RADIO ANNOUNCER: We've got a ten-minute delay from Fremont to all destinations. Once again, it is slow. It's backed up to highway 84 as you make your way down from the Sinoa exit...
SHELLEY KOFLER, State of the Union: While Silicon Valley fights rush hour traffic, Donn Denman wakes to the kind of job most of us dream about. He seldom begins work before 10:00. His office is just a few steps from the breakfast table. This is where he did some of his best work for Apple Computer.
DONN DENMAN: While I was working for Apple, I had the luxury of making my own hours. And so I would take a day off and go hang gliding. Or I would take a week off and go to Mexico. And so, I was having a nice quality of life.
SHELLEY KOFLER: Donn's computer programming skills are in such great demand, he turns down offers for full-time jobs. He makes more money going from project to project, company to company. One of Donn's newest clients is PowerTV.
BOW ROGERS, CEO PowerTV: Let's pour some champagne.
SHELLEY KOFLER: This aggressive little company is celebrating three years of survival in the cut-throat working world of Silicon Valley.
BOW ROGERS: All the best to PowerTV.
SHELLEY KOFLER: CEO Bow Rogers and his small staff of 28 are hoping to make their fortunes in the latest California gold rush-- the rush to develop high technology. Silicon Valley has been out front in that battle for decades. And its companies have pioneered a new kind of workforce to compete.
BOW ROGERS: This is an example of PowerTV's-- one of our applications.
SHELLEY KOFLER: At PowerTV, for example, demand for it's interactive television products is greater than the full-time staff can handle. That's where the Donn Denmans of the world come in. Unlike full-timers, they get paid only for the hours worked. No insurance, no retirement, no vacation pay. And they can be sent home if business slows down.
BOW ROGERS: I see this continuing. I don't see the ability to grow your company to a huge size and keep that workforce fully employed with the ebbs and flows of technology.
SHELLEY KOFLER: In fact, one-fourth of Roger's staff works part-time, temporary or on short-term contracts. They're part of what many call the contingent work force.
CHERYL HALLBERG, Part-time employee: What I do like is the feeling of being free and able to move in a moment's notice.
SHELLEY KOFLER: But whether the lives of these so-called contingents is prosperous or precarious is the subject of heated debate.
AMY DEAN, AFL-CIO: The next economic downturn that takes place in Silicon Valley, there will be no social safety net. There will be no safety net for contingent workers.
SHELLEY KOFLER: Labor unions warn of a crisis in the making.
AMY DEAN: The reason people should be concerned about what's happening in the Silicon Valley is that as goes Silicon Valley, so goes America.
SHELLEY KOFLER: Now, I have more than just a little bit of interest in what's going on here in Silicon Valley, because I too, am a contingent worker, an independent contractor. In the past two months, I've worked on news and programming for four different employers. By the way, the photographer who's shooting this story? He's an independent contractor, too. The audio technician is also an independent contractor. And the editor who's putting this story together is an independent contractor, as well.
BOB LEE, Regional Director of Manpower: It's totally changed. You have lawyers, now, who work contingent. You have doctors who work contingent. You have people with Ph.D.'s who work contingent.
SHELLEY KOFLER: Bob Lee is the regional director of Manpower, which places more temporary workers worldwide than any other agency. He doesn't see a crisis on the horizon, just a new way of working.
BOB LEE: Because we are on the leading edge with new products and we've got to get those products to market, because it's a world competitive advantage, they use contingent labor to help them get those products to market.
SHELLEY KOFLER: The explosion of contingent labor is the result of layoffs. Companies have stripped to fighting weight to compete globally. While this way of working is increasingly common throughout the country, some companies have sounded an alarm.
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SHELLEY KOFLER: The Internet's Yahoo!, for example, won't hire contingents for critical programming positions because they may lack the dedication of full-time employees. Intel is so worried about the theft of company secrets, it's contingent workers wear different colored badges and are barred from designing software.
BOW ROGERS: He's got to put a notification out to the shareholders of what we're doing here.
SHELLEY KOFLER: Even at PowerTV, all contingents are not created equal. They are seemingly divided into two classes: those without high level technical skills and those like Donn Denman, who have them.
DONN DENMAN: They're looking everywhere for programmers, so there are a lot of options for me.
SHELLEY KOFLER: This is where Donn Denman lives, in the Santa Cruz mountains. And this is where you can afford to live as a contingent worker, if you have some special technical skills. But if you don't have those skills, you probably live down there. And your life is very different.
ENO UTO-UKO, part-time worker: I work four jobs. And at times it is very frustrating, because...
SHELLEY KOFLER: Eno Uto-Uko works as a waitress and cashier. She often gets paged just hours before employers want her to come in.
ENO UTO-UKO: Help the next person?
SHELLEY KOFLER: Eno's story is startling. She says she has two bachelors degrees and paralegal training, but can't find full-time employment. She says her lack of computer skills holds her back. So, she's taking classes at the community college, in hopes she'll become more marketable.
ENO UTO-UKO: I would love to have a full-time job. Because number one, it would give my life some consistency.
SHELLEY KOFLER: Eno is the kind of contingent worker unions are trying to organize.
AMY DEAN: You don't need to be an economist to wake up in the morning, read the paper and go, "the economy is booming and I don't get it. It is not happening for me." Those two things together, equal people are prepared to do battle.
SHELLEY KOFLER: Amy Dean heads the AFL-CIO in Silicon Valley. She wants to build her union's membership by pressing businesses into an agreement.
AMY DEAN: We're just going to move straight into the agenda that deals with the whole question of establishing some kind of code of conduct for temporary agencies in the Valley, as well as the client companies that hire them.
SHELLEY KOFLER: The idea here is to create a code of conduct that addresses worker concerns.
RICHELLE NOROYAN: When I looked into purchasing health insurance, it was basically very expensive and the deductible was $2,000.
ENO UTO-UKO: The most frustrating thing is, you could be ready to leave for work at 10:00, and they'll call you at 9:00 to say that you're cancelled.
SHELLEY KOFLER: The union will encourage workers to boycott companies that won't sign it's code of conduct.
BOW ROGERS: Frankly, I don't think it'll happen.
SHELLEY KOFLER: But PowerTV's Bow Rogers believes that right now, Silicon Valley jobs are so plentiful, few contingent workers have reason to unionize. What he may not realize, however, is that some of his own contingent workers are struggling.
CHERYL HALLBERG: Insurance-- medical insurance, that's my biggest concern.
SHELLEY KOFLER: Cheryl Hallberg is the company's employee recruiter and a temporary. She loves her PowerTV job. But she's checking out full-time jobs because she needs the benefits.
CHERYL HALLBERG: I'm being paid quite a bit less because of that. Benefits equal anywhere from-- I suppose 20, to upwards of 35 and more percent of your salary. So, that's quite a chunk.
SHELLEY KOFLER: At 51, Cheryl has no retirement and no health insurance through work.
SHELLEY KOFLER: Even Donn Denman, who seems to have it all, is having second thoughts. He's escaped the rat race only to find he's also left the human race behind.
DONN DENMAN: I felt incredibly isolated here, lonely. And connecting with people is important, not only from a spiritual side but also technically. When I hit a roadblock and I'm stuck, I need to rely on my co-workers. So, my strategy in part, is to let them get to know me, see how valuable I can be to the company.
SHELLEY KOFLER: Then, Donn says, he may trade his mountaintop work retreat and his contractor's pay for something every worker wants: the sense of belonging that full-time employment can provide.