Contingent Employment

Contingent EmploymentContingent employment has become pervasive in contemporary society. It is a multifaceted phenomenon with significant implications for career development, occupational and economic opportunity, and employment security. The employment of people on a contingent basis is a trend found in all the advanced industrialized countries of the world. Understanding the many faces of contingent employment, therefore, is crucial to social science theories and empirical analyses of work, employment, and careers. While estimates of the extent of contingent employment vary, there is a consensus that it has expanded notably in the last two decades of the twentieth century and in the early twenty-first century. Estimates depend on how contingent employment is defined. In its broadest definition, contingent employment includes temporary, contracted, seasonal, day labor, and part-time jobs. Using these broad parameters, it is estimated that more than 30 percent of the American workforce is employed on a contingent basis. Excluding part-time jobs (many of which are permanent), the contingent workforce is estimated to be approximately 15 percent.

Part-time Employment

Part-time work has existed for many decades. Historically, employers hired people on a part-time basis to adjust the size of their staffs to shifts in business cycles. Hiring extra restaurant staff to serve customers during a lunch or dinner hour is one example of this type of adjustment. Increasingly, many corporations structure their jobs on a part-time basis to avoid having to pay benefits to workers, discourage workers from developing long-term attachments to firms, and minimize long-term relationships among workers that might lead them to mobilize against employers for better wages and working conditions. Part-time employment is widespread in the service sector, particularly in fast-food and retail service occupations, where training requirements are low and turnover is high. Many people who are able to find only part-time jobs may moonlight as well, holding down multiple part-time positions at any given time.

Temporary Employment

Similarly, temporary employment has existed for many decades, but the dynamics have changed considerably in recent years, a period that has seen explosive growth in this form of employment. In the post-World War II era, many women took jobs on a temporary basis because it allowed them to adjust their paid work hours around their unpaid family obligations. When a woman worked in a temporary job, typically she filled in for a full-time, permanent worker who was temporarily ill or otherwise off the job for a brief duration. Today, researchers have discovered, many temporary jobs are permanent, continuous positions that managers staff with temporary workers on an ongoing basis. Thus, while a temporary employee in the postwar period might have worked for a few days or weeks to fill in for a permanent worker, today a temporary employee might work for months and, in some cases, years, carrying out job tasks much as a permanent worker does. While women continue to be the majority of temporary workers, this workforce is increasingly staffed by men who are able to find only temporary positions.

Companies use temporary workers for a variety of reasons, including increasing their flexibility to let go of a portion of the workforce when there is an economic downturn, externalizing the costs and complexities of handling the workforce, and cutting back on the size (and thus the costs) of the permanent workforce. Companies using temporary workers, or “temps,” often limit the length of time they can work in order to avoid “temp-initiated” legal actions that might require the company to hire them on as permanent workers or give them benefits. Temporary jobs on average pay lower wages than their permanent counterparts and usually are found in the lower levels of the occupational ladder, including clerical, assembly, and technical. Such jobs offer few, if any, benefits; in this “at will” contract, employers can let go of temporary workers without any advance warning.

For these reasons, social scientists and labor economists who study the spread of temporary employment worry that the institutionalization of this category of employment creates a second tier of workers who are disadvantaged economically, experience continual insecurity, and lack opportunities to develop careers. It can be difficult for temporary workers to develop and pursue careers because they lack the opportunities to acquire skills that would allow them to move up and out of the low-level “temporary ghetto.” Many temporary workers report feeling trapped in the cycle of temporary employment, wherein they must work so hard to survive in and obtain temporary jobs that they can’t afford the time or the money to develop new skills or advance their educational credentials. At the same time, many workers hope that these jobs serve as a bridge for them to get a foot in the door of good companies and eventually gain permanent positions.

One indication that temporary employment poses a hardship to workers is that the majority who work on a temporary (or part-time) basis do so involuntarily: In other words, they would prefer to hold a permanent or full-time job if they were able to find one. Many observers argue that the growing pervasiveness of involuntary temporary employment is a key factor that undermines the stable-employment contract of the mid-twentieth century, which offered workers stable and secure employment, as well as benefits. The explosive growth in temporary employment has been spurred by the symbiotic growth of temporary help and staffing agencies, which we discuss shortly.

