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October 1996, Vol. 119, No. 10
Into contingent and alternative employment; by choice?
Anne E. Polivka
Recent reports of corporate downsizing, the growth of temporary help agencies, and the phenomenon of "outsourcing" have fueled the perception that the number of contingent workers and workers in alternative work arrangements is increasing. In addition to participating in debates over the number of workers in such arrangements, economists are interested in the long-run effects of these arrangements on individuals employment patterns and labor market behavior. Some have argued that being a contingent worker or being in an alternative work arrangement consigns a person to the bottom of the economic ladder, where the worker experiences frequent job changes and has little economic security and no hope of economic advancement.1 Further, proponents of this position argue that, as a result of the apparent growth in the number of contingent workers and those working in alternative work arrangements, the economic hardship associated with these types of jobs is increasing. Others argue, by contrast, that contingent employment and alternative work arrangements offer individuals pathways into the labor market that they otherwise would not have, as well as flexibility that helps them balance work with other, non-labor-market obligations. Without contingent work and alternative work arrangements, these observers insist, individuals with poor access to jobs or with conflicting needs would either be unemployed or drop out of the labor force altogether.2 Proponents of these types of work arrangements also go so far as to argue that some alternative work arrangements, such as temporary help service employment, offer individuals more stable employment and greater chances for upward job mobility than they would be able to obtain on their own.3 Implicit in the discussion of the growth of contingent and alternative work arrangements and their effect on individuals' labor market prospects is the notion that the job market has undergone a fundamental shift in the last several years. The importance of internal labor markets, it is argued, has declined, and employers have altered the ways they hire and fire workers.4
Using data from the February 1995 supplement to the Current Population Survey (CPS) on contingent workers and workers in alternative work arrangements, this article explores the effect of such employment arrangements on individuals positions in the labor market. It begins by examining the importance of these arrangements for those who started in their current work relationship relatively recently and goes on to consider what these individuals were doing prior to entering into that relationship. The article then investigates the preferences of all contingent workers and workers in alternative arrangements regarding their arrangement, as well as their reasons for being in that type of employment relationship. All this information is used in various combinations to construct several measures of the proportion of those employed who involuntarily entered into either a contingent or an alternative work arrangement. As a further measure of individuals satisfaction or dissatisfaction with their current work arrangements, the article proceeds with an examination of the proportion of contingent workers and workers in alternative work arrangements who are looking for a new job. Finally, to obtain a gauge of the importance of alternative work arrangements in leading to wage and salary employment directly with a single employer, the article presents the proportion of workers in traditional jobs who started working for their current employers in an alternative work arrangement.
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1 See, for example, Garth Mangum, Donald Mayall, and Kristin Nelson, "The Temporary Help Industry: A Response to the Dual Internal Labor Market," Industrial and Labor Relations Review, July 1985, pp. 599611; Eileen Applebaum, "The Growth of the U.S. Contingent Labor Force," in Robert Drago and Richard Perlman, eds., Microeconomic Issues in Labor Economics (London, Harvester Wheatsheaf, 1989); Polly Callaghan and Heidi Hartmann, Contingent Work: A Chart Book on Part-Time and Temporary Employment (Washington, Economic Policy Institute, 1991); and Julie Quiroz, James Auerbach, and Rubie Coles, "Strengthening Job Ladders for Contingent Workers," in New Policies for Part-Time and Contingent Workers (San Francisco, New Ways to Work, 1991), pp. 4648.
2 See, for example, Bruce Steinberg, "Temporary Help Services: An Annual Update for 1995," Contemporary Times, Spring 1996, pp. 1118; and Lewis Segal and Daniel Sullivan, "The temporary labor force," Economic Perspectives, March/April 1995, pp. 219.
3 Steinberg, "Temporary Help Services," p. 15.
4 See Paul Osterman, "Internal Labor Markets: Theory and Change," in Clark Kerr and Paul D. Staudohar, eds., Labor Economics and Industrial Relations (Cambridge, MA, Harvard University Press, 1994); Anne E. Polivka, Are Temporary Help Agency Workers Substitutes for Direct Hire Temps? Searching for an Alternative Explanation of Growth in the Temporary Help Industry (paper presented at the Society of Labor Economists Conference, Chicago, May 34, 1996); Maria Ward Otoo, Contingent Employment and Frictional Unemployment (Board of Governors of the Federal Reserve System, 1996); and Applebaum, "Contingent Labor Force."
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