it doesn’t launch new careers for struggling workers hired under this program. Rather, the staffing companies hire the workers “for a few months in dead-end jobs.” At the same time, staffing companies, operating on low profit margins, rely on the subsidies “to make their money,” she said.

An equally troubling staffing company strategy, experts say, is a conversion fee. Some staffing firms, according to data collected by Temp Worker Justice, charge a potential employer up to $2,000 or 10 percent of a worker’s yearly salary if a company directly hires the worker after several months on the job. “The whole model is built on keeping workers in temp worker conditions,” Padin said.

Dan Shomon, a spokesman for the Staffing Services Association of Illinois, refutes such criticism, saying that agencies want to benefit workers. “Illinois has one of the strongest laws in the country to protect temporary staffing workers,” adds Shomon, whose group represents ten firms that hire light-industrial workers.

But some of these agencies have had legal problems with Illinois officials. In 2020, three staffing agencies that belong to the organization were accused in a lawsuit by the Illinois attorney general of colluding to set low wages and agreeing not to “poach” workers from each other. The case is ongoing.

THE NEWS ABOUT worker shortages and rising wages at companies with the reopening of the economy may suggest new hopes for warehouse workers. Indeed, at a new warehouse in Joliet, Harbor Freight Tools will pay $19.50 an hour, says Doug Pryor, vice president of the Will County Center for Economic Development. Wages are also rising at small warehouses that rely on temporary workers, he adds.

Beth Gutelius agrees that labor shortages might finally be reversing the wage stagnation that has plagued both temporary and permanent warehouse workers in the U.S. for 20 years. The average wage for a warehouse worker in June 2021, according to one wage-tracking firm, was $12.81 an hour—not a lot to feed a family on.

But the pay gap between full-time workers and temps won’t disappear entirely. In the end, Gutelius predicts, rising wages may mean that employers will turn even more to temporary workers.

Moreover, companies that rely on warehouses are still encouraging turnover. In Amazon’s case, the churn rate has reached 150 percent per year, according to The New York Times. For longtime workers—those who stay more than three years—Amazon stops giving annual pay raises and offers a $1,000 bonus if they leave, according to Bloomberg. Amazon also recently closed a Chicago warehouse where workers had staged a series of protests during the pandemic.

In 2020, at the pandemic’s peak, OSHA’s warehouse inspections not only didn’t rise with the number of warehouse outbreaks; they dropped by more than a half.

The anti-union tactics Amazon used to block an organizing drive by the Retail, Wholesale and Department Store Union (RWDSU) in Bessemer, Alabama, are employed widely across the industry. The mammoth company now faces another, and larger, potential challenge from the Teamsters union, which has created a division to organize Amazon and urged its members to back an all-out national effort.

But regaining a foothold among warehouse workers and drivers serving the warehouses has proved to be difficult for the 1.2 million member union. Employers’ determination to resist unions at all costs—a determination abetted by the inadequacies of labor law—are a potent obstacle to unionization. Teamsters union officials say that until recently five XPO facilities had voted to join their union, but none had contracts. But in July, workers at XPO facilities in Miami and Trenton, New Jersey, finally won contracts with the company, six years and four years, respectively, after voting to become Teamsters.

At the same time, workers at several XPO locations, where contract bargaining was going nowhere, have voted the union out. These efforts have been supported by the National Right to Work Foundation, according to news reports.

XPO offered this take on unions’ lack of success at its U.S. facilities in a filing with the Securities and Exchange Commission. “As of December 31, 2020, 75.8% of our employees in Europe were represented by unions or other employee representative bodies, while almost all of our employees in the United States have chosen to remain union-free,” the company said. Out of 35,000 employees in the U.S., unions represent just 231 XPO employees, among them workers at a small Indiana facility recently organized by the Machinists Union, according to an XPO official.

A likely reason for unions’ failure has been XPO’s resistance. Between 2014 and 2018, the firm racked up 120 unfair labor charges with the National Labor Relations Board, according to an extensive 2020 report on the firm by unions in the U.S. and globally. The report cited a statement from the company’s employee handbook: “It is the company’s position that it can best achieve a competitive position in the transportation and logistics industries by remaining union-free. XPO will do everything legally possible to remain in that position and to convince the company’s employees that they have no need for representation by an outside party.”

XPO Logistics, Inc., has paid over $47 million in fines, penalties, and court cases for employment-related issues since 2000, according to Violation Tracker, a research tool of Good Jobs First, a Washington, D.C., organization that promotes government and business accountability. Despite unions’ complaints, an XPO official told us that the company “respects the right of every employee to choose or decline union membership.”

