Subcontracting is nothing new in American business. But it seems to have become almost an art form in Chicago. As part of a joint Marketplace/ProPublica investigation, I found that companies recruit immigrant warehouse workers through temp staffing companies, which then use informal labor brokers.
How do companies benefit by employing multiple middlemen? To find out, let’s track one product through the system of intermediaries.
In the airport on my way to Chicago, I paid five bucks for a pink, plush troll named 'Trixie.’ It’s made by Ty, the company behind Beanie Babies.
When I showed Trixie to people on the street in Chicago, they called it “cute” and “the perfect toy for our baby.”
But some middle-aged Latina women had different associations. They knew the doll from working at the Ty warehouse. “It reminds me of the pain I felt in my hands,” says a former employee named Estela. And worker Jeanette Gonzaga says, “The owners of the company don’t pay us for the hours that we worked.”
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That’s a big difference in perceptions. It mirrors the gap between the laborer in China who made Trixie and the owner of the company, Ty Warner, estimated to be worth $2.5 billion.
And the disparity at Ty is almost as striking right here at home. Latino immigrants do the work for Ty. But they’re not paid by Ty. A temporary staffing company hires and pays them. And that company relies on informal labor brokers to recruit and transport workers. So you have two intermediaries between Ty and its workers.
To see how that makes business sense, let’s consider the different players involved in bringing Trixie to market.
I try to visit the Ty warehouse, 40 minutes outside Chicago. But a security guard turned me away. “Private property. You’re not allowed here.”
So, I go looking for warehouse workers in the neighborhood where they live, Little Village. 26th Street is the main thoroughfare for Little Village, which is the Latino heart of Chicago. All the signs are in Spanish. There is Marque Medicos, next to La Tienda de Dolar, next to Restaurante Sabor.
Little Village on Chicago's west side in the early morning hours on Jan. 18, 2013. One raitero named Rigo picks workers up in an alley behind a blue-neon-lit dentist clinic and a shop selling quinceañera dresses, as seen in this photo shot off of a window's reflection. Credit: Sally Ryan for ProPublica
Elizabeth Bellido lives in a small apartment a few blocks away. She moved to Chicago from Mexico when she was eight. Now she’s 19 and doesn’t have many job prospects.
“A lot of times I am capable to, to get the job. But once it comes down to filling the applications, the first thing they ask you for is your social security number. And that’s something that I don’t have,” says Bellido.
From last summer until February, she worked at the Ty warehouse, where she packed dolls like Trixie.
“They were all Mexican workers there. There was no white workers there. There was no Chinese. It was nothing but, you know, Hispanics,” says Bellido.
Workers like Bellido make minimum wage -- minus the money they pay the middlemen directly above them, underground labor brokers called raiteros.
The raitero connects workers with temporary jobs. In return, workers are obligated to pay for a ride to work. That’s what the raiteros get out of it: $8 a day for each worker shuttled to a warehouse.
Temp workers get off Rigo's bus and walk into the Ty warehouse in the southwest suburb of Bolingbrook outside of Chicago, Ill., on Jan. 18, 2013. Credit: Sally Ryan for ProPublica
The economic interests are more complicated for the next link in the chain. A temp staffing company called Select Remedy is responsible for paying the workers. It’s part of the Select Family of Staffing Companies, one of the top ten temp firms in the US. It provides workers for industries ranging from health care to trucking.
How might staffing companies benefit from using the raiteros as intermediaries?
I put that question to several people who work closely with immigrant workers.
“It allows them to wash their hands and say, ‘That’s not within our control,’” says Miguel Del Valle, acting commissioner of the Illinois Commerce Commission.
I also visited the Chicago Workers’ Collaborative, which is housed in a cheap office. The advocacy group is on a shoestring budget.
“If I’m a big staffing agency, instead of paying rent for an office, leasing, paying the light, and paying a yearly fee to the Illinois Department of Labor, I have so-and-so in Little Village, and he operates it out of his garage,” says the organizations executive director, Leone Bichieri.
In a downtown high-rise overlooking the tracks for the ‘L’ train, I stopped by the office of employment lawyer Chris Williams. He has represented workers from Little Village in wage disputes with the temp companies.
“I think they’re trying to create a level of deniability. That if there’s a problem with the pay, that it’s not their problem, it’s the raitero’s problem,” says Williams.
In the end, it’s often left as the worker’s problem.
Elizabeth Bellido says she got cheated in her paycheck from Select Remedy.
“I actually had to come in on a Sunday and we worked a full day. They told us they were going to pay us double time, which was $16 per hour. And we didn’t get that in our paychecks,” says Bellido.
In a statement, Select Remedy says it has “no relationship with the private van drivers who provide transportation to the job site for some of our associates.” And the company says, in the event of a missing check, “we would not direct associates to speak with a van driver.”
But I spoke with several workers who say they contacted Select Remedy about a missing payment and were referred to speak with their van driver.
Leone Bicchieri with Chicago Workers’ Collaborative hears similar stories. He says the layers of intermediaries insulate companies from responsibility for hiring undocumented immigrants.
“The majority of the staffing agencies prefer the Latino immigrant workers with the belief that they will hopefully complain less about a variety of abuses,” says Bicchieri.
Not everyone buys that idea. Jon Osborne researches temp companies for Staffing Industry Analysts.
“If you’re asking me, is it a normal practice for staffing firms to hire illegal workers, hell no. I mean, these people can lose their entire business for something like that,” says Osborne.
Osborne says companies like Ty report using temp firms mostly to have a ‘just in time’ workforce.
Ty Incorporated did not respond to repeated requests for comment.
Trixie, Ty’s pink stuffed troll, isn’t the only product that comes to market through this complicated system of sub-contracted labor. Our investigation found that raiteros bring immigrant workers to temp jobs for brands including Fresh Express, Sony, Frito Lay, and Smirnoff.