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Workplace Culture

Lowe’s outsources thousands of jobs to third-party contractors

Meghan McCarty Carino Aug 5, 2019
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Hardware retailer Lowe’s announced thousands of layoffs this week among workers who do maintenance and janitorial work at the stores or assemble the patio furniture and appliances they sell. The jobs aren’t going away exactly, they’re just being outsourced somewhere else — to third-party contractors who often don’t offer employee benefits like health care, vacation or sick leave — part of a growing trend of companies increasingly relying on contractors for non-core parts of their business.

Lowe’s said its decision to contract out these jobs will allow the business to focus more resources on customer service, something the company sees as key to future survival. It’s a strategy that makes sense according to Arun Sundararajan, a business professor at NYU and an expert on the gig economy.

“The idea of focusing on your strengths and outsourcing the rest is not new,” he said. What is new: the advent of technology platforms that seamlessly connect companies with contract workers — the “Uberizing” of everything. Sundararajan said that allows businesses to be increasingly picky about which jobs they want to be in house and which they’ll contract out.

More and more businesses are contracting out more and more jobs, said Eileen Appelbaum with the Center for Economic and Policy Research.

“This is not simply happening to hourly paid workers or less skilled workers. It’s up and down the skill and income ladder,” she said.

Everyone from cleaners and security guards to software developers, accountants and anesthesiologists are more likely to be working on contract these days. While high-skilled workers can sometimes earn higher wages as contractors, that’s not the case for many in the labor force, said Adam Cobb, a business professor at the University of Texas.

“For lower-skilled workers, this can be pretty darn harmful,” he said.

Contract workers generally don’t get the same health care, paid time off or training as regular employees, and they miss out on opportunities to advance through the ranks.

Lowe’s is offering laid-off workers the chance to apply for other positions at the company, and it said it has 30,000 openings.