Low-Income and Low-Skilled Workers Involvement in Nonstandard Employment. Chapter 1: Introduction

The growth of alternative work arrangements  temporary work, independent contractors, on-call workers, and contract company workers(5)  has caught the attention of both policy makers and academic researchers alike. Part of the attention is due to the number of workers in the sector  Bureau of Labor Statistics (BLS) data for the last five years indicate that 1 in 10 workers are employed in one of these four alternative work arrangements.(6) Another reason is the growth of the temporary help services industry. Employment in the temporary help services industry grew five times as fast as overall non-farm employment between 1972 and 1997  an average annual growth rate of 11 percent.(7) By the 1990s, this sector accounted for 20 percent of all employment growth.(8)

The growth of alternative work arrangements is important for another reason. The recent transformation of the nation's welfare system(9) combined with a strong economy has resulted in more individuals, many of whom have little employment experience, entering the labor force. However, our literature review shows that little is known about the importance of alternative work arrangements for these types of workers or the resulting labor market outcomes. This report attempts to fill the gap. The core research question was split into two components:

  1. How do alternative work arrangements differ from other arrangements in the characteristics of workers holding the jobs and in the characteristics of the jobs? How have these characteristics changed over time? What is the impact on low-income workers at risk of welfare recipiency? The part of the report that addresses this research question is primarily descriptive in nature, and structured to provide an environmental scan of the characteristics of the workers, jobs, and labor market outcomes.
  2. How do alternative work arrangements affect subsequent labor market outcomes for different types of workers  particularly at-risk workers? The part of the report that addresses this research question is founded on a model-based approach that permits the construction of comparison groups and an analysis of possible counterfactual outcomes.

Two different sources of data are used: the Current Population Survey (CPS) for question 1, and the Survey of Income and Program Participation (SIPP) for question 2. Each is uniquely useful for each question. The CPS has rich detail to characterize the trends in and characteristics of alternative work arrangements in the mid- to late-1990s. The SIPP data from the 1990 through 1993 panels provide detailed work histories and the capacity to look at the impact of employment in temporary work on subsequent labor market outcomes one year later, including: employment status, hourly wages, weekly hours, private and employer-provided health insurance, public assistance receipt, Medicaid receipt, and poverty status.

The report is structured as follows.  Chapter 2 provides an overview of the existing literature and research and sets the context for this study. In addition, Chapter 2 presents a first look at the evidence that is available from the existing literature  both in terms of coming to grips with some of the definitional ambiguities and in terms of preliminary evidence on outcomes for workers in alternative work arrangements. Chapter 3 presents fresh evidence which describes the nature of alternative work arrangements, particularly with respect to the at-risk population, and is particularly focused on addressing the first part of the research question. Chapter 4 addresses the second part of the research question, examining the impact of alternative work arrangements  specifically employment in the temporary help industry  on workers in general and at-risk individuals in particular. Chapter 5 discusses the conclusions and implications drawn from the two different components of the study and discusses steps for future research.


5.  These four alternative work arrangements  independent contractors, on-call workers, temporary help agency workers, and workers provided by contract firms  are taken from BLS' definition of alternative work arrangements.

6.  Bureau of Labor Statistics. "Contingent and Alternative Employment Arrangements, February 1999." U.S. DOL/BLS. <ftp://ftp.bls.gov/pub/news.release/History/conemp.12211999.news>. December 1999; Bureau of Labor Statistics. "Contingent and Alternative Employment Arrangements, February 1997." U.S. DOL/BLS. <ftp://ftp.bls.gov/pub/news.release/History/conemp.020398.news>. December 1997; Bureau of Labor Statistics. "New Data on Contingent and Alternative Employment Examined by BLS." U.S. DOL/BLS. <ftp://ftp.bls.gov/pub/news.release/History/conemp.082595.news>. August 1995.

7.  Autor, David H. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," February, 2000; Estevao, Marcello M. and Saul Lach. "The Evolution of the Demand for Temporary Help Supply." NBER Working Paper No. 7427, December 1999.

8.  Segal, Lewis M. and Daniel G. Sullivan. "The Growth of Temporary Services Work." Journal of Economic Perspectives Spring 1997b.

9.  The Temporary Assistance for Needy Families (TANF) block grant, which was authorized in 1996 under the Personal Responsibility and Work Opportunity Reconciliation Act, emphasizes temporary assistance and a relatively fast transition to employment.