How to account for the company’s success at thwarting unionization in the U.S., while more than three-quarters of its European workforce is unionized? It’s not that XPO supports unionization there while opposing it here, or that the issues American workers confront are wholly different from those in Europe. In large part, it’s because the tactics XPO uses to defeat unions in the U.S. are forbidden by European laws, while American labor law imposes no serious penalties for the same offenses.

XPO’s business, meanwhile, is booming, with a 24 percent increase in revenue for the three months ending in March over the first quarter of last year, and a 40 percent increase in its share price for the first half of 2021. XPO recently said it would be splitting its trucking and logistics operations into two separate companies.

THE PANDEMIC brought a burst of scrutiny to the archipelago. Warehouses and factories were second only to nursing homes in COVID cases reported in Illinois, according to a January 2021 report by Warehouse Workers for Justice and the Chicago Workers’ Collaborative. At least 165 outbreaks occurred in warehouses, factories, and food service facilities, the report said.

But workers’ pleas for help got limited support nationally from the Occupational Safety and Health Administration (OSHA) during the Trump administration (a situation that the new administration has promised to fix). According to figures for 2020, at the peak of the pandemic, OSHA’s warehouse inspections across the U.S. not only didn’t rise with the number of warehouse outbreaks; they actually dropped by more than a half, falling to 100, the lowest number in over a decade. Total fines fell by 61 percent from the previous year, according to Good Jobs First.

Oscar (not his real name) worked in a small 200-person combination factory/warehouse in southern Wisconsin. Most of the workers were Latina. “The money I was getting was not enough to live on, but to survive,” he says.

When he fell sick with COVID-19 in the spring of 2020, he had no medical benefits and no financial help from the staffing company. He knew about 15 of his fellow workers who had caught the virus, and one, a 55-year-old friend, had died. Despite that, he doesn’t recall the company talking about sick workers.

The company fired him soon after the virus struck him. After 20 years in the warehouses, always working for staffing companies, he had no money, and no support to help him get by.

A small hospital in a northern Chicago suburb took him as a charity patient to help him deal with the virus. But he had to leave after a month, although he hadn’t fully recovered. He avoided taking a bath or doing anything physical for weeks afterward because his lungs hurt him so much. Out of work for months, he could not pay rent and then found a room in a nearby house. “I’m afraid,” he said, soon after leaving the hospital. “I don’t know what’s going to happen. I have trouble breathing.”

He eventually found a new job: doing lighter work through a staffing company.

Oscar’s warehouse was just one of many where management downplayed the pandemic. At the 1.4 million square foot warehouse that Mars opened in Joliet in 2017, a mammoth building 29 times the size of a football field, COVID-19 was racing through the workforce.

The Mars building is in a cluster of warehouses surrounding Joliet, 35 miles southwest of Chicago. Mothballed factories and steel mills dot the area. But the area is growing as a warehouse mecca that links more than 70 million people in the Upper Midwest to rail lines that run straight to California ports where container ships constantly arrive from China. The two-mile-long trains run back and forth along these lines every 20 minutes, every day of the year.

Mark Balentine worked on the candy-packing line in the Mars warehouse and is still angry about not being informed that one of his co-workers had tested positive. “I was bumping into her, my sweat into her sweat, and when I asked about not being informed, they said I was a troublemaker,” says Balentine, who later quit and is now an organizer for Warehouse Workers for Justice in Illinois.

The lack of information posed unique problems for Ryan Johnson, one of the warehouse’s forklift drivers. He has diabetes and high blood pressure. His wife has rheumatoid arthritis; his sister-in-law, who lives with them, has multiple sclerosis; and his son has a heart condition.

“When I come home from work, the first thing I do is strip down and take a shower,” Johnson said in an interview last year. All the clothes I’m wearing go into the washing machine. All the jewelry I’m wearing, all the rings and everything, comes off and gets disinfected. My wife has clean clothes waiting.”

Warehouse worker unionization fell from 28 percent in 1983 to 6.7 percent in 2018, due chiefly to opposition from employers like Amazon.

As the pandemic gained steam, 100 Mars workers—20 percent of the warehouse staff—signed a petition demanding hazard and quarantine pay and more and better protective equipment. They staged a protest at the company’s research center on Goose Island in Chicago in September.

Johnson was one of four Mars workers who spoke during their COVID-19 protest. Three had already been fired; in December, Johnson was fired, too. Despite requests, Mars did not offer a reply to the issues he raised. 

Ronald Jackson is another protestor who was fired. He was ostensibly let go for refusing to open a box, but claimed his temporary staffing company, CoWorx Staffing Services, provided no written documentation of his alleged offense. The staffing company did not reply to a request for comment.

