The tech industry is bolstered by a huge shadow workforce, workers who are either temporary, contingent or on a contract and who receive different pay, benefits and protections than those considered employees.
“Not only are you underpaid, but you feel undervalued,” Google contract worker Rachael Sawyer told Protocol. “It’s as if we’re expected to play as a team, but we’re not even allowed into the same league.”
Contract workers are hired through a third-party staffing agency but work day-to-day for tech companies in both low-wage service jobs like janitors and high-wage technical work like software engineers.
The TechEquity Collaborative just released its Contract Worker Disparity Project, which documents the many inequities facing contract workers in the tech industry. The report claims that some of the disparities include job insecurity and a lack of opportunity to speak up against harassment and other workplace issues, as well as pay inequity. Meanwhile, contract workers are oftentimes doing the same work as their employee counterparts.
According to research by TechEquity and Project Include, “contract and temp workers are more likely to be Black, Indigenous, Latinx, Asian, women, and nonbinary people than those hired in the direct workforce.” This leads to what the report calls “occupational segregation.” TechEquity says contract workers of color are less likely to be converted to direct employment than white contractors, and they’re also more likely to be paid hourly rather than annually and more likely to receive lower pay.
Image: TechEquity Collaborative
Contracting makes sense for many companies in all industries, and it makes even more sense for tech, where the overwhelming ethos is to move fast and stay agile. But the new report reveals how wide the gulf is between contractors and direct employees in Silicon Valley.
Catherine Bracy, the co-founder and CEO of the TechEquity Collaborative, says venture capital in the tech industry creates a demand that “supercharges the practice of keeping headcount low but growing as much as possible.” According to Bracy, ingrained in Silicon Valley culture is the celebration of companies like Instagram that are bought for $1 billion with only 13 full-time employees.
As of March 2019 Google employed 121,000 contract workers and 102,000 direct employees. Sawyer is one of those contract workers with Accenture for the production team at Google, as well as a steward in the Alphabet Workers Union. She’s been on the Google contract for just over two years, having previously worked on another Accenture contract with Meta. At Google, she helps write help center content and knowledge-based content, as well as legal documentation for the production team.
Sawyer told Protocol that the hardest part of her job is knowing about the reported wage disparity between herself and direct Google employees. While companies like Google are setting reported minimum wages with their vendors and staffing agencies, Sawyer said that the differences go beyond pay and include things like vacation and time off. For example, she said her team is not allowed to work during Google’s global wellbeing days that are given to employees. Unlike employees, however, they are not paid for those days off. Sawyer said she also doesn’t have access to sick leave, another contrast to direct employees.
Sawyer’s experience echoes the report's findings. She said that no one on her team has ever been able to transition to direct employee without leaving the team. “You could have a lifetime of experience, and you’re going to be treated as someone who’s on that lower tier of the two-tier tech system going forward, possibly for the rest of your career,” she said.
Amazon, Apple, Meta and Microsoft were not available for immediate comment on their contract workforce. A Google spokesperson declined to comment but did provide a link to the company’s public page on its extended workforce.
A big issue lies in the reporting structure, which is difficult to navigate, according to the report’s findings. These workers are oftentimes managed directly by an employee at the tech company, but their pay, benefits and legal protections are handled by the staffing agency. As a result, contract workers are forced to deal with confusing expectations, inconsistent communication and stressful bureaucracy, according to advocates.
TechEquity argues that relying on a huge contract workforce is also a potential liability for tech companies themselves, since there often isn’t visibility into how much of the labor contracts they sign is allocated towards worker pay and benefits. Plus, these contracting agencies take upward of 30% of what tech companies pay them in recruiting and contracting fees, a big cut of workers’ potential earnings, according to the project’s research.
The report suggests some corporate and public policy solutions to these worker disparities. Chief among them is urging tech companies to require higher standards from vendors when it comes to worker wages and benefits. It also recommends that companies provide contract workers means and processes for raising concerns around workplace safety violations, as well as outline clearer pathways to direct employment.