A joint investigation with ProPublica

How Subcontracting Affects Worker Safety

There’s been a change in the American labor market over the past few decades, as more workers — many of them young, inexperienced and willing to work for low wages — are now employed by a vast network of subcontractors that affects not just industries like tower climbers and construction, but also the health care, logistics, retail and service industries.

FRONTLINE interviewed David Weil, an economics professor at Boston University who has studied the trend, as part of the film Cell Tower Deaths to understand who’s responsible for worker health and safety in this new model, and what changes we need to make sure that workers are protected. Here are some excerpts from that interview, conducted on March 14, 2012.

How would you describe subcontracting to someone who doesn’t understand the nuances of the economy?

Subcontracting in general is where one company will take a piece of work and give it to some other business organization to carry out that work. So it’s an old, old way of doing business, and common in industries like construction. … Subcontracting used to be just something particular to a very small number of industries. But in the last 25 years, 30 years, it’s grown in scope … Virtually in most major industries in this country now there are pieces of subcontracting.

The more subcontracting, the more “fissuring” of the work, the greater the risk for health and safety at the bottom of those chains.

How can you measure this change?  

Subcontracting is being tracked well in certain industries where it’s been in place for many years.  … But overall, subcontracting is not well accounted for in our national statistics.

Why is this a problem?

We need to be able to track it better because it has very serious consequences on things at the workplace level like health and safety.  … The reality is, in many industries, that lead employer has pushed off a lot of that [work that is typically governed by health and safety laws] to subordinate organizations. And those subordinate organizations are often operating in a much more competitive environment. … So the more competitive, the more volatile those lower levels of business, the harder it’s going to be to achieve the kinds of health and safety practices that many of our workplace laws aspire to have in place. …

The more subcontracting, the more “fissuring” of the work, the greater the risk for health and safety at the bottom of those chains.

Why do companies do it? What are the advantages to subcontracting?

It’s important not to see subcontracting as simply the evil actions of voracious capitalists. …[S]ubcontracting and shifting work out from the main activities of large employers is partially to save costs and to push some of those costs, some of those liabilities, some of those risks, to other parties.

But that’s not the whole story.  Firms have also done it … as part of a larger business strategy. …That means businesses are providing better and better services or better and better products to their consumers.  … The tension, the danger, is that those organizations cut corners, or in some way undermine your ability to do what you care about.

Is all subcontracting bad?

There is nothing inherently wrong [with subcontracting]. … Subcontracting certainly has its place as part of a business strategy. The problem is where we don’t also account for the downsides of that subcontracting. And in particular where we have workplace laws, public policies, that don’t account for the fact that more and more of that work, once undertaken by larger business organizations, is being undertaken in this subcontracted kind of manner. And we therefore don’t afford the people who are doing that work the adequate protections they need.

It seems that in some industries, like tower climbing, more dangerous jobs tend to be subcontracted.

Some of that work can tend to have higher health and safety risks. Moving some of those risks outside of the workplace does make it attractive to move it out.

Historically, one of the ways large chemical producers in this country dealt with health and safety, the increasing problem and the increasing pressure from passage of [Occupational Safety and Health Act] in 1971, for instance to deal with injuries in the workplace, was to figure out ways to move some of that work outside the boundaries of the organization. And we’re seeing that again in a lot of the industries we’re now looking at subcontracting, fissuring, in newer places.

What can that law, or the government department charged with enforcing it — the Occupational Safety and Health Administration —  do to regulate subcontracting?

[I]n subcontracted relationships, in fissured employment situations, the definition of the employer has become very fuzzy. … In the way we have traditionally thought about our OSHA laws, the lead company can argue that they are not the direct employer, and therefore not responsible for conditions that might play out in bad ways in terms of injuries and fatalities. And in the tradition of how we have enforced that law and thought about that law, they’re right. … They actually do play a very major role in setting the overall structure of how work is undertaken, and therefore arguably have a much greater role in making sure that work is carried out in a safe way. But that’s not the way our laws are written.

Why not go after the small contractors who employ the workers?

The problem of focusing the enforcement attention at the bottom, at the small subcontractor is a little bit like the old game of Whac-a-Mole … you can enforce your OSHA standards on that individual contractor and hit the mole…  But there are a lot of other contractors that are going to pop up.

What changes are needed on a broader level?

The current system creates incentives for people to operate in the dark… [I]nstead of creating incentives for people to veil their role in those activities, I think we want public policies that actually make it more clear to the public who that work is being done for, and in that way increase the incentive for … the lead company to take a much more active role in the health and safety practices at the workplace. …

It’s a matter of creating a culture, and a set of relationships, up and down the set of organizations that ultimately are responsible for doing that work that reinforces safe and responsible practices on the job site because of the way all of the parties are behaving, not just the parties that are actually doing the work. That’s the change that has to happen here.

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