Jackson says he was actually fired for speaking out on safety problems, even though labor laws protect this kind of speech. He filed a complaint with the National Labor Relations Board. The board ruled that the company had indeed used threatening language but refused to order back pay or reinstatement, according to documents provided by Jackson.

After getting fired at Mars, Jackson refused an offer by CoWorx for a temporary job at another warehouse paying $12. “I didn’t refuse work, but I refuse to be treated like a slave,” Johnson says.

For Jackson, the fight for workers’ rights is a direct extension of the Black Lives Matter protests that raged across the U.S. last summer.

“Let’s be real,” he says. “If this were a white issue, with a white workforce, safety would be no issue at all. Precautions would be taken.”

PRESIDENT BIDEN seems more inclined than either of his two Democratic predecessors to regard unions as part of the bedrock of his political base, says Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara.

But for now, hefty campaign contributions mean the primarily white, unionized electricians getting paid $80 an hour to build a warehouse wield far more clout in the Democratic Party than the Black and brown unorganized workers who work in warehouses and make just $15, says Roberto Clack, director of the Warehouse Workers for Justice in Joliet.

Born out of workers’ complaints, lawsuits, political pressure, and worker advocacy groups, experts say, Illinois has the nation’s strongest law protecting warehouse workers. But Tim Bell of the Chicago Workers’ Collaborative says it’s not been enough.

“Enforcement comes from worker complaints and [workers] are terrified of complaining,” he says.

What are the solutions?

Only three states—Illinois, California, and Massachusetts—have comprehensive laws. So what should stronger laws do? How can they address warehouse workers’ multiple plights?

Workers need protections against discrimination because of race and gender. State agencies should track staffing agencies’ hiring to signal any abuses and abusive patterns.

Workers need to be provided with safe equipment, clothing, and training by the staffing agencies and host companies. Warehouse workers suffer high rates of injuries on hazardous jobs. And because of crowded warehouse conditions, they faced high rates of exposure to the COVID virus at the peak of the outbreak.

Workers need to be given training for long-term skills and the chance for long-term jobs when openings come up. This will reduce the slotting of workers permanently into low-wage, low-skill jobs.

Workers should know their basic rights. In a time of fissured workplaces, they should know who they are working for: what staffing agency, who provides workers’ compensation, what their hours are, and the length of their assignments.

State and federal safety agencies should increase their inspections of warehouses heavily staffed by temporary workers. Workers should also be protected against retaliation by firing with state laws that protect whistleblowers.

Workers need a voice on the job, and this can come from worker advocacy groups or unions. The shrinkage of union presence in warehouses, and companies’ resistance to unions, promotes a silenced workforce. Federal labor law needs a wholesale rewrite, so that workers can form unions to give them a share of power in their workplace, without fear of being fired.

Workers need state and federal agencies to crack down on the misclassification violations that are actually at the core of the warehouse industry’s business model, in which full-time workers are mislabeled as temps, underpaid, deprived of benefits, and shunted off to staffing agencies.

For now, such reforms seem a distant possibility for workers like Rebecca Wells, the Mars candy packer.

When she first arrived at the warehouse, she was assigned to the same packing lines on which Ronald Jackson and Mark Balentine had previously worked. But she heard no discussion of how they and other workers had staged a COVID-19 safety protest. It was as if they’d never existed.

As she settled into her job, Wells learned to block any distractions so she could keep up. At times, she even preferred to work in total silence. “The speed of the belt,” she said. “That’s what I concentrate on.”

But the work has continued to grind her down. Workers worried for weeks that they’d face a pay cut when Mars dropped XPO and hired another logistics provider, DHL Supply Chain, to run the entire warehouse. They found out only after the fact that DHL had decided to stick with Staffmark and make no change in its pay scale for temporary workers.

In response to queries, a DHL official defended the firm’s COVID-19 precautions and added that the NLRB had dismissed Mars workers’ claims of retaliatory dismissals. So did a Staffmark official, who said the firm followed CDC guidelines, but would not comment further.

Wells started applying for jobs closer to her home. It was a way to buy time to think about her next steps. She debates continually with family members about moving, but one wants to go to Alabama and another to Texas.

There’s anguish in her voice as she mulls over her future. And in that anguish is a reminder of how much Chicago has lost, even as it remains one of the world’s great crossroads for moving freight. Chicago was once a promised land that attracted millions of Black and brown migrants because it offered a shot at a better life. But for Wells and thousands like her, Chicago has become just another island in the warehouse archipelago. 

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