faculty focus Other aspects of outsourcing predictably promote illegal labor practices. Outsourcing puts contractors into a literal bidding war; when labor costs make up the lion’s share of their costs, contractors compete by pressing down wages to whatever the market (and the regulatory regime) will allow. Moreover, these contractors pose a chronic regulatory challenge; with little capital or reputation at stake, they fly below the regulatory radar, and may be judgment-proof or prone to disappear in case of enforcement. And because immigration laws are also underenforced in this sector, low-wage contractors can and do rely heavily on undocumented immigrant workers who are particularly unlikely to complain about substandard wages or working conditions. The upshot is that many low-skill jobs that used to be performed within large, integrated firms are now often performed within a more thoroughly low-wage environment by contractors who are in a race to the bottom of the wage scale and are beyond the gaze of the public and regulators. The practice of contracting out work under these circumstances puts downward pressure on wages and labor standards that is predictable and profitable, if not intentional. That is the basic logic of holding those at the top accountable for the illegalities that flourish at the bottom of the labor market. In fact, the most important law in the low-wage landscape, the Fair Labor Standards Act (FLSA) of 1938, aimed to do just that. New Deal reformers were familiar with the practice of contracting out laborintensive parts of a business to small, minimally capitalized contractors to cut labor costs. The so-called “sweating system” was especially common in garment manufacturing. It was precisely to reach through those contracting arrangements that Congress, following a pattern set by child labor laws, defined the term “employ” in the FLSA to include “to suffer or permit to work.” Under that broad standard, the user employer was responsible for wage and overtime violations if the work was an integral part of its business, and if the employer had the means to learn that the work was being done and the economic power to prevent it. The goal behind this broad standard of employer liability was to eliminate substandard wages and working conditions, to eliminate the competitive advantage of employers who used these contracting arrangements to lower labor costs, and to protect responsible employers from that unfair competition.
The original meaning and purpose of the phrase “suffer or permit to work” has been exhaustively documented by legal scholars, but it has not quite won the day in court. Many courts seem convinced that Congress could not have meant to deprive employers of the ability to structure their contracting arrangements however they wish to compete effectively. That assumption is half right and half wrong: Congress did not prohibit any contracting-out arrangements, but it did seek to eliminate employers’ ability to use them in a way that fostered substandard labor conditions and undercut responsible employers. It may be an uphill battle to restore the original meaning of “employ” under the FLSA. But it is a battle worth fighting— perhaps on legislative terrain rather than in the courts—by policymakers and advocates seeking to improve enforcement of labor standards in low-wage labor markets. Economic inequality may continue to grow as those with capital and scarce skills continue to take the lion’s share of the social product in a globalized economy. Even in a political climate that is more worker-friendly and readier to regulate the excesses of the financial titans, it is unlikely that we will seriously curb the ability of the rich to get richer. What we can do, and what we must
do if we want to live in a humane and cohesive democratic society, is to improve the conditions that prevail at the bottom of the economy, and to ensure that full-time work secures the material makings of a decent life. One constructive step in that direction is to ensure that the firms at the top of the heap—those that are reaping the greatest profits from globalization—take responsibility for securing decent and lawful wages and working conditions for the workers who supply them with essential labor inputs. cynthia estlund, Catherine A. Rein Professor of Law, is a leading scholar of labor and employment law and has written extensively on the relationship between the workplace and democracy. Estlund practiced labor law before teaching at the University of Texas at Austin School of Law and Columbia Law School. Her recent work focuses on the crisis of workplace governance due to the decline of collective bargaining and the shortcomings of both regulation and litigation. This excerpt is from a lecture she gave as a Higgins Distinguished Visitor at Lewis and Clark Law School, and was published as “Who Mops the Floors at the Fortune 500? Corporate Self-Regulation and the Low-Wage Workplace” in the Fall 2008 Lewis and Clark Law Review.
You empower today’s students. . . “I received PILC grant funding my first summer allowing me to go to San Francisco and work with Legal Services for Children. I was working directly with the clients every day in a way that was really exciting—and very different from what I’d been doing in the classroom all year.” an dre a l. n ie v e s ’ 10
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