March 13, 2024
In 2022, more than 850,000 people in the United States worked as security guards. This post provides a quick overview of the challenges facing this particular part of the workforce — challenges that face almost all low- and middle-wage workers — and explores the particular ways security guards experience these issues.
Figure 1 summarizes some key characteristics of the workforce. Traditionally, security guards were overwhelmingly male, but in recent years almost one in four are women. Security guards of color make up more than half of the sector, with a particularly heavy representation of Black workers (31.3 percent). A large majority of security guards work in the private sector (85.6 percent). And the unionization rate in the sector — at an average of 12.8 percent over the period — is somewhat higher than in the rest of the economy (about 10 percent over the same period).
FIGURE 1
TABLE 1
Wages
Table 1 presents data that indicate security guards are heavily concentrated in the bottom and middle of the national wage distribution. The bottom 10 percent of security guards make less than $11.87 per hour, which is about 60 cents per hour less than low-wage workers in the economy as a whole. The bottom 50 percent of security guards make less than $17.83 per hour, $6.00 per hour less than the typical middle-wage worker overall. The wage gap is especially large for the best-paid security guards, who make only a little more than half ($34.34 per hour) the pay of highly paid workers outside the sector ($60.00 per hour).
Following patterns common across the workforce as a whole, hourly wage rates vary by gender, race and ethnicity, age, and education. The distribution of wages paid to female, Black, and Hispanic security guards consistently lies below the corresponding wages for male and white workers in the sector.
Table 1 also shows that two factors greatly impact the wages paid to security guards. Guards in the public sector consistently make substantially more than their counterparts in the private sector — from 20 percent to 50 percent more. And unionized guards earn between 24 percent and 38 percent more than non-union guards, with the biggest boost for workers at the bottom of the pay distribution.
A number of economic factors, some legal and some illegal, put downward pressure on wages at the bottom and middle of the overall wage distribution and these same pressures have a negative impact on the earnings of security guards.
Wage Theft
Wage theft is a common tactic used by employers across industries to suppress earnings. Wage theft can take a variety of forms, most commonly violating local, state, or federal minimum wage or overtime laws.
Perhaps ironically, employers in the private security industry also engage in this behavior. In April 2023, for example, the US Department of Labor ordered a private security firm in California to pay 54 security guards a total of $78,000 after determining that the company had illegally denied them overtime pay and then attempted to conceal the overtime hours "by recording them falsely as training, bonuses, commissions, and reimbursements." A recent class action suit alleges that Allied Universal failed to pay some of their security guards legally required overtime, by systematically paying them only their regularly scheduled hours.
Non-compete Agreements
The industry has also come under scrutiny for requiring security guards to sign "non-compete agreements" as a requirement of employment. Non-compete agreements prohibit workers from quitting and immediately starting a new job with a competitor. Historically, these agreements applied only to highly compensated employees who had knowledge of trade secrets or close relationships with company clients. In recent years, the US Federal Trade Commission (FTC) has argued that non-compete agreements for low- and middle-wage workers are illegally anti-competitive because they limit the ability of workers to find better-paying jobs at other firms in their sector. In 2023, the FTC subsequently took action against a Michigan-based security guard company for "using coercive noncompetes on low-wage employees."
“Misclassification”
Another practice that some security firms employ is to "misclassify" guards as independent contractors, rather than employees. Employers misclassify workers to evade legal protections that employee status provides to workers, including the minimum wage, overtime pay, and participation in state and federal unemployment insurance, none of which are available to independent contractors. Employers who misclassify employees also save themselves the cost of making employer contributions to Social Security and Medicare, which become the sole responsibility of the misclassified independent contractors. Misclassification is widespread in low- and middle-wage occupations, and security guards have not been exempt. In 2023, for example, the DOL sued a Chicago security company to recover over $450,000 in back wages and damages after an "investigation found the employer misclassified guards as independent contractors." In a separate case last year, the DOL ordered a local government in Michigan to pay 32 security guards $98,000 in back wages and damages because it had misclassified the workers as independent contractors.
Outsourcing and Privatization
Even when workers are classified correctly as employees, employers, especially large employers, can reduce pay and benefits paid by hiring contractors to perform services such as security guards. Economist David Weil has used the term the “fissured workplace” to describe a situation where, as a cost-cutting strategy, large firms contract out jobs that used to be done by their direct employees. Sometimes, the firms who contract out parts of their work do so because it allows them to focus their time and energy on managing employees directly involved in their core operations. But the main motivation for outsourcing is often to save on labor costs by taking advantage of the lower pay and benefits paid by outside security contractors. Research by economists Arindrajit Dube and Ethan Kaplan estimated that the “outsourcing wage penalty” for security guards who were outsourced was between 8 and 24 percent.
A similar arrangement occurs in the public sector, where government agencies hire private-sector security firms to provide security guards, who are not eligible for public-sector health and retirement benefits and are usually paid lower hourly rates below those paid in the public sector.
Industry Structure
Independent of the preceding factors, the current structure of the private security industry itself puts tremendous downward pressure on wages and benefits. On the one hand, the increasing concentration of employment in a few large firms gives those firms greater power in setting pay and working conditions in the industry. Large employers can use this “monopsony” power to drive down wages, benefits, and working conditions, directly, in the private sector and in the public sector, indirectly, through privatization.
On the other hand, a small number of big security firms operate in regional markets that also include a large number of much smaller firms that compete for local businesses. Any of these smaller employers that raise wages–for their own business reasons (for example, to attract and retain employees) or because their workers unionize–are often caught in a squeeze. Whatever the reason, given the relatively thin margins in the industry, the higher pay and benefits make it more difficult for the small firm to win competitive security contracts against other firms that haven’t matched their compensation increases.
Difficulty Forming a Union
As Table 1 shows, unionization is one way that security guards can improve their economic circumstances. But when security guards attempt to unionize, they face the same challenges that confront other private and public sector workers seeking to form a union.
In the private sector, labor law and strong employer opposition make formal recognition of the union an uphill battle. And, securing a contract after the union is legally recognized frequently takes more than a year and, in some cases, never occurs. In 2022, for example, when security guards attempted to form a union at the private security firm USENTRA, the company retaliated with “coercive” rules and action, according to a union filing with the National Labor Relations Board.
Even security guards in the public sector, where employer opposition is usually less intense, face significant obstacles to unionizing, especially since the Supreme Court’s 2018 decision in Janus vs. AFSCME. The Janus decision imposed “right-to-work” conditions in the public sector across all states, curtailing the power of unions representing state and local government workers.
Security guards must also navigate additional legal restrictions that are specific to their occupation. Under existing labor law, security guards cannot be in the same bargaining unit as other employees at a workplace.1 As a result, they do not directly benefit from existing or newly formed unions at their own workplace and lose out on the economies of scale that flow from organizing an entire workplace together. A separate complication specific to security guards is that employers have sometimes deployed security guards in order to suppress employee unionization efforts, which can undermine worker solidarity. In Cemex Construction Materials Pacific, LLC, the National Labor Relations Board (NLRB) ruled that Cemex had used security guards for “unlawful coercive intimidation” against employees in the run-up to the union election.
- The NLRB is currently reviewing this restriction. See https://www.nlrb.gov/case/29-RC-335614.
