News Column

High Tech, Low Pay: Service Workers Struggle

August 18, 2014

By Jessica Guynn, USA TODAY

Michael Johnson used to work as a field engineer in the telecommunications industry, but that job was wiped out in the dot-com bust.

So Johnson went back to school. Today, he has a master's degree and dreams of finding another job in high-tech.

But to pay the bills and pay down his student loan debt, the 52-year-old divorced father of three has worked security jobs on and off for years. And, for as many years, he has watched his bank account shrink.

He says he makes "Wal-Mart" wages as a security supervisor at a major tech company that he declined to name for fear of losing that job.

He can't afford an apartment, so he rents a room in a friend's house. A friend sold him a truck and let him pay it off in installments.

Johnson watches every dollar he spends on food. He fills out surveys at Denny's to get a discount on breakfast and takes advantage of the two pieces of chicken for $2 at Popeye's on Tuesdays.

"I am living straight hand to mouth," Johnson said.

Johnson belongs to a new and growing underclass who work at some of the world's wealthiest companies. They push mops and clean toilets. They cook and serve gourmet lunches. They patrol suburban office parks. They ferry technology workers to and from their jobs in luxury shuttle buses.

But they are not on the payroll at Apple, Facebook or Google, companies famous for showering their workers with six-figure salaries, stock options and perks.

Instead, they're employed by outside contractors. They say the bounty from the tech boom is not trickling down to them.

In the past two decades, U.S. companies under growing pressure from Wall Street to deliver higher returns have outsourced jobs such as janitors and security officers to drive down labor costs.

That nationwide trend has led to falling wages, eroding health and safety conditions and a lower standard of living for these workers, says David Weil, author of The Fissured Workplace and head of the U.S. Department of Labor's Wage and Hour Division.

Nowhere is that trend more pronounced than in Silicon Valley, where the economic divide is widening between highly educated and skilled high-tech workers and low-paid workers who are trying to piece together a living in one of the country's most expensive places.

A much higher percentage of these low-paid workers are black or Hispanic, making them stand out on high-tech campuses where those historically underrepresented groups compose a fraction of the professional workforce.

High-tech companies contacted by USA TODAY declined to comment and referred calls to outside contractors.

"It's not a tech-specific phenomenon," Enrico Moretti, University of California-Berkeley economics professor, said. "But it comes across as a more salient and more poignant trend when you have these people working next to people who are extremely highly educated and skilled and whose wages have improved."

INCOME DISPARITY

Silicon Valley tops the list of the highest-paid metropolitan areas for tech talent.

The average tech worker in Silicon Valley commands a salary of $108,603 and an average annual bonus of $12,458, according to Dice.com. Software engineers make even more -- an average of $126,288 and a bonus of $9,741 -- and compensation for engineers is rising quickly.

Contract workers for Silicon Valley companies, on the other hand, have seen their wages stagnate. Most of these jobs come with few if any benefits.

Many of these workers can get only part-time hours and are not paid for sick or vacation leave.

Few can afford to pay for health insurance or to set aside money for retirement. Some work second jobs just to pay the rent. They have no job security and few job protections.

Silicon Valley used to offer these workers a middle-class living with good-paying manufacturing jobs in the tech industry.

As those jobs have vanished, the region is losing its social and economic balance, said Derecka Mehrens, executive director at Working Partnerships USA.

Each technology boom has ushered in more wealth than the last, pricing lower-wage workers out of Silicon Valley. Nearly a third of jobs in Silicon Valley pay $16 an hour or less, not enough to support a family, Mehrens said.

Russell Hancock, CEO of Joint Venture Silicon Valley, says the region is becoming "a valley of haves and have-nots."

"We have never seen a bigger income gap, and it's only growing," he said.

And that is creating a whole new class of workers in Silicon Valley, said Stanford sociologist Marianne Cooper, author of Cut Adrift: Families in Insecure Times.

"We are seeing the emergence of a serving class," Cooper said. "And that is a real dividing line in society."

FEELING SECOND CLASS

Marcial Delgado, 36, says he used to make $12 an hour putting in about 30 hours a week in the kitchen at Yahoo as a supervisor.

Unable to obtain more hours, he held down a second job so he could buy diapers and formula for his two children.

Looking around at Yahoo employees, he said he felt like a second-class worker.

"They made five or 10 times what I was making," Delgado said. "I felt bad. I was doing the hardest work for the least money."

Terrance Rollins, 50, leaves Stockton, Calif., at 3:40 a.m. for the 90-minute commute to the bus yard in San Carlos, Calif., where he picks up the 45-foot shuttle that ferries Facebook workers to and from work.

He works a split shift, meaning he is on duty in the morning and again in the evening. He's not allowed to take another job, and driving home is not an option.

So from 10:45 a.m. until 3:45 p.m., he either tries to sleep sitting up in a chair in the break room or dozes fitfully in the front seat of his car. He and his co-workers drape blankets over their cars to shield themselves from the midday heat.

Rollins makes $18 an hour for eight or nine hours of work. He says it's not enough with the high cost of living and the high personal cost of seeing his kids only on the weekends.

"Driving people back and forth to their jobs is a very stressful job," Rollins said. "They say you are a professional driver, but you are not getting professional pay."

Some high-tech start-ups are looking for ways to better provide for contract workers.

Meal-delivery service Munchery employs a couple hundred drivers. Some work 15 hours a week, but those who work 30 hours or more get the same benefits as other employees.

When Tri Tran launched Munchery, he made the deliveries himself. He quickly realized how important it was for customers to be greeted with a smile and a friendly attitude.

At Munchery, drivers keep the same routes, building rapport with customers and becoming ambassadors for the service.

"Drivers feel invested in the company, and they feel respected by the company," said Tran, Munchery co-founder and CEO.

And drivers who show initiative can move up in the company, Tran said.

LITTLE HOPE FOR OTHERS

Eulogia Figueroa, a 49-year-old mother of two who works as a janitor on Apple's Cupertino, Calif., campus, worries the future does not hold that kind of promise for her family.

She earns $14.94 an hour, barely enough to scrape by in Silicon Valley.

Figueroa and her husband share a three-bedroom duplex in East San Jose with her son, daughter and son-in-law.

Their budget is tight -- and getting tighter as prices go up. They used to buy four pounds of meat; now they can only afford two. They skimp on all but necessities.

Figueroa says she's luckier than many of her friends at other technology companies. She has a union job that provides health insurance and retirement benefits.

But, "we sacrifice a lot just to survive," she says. "We don't have much left over at the end of the month."

Her biggest sacrifice by far: not being able to send her kids to college. She used to dream they would escape the grind of low wages by landing jobs writing code or designing gadgets for a company like Apple.

Instead her 24-year-old son works by her side at Apple as a janitor.


For more stories covering the world of technology, please see HispanicBusiness' Tech Channel



Source: Copyright 2014 USA TODAY


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