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October 1996, Vol. 119, No. 10
Entry into and consequences of nonstandard work arrangements
Donna S. Rothstein
There is growing concern that the employment patterns of U.S. firms are shifting toward more temporary work arrangements, such as hiring workers from temporary agencies or contracting work out, and away from more standard direct hire and longer-term work arrangements. The worry is that this development might result in lower paying and less stable jobs.1 However, workers may take employment in a nonstandard arrangement, such as working for a temporary agency, for a number of reasons, including inability to find a permanent job, wanting to work fewer hours when they have a young child at home, or wanting to learn about a number of different jobs or fields. In addition, some nonstandard work arrangements, such as consulting or contracting, may provide workers with relatively more flexible and lucrative employment opportunities.2
This article explores the impact on workers aged 29 through 37 of being in a nonstandard employment arrangement. It first examines the distribution of workers among various employment arrangements, and then looks at aspects of work behavior and life "events" that may have influenced the likelihood of working in a nonstandard arrangement. Finally, it compares wages and hours worked on the previous job with those on the current job to see whether the nonstandard employment arrangements imply a relative "step up," versus a "step down," with respect to wages and hours.
As the other articles in this issue of the Review emphasize, a need for individual-level data to examine the number of workers in different employment arrangements and their characteristics spurred the Bureau of Labor Statistics to create a special supplement to its Current Population Survey (CPS), designed to collect information on contingent workers and alternative work arrangements. The supplement was implemented in February of 1995. The need for individual-level information on different employment arrangements also has been addressed in the National Longitudinal Survey of Youth (NLSY), a data set sponsored by the Bureau of Labor Statistics. In 1994, the NLSY asked questions that directly inquired about each respondents type of employment relationship: each respondent was asked to indicate whether he or she was a regular employee at the job, a temporary worker, a consultant, or a contractor. This article uses data from the NLSY because addressing the issues of concern requires longer term longitudinal information as well as current information.
This excerpt is from an article published in the October 1996 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 For example, see Louis Uchitelle and N.R. Kleinfield, "On the Battlefields of Business, Millions of Casualties," The New York Times, Mar. 3, 1996, pp. 1, 2629; and Lewis M. Segal and Daniel G. Sullivan, "The Temporary Labor Force," Economic Perspectives, vol. 19, no. 2, 1995, pp. 219.
2 Employers may prefer nonstandard types of employment relationships because they provide the flexibility to adjust the work force quickly when product demand conditions change, and permit employers to benefit from lower hiring and training costs, to pay lower wages and benefits, and to hire temporarily workers with expertise in a particular area (such as consultants). Many of these employer- and employee-sided rationales are described in Anne E. Polivka and Thomas Nardone, "On the definition of "contingent work, " Monthly Labor Review, December 1989, pp. 916.
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