Low-Income and Low-Skilled Workers Involvement in Nonstandard Employment. Benefits


In general, one disadvantage to alternative work arrangements is the lack of health insurance and employer-provided pension plans. Indeed, Farber (1997) uses the presence or absence of such plans as one of his measures of "good" or "bad" jobs.(31) While workers in all alternative work arrangements are less likely to have health insurance and pension plans than workers in traditional arrangements, the coverage varies quite a bit by alternative arrangement. As Table 2.8 indicates, BLS data show that 83 percent of workers in traditional arrangements have health insurance coverage and 58 percent have coverage provided by their employer. While contract workers have nearly the same health insurance and pension plans as workers in traditional arrangements, other alternative work arrangements provide health insurance coverage and pension plans less frequently. In terms of health insurance, agency temporaries are the worst off, since only 41 percent have health insurance from any source and 9 percent have employer-provided insurance. Two-thirds of on-call workers have health care coverage from any source and one-fifth receive health care coverage from their employer. Nearly three-quarters of independent contractors have health insurance; however, it is never supplied by the employer.

Table 2.8
Percent of Employed Workers with Alternative and Traditional Work Arrangements by Health Insurance Coverage and Eligibility for Employer-Provided Pension Plans, February 1999
Characteristic Percent with health insurance coverage Percent eligible for employer-provided pension plan
Total Provided by employer Total Included in employer-provided
pension plan

With traditional arrangements

82.8% 57.9% 54.1% 48.3%
With alternative arrangements
Independent contractors 73.3% NA 2.8% 1.9%
On-call workers 67.3% 21.1% 29.0% 22.5%
Temporary help agency workers 41.0% 8.5% 11.8% 5.8%
Contract workers 79.9% 56.1% 53.9% 40.2%
Source: BLS 1999.
NA = Not applicable

Fifty-four percent of workers in traditional arrangements are eligible for an employer-provided pension plan and nearly half are included in their employer's pension plan (see Table 2.8). Again, contract workers most closely resemble workers in traditional work arrangements with 54 percent eligible for an employer-provided pension plan and 40 percent included in that plan. Only 12 percent of agency temporaries are eligible for an employer-provided pension plan and 6 percent are actually included. Independent contractors fare the worst in employer-provided pensions with 3 percent eligible and 2 percent actually included. Thus, health insurance coverage and employer-provided pensions are provided less frequently to workers in alternative work arrangements, and many workers must purchase these amenities on their own if they wish to be covered.