Ohio GOP Wants A Tax Break for Hiring Temps? Give Us a Break!!

Guest Column from Wendy Patton, Policy Matters Ohio

Growing use of temporary workers has benefited corporations at the expense of workers, who often earn low wages and have no benefits or job security. Yet instead of trying to help workers get ahead, Ohio legislators are considering giving a $131 million tax break to corporations that use temporary labor.

The Ohio House Economic and Workforce Development Committee is hearing testimony on House Bill 343, legislation that would give this sales tax break to corporations that hire temporary workers. This new and significant giveaway would add tax advantages to the windfall corporations already garner when they shed some of the costs of a traditional employment relationship, like sick leave, vacation and/or health insurance (Check out our testimony to lawmakers).

A lot of Ohioans are in the temporary labor market – 117,000 in 2014.  The median annual wage was $24,334, a level at which a family of three is eligible for Medicaid because they can’t possibly afford to buy health care. Indeed, records show that many workers in this sector must turn to public assistance. In May 2015, temp firms made up almost a quarter of Ohio’s top 50 firms in number of employees and family members receiving federal food aid.

Beside lacking good pay, benefits and job security, temporary workers toil in a fractured system where responsibility for following labor laws and health and safety regulations is unclear. The U.S. Department of Labor reported 391 enforcement actions involving 5,278 workers in the temporary sector in 2015. The New York Times reported on a study from the American Journal of Industrial Medicine that temporary workers in Washington State had substantially higher rates of injuries than other workers.

There is some progress in addressing the many problems in the temp sector. The U.S. Department of Labor’s Wage and Hour Division has focused on this sector, offering guidance to staffing agencies and corporate clients, but also holding them jointly responsible for labor law violations. In a blog post that describes new guidance released in January, the DOL writes: “As the workplace continues to fissure, and as employment relationships continue to become more tenuous and murky, we will continue to identify where joint employment applies and to hold all employers responsible.”

Health and safety issues are also being addressed. The Occupational Safety and Health Administration (OSHA) published 30 findings of safety violations in situations involving temporary workers, including deaths and severe injury. In Pittsburgh this month, both Kinsey Corp. and Gillman Services, the staffing agency, were cited when temporary workers were found working in a trench 18 feet deep without protection from cave-in. Both MooreCo Inc. and Manpower Group US of Texas were cited for severe injury and amputation to temporary workers (twice in a 14-month period). In 2013, OSHA launched an initiative to protect temp workers from health and safety hazards.

The National Employment Law Project reports states are also beginning to combat the staffing industry’s downward pull on wages and working conditions by passing legislation to establish accountability for labor violations and worker welfare. California, for example, now requires that client employers share civil liability for worker wages, safety and workers’ compensation taxes. Illinois and Massachusetts have similar laws.

The huge new tax break will make it all the more difficult to support badly needed public services that have languished since the recession. The $131 million would be enough to continue Medicaid expansion throughout the current budget period. It could underwrite childcare assistance to a greater number of working poor families. It could help restore need-based financial aid for struggling college students, creating the educated workforce our employers need in a competitive global economy.

Instead of giving away money for companies to hire temp workers, Ohio’s legislators should be helping struggling Ohio families and thinking of how to foster stability and responsibility in corporate relationships with working people of Ohio.

Wendy Patton