Contract Employment

Contract work is another type of contingent employment. Importantly, it reveals the contradictory nature of contingent employment in the contemporary economy. Specifically, the experiences of contract workers reveal how contingent employment cannot be seen simply as a method for cutting back on costs, nor does it uniformly disadvantage workers. Contracting work in some ways resembles temporary employment: Contractors work for delimited periods of time for an employer, carrying out a project or a job only until it is completed. Contractors can be self-employed, or they can be deployed by staffing agencies. Like temporary workers, contract workers experience a great deal of uncertainty in their employment prospects and must absorb fluctuations in the economy and markets. For example, in the Silicon Valley, which has a large contract labor market, employees face intermittent periods of unemployment (“down time”) when high-technology firms experience economic downturns or lose their competitive edge in a product market, or when projects come to an end. Like temporary workers, contract workers usually pay for their own health benefits and design their own retirement packages. Unlike temporary workers, however, many contract workers experience greater advantages.

Contractors typically are highly educated professional and, to an increasing degree, managerial-level employees. Contract workers often earn higher wages in a contract position than do their permanent counterparts. Researchers have noted with irony that it has become a common practice for firms to lay off their permanent, experienced information and technology workers, only to rehire them on a contract, contingent basis at a higher salary. Contractors possess technological or information management skills that put them in a highly competitive position on the job market and that they can use to leverage high wages. Firms employ these high-level contractors for different reasons than they employ lower-level temporary workers: For example, contractors may have unique technological or administrative skills that a company needs but lacks in its own permanent workforce.

With respect to career development, contractors experience a different set of issues than do temporary workers. Contract workers develop careers in their technological or professional niches, but their careers are not organizationally bound, as might have been more typical in the postwar era. Observers use the term boundaryless employee to capture the fact that specialized professional workers move from position to position, across a variety of organizational settings. Thus, their careers are fluid, not confined to one organization, and can even shift across different industrial fields. These skilled, well-paid employees, it is believed, choose to work on unpredictable terms, embrace the opportunity to work in new corporate environments and learn new skills, and eschew long-term relationships with one or a very few employers. In contrast, then, to those who are employed and even trapped in involuntary temporary employment, contractors are believed to work on a temporary basis by choice.

Staffing Agencies: The Private Sector

Contemporary staffing agencies, once commonly referred to as “temporary-help agencies,” are the dominant type of labor market intermediary that facilitates part-time, contract, and temporary employment relations. Although temporary-help agencies are not new, they have changed and grown dramatically in the last two decades. Today, staffing agencies often work directly with corporate human resource departments to help them manage a host of employment-related functions. And there is growing evidence to suggest that intimate partnerships between firms and staffing agencies are contributing to the outsourcing of significant portions of the human resource function.

Data on industry size and growth by segment indicate that temporary-help service agencies are still the largest segment of the staffing industry. Although revenues from temporary placement dominate the staffing industry, the character and scope of temporary-employment arrangements have changed dramatically as new staffing services have enabled firms to manage contingent labor in unprecedented ways. Whereas in the past temporary-help agencies primarily matched employers with employees, conducting a minimum of prescreening of less skilled workers who could fill the temporary needs of a company, today these agencies have expanded, changing their names and images to reflect the more diverse scope of their businesses.

Staffing agencies vary in both size and the types of services they provide, but most offer employers a range of services, including assistance with recruiting, training, prescreening or testing, and payrolling. They can take over the legal and administrative responsibility of managing a firm’s workforce through new types of employee-leasing arrangements (also known as professional employer services, or PEOs). Staffing agencies offer firms on-site management of their temporary workforces through vendor-on-premises arrangements (VOPs) as well as consulting services related to the development of human resource policies, organization and design, and communication strategy.

Often adapting their strategies to meet local labor market conditions, staffing agencies also provide a number of supplemental services for their client firms, including advertising for specific job openings, transporting workers, 24-hour staffing, and other services specifically designed for individual client needs. Historically, temporary agencies focused on recruitment and placement of temporary clerical and light-industrial workers. More recently, these agencies have expanded their market shares, reaching out to the technical, professional, and managerial workforces.

The staffing industry can enable employers by giving them an opportunity to either outsource functions or externalize the costs of their human resource functions. However, the use of staffing firms may complicate certain aspects of corporate human relations, creating hidden monetary and managerial costs. For example, coemployment, the term alluding to the relationship between staffing agencies and their client firms, can be unclear. Coemployment laws vary from state to state, often making the legal aspects of staffing agency involvement very confusing for firms and workers. Grave uncertainty can arise out of the coemployment relationship, with consequences for both employers and employees. The legal, economic, and ethical obligations to employees on the part of the staffing firm, its customer, or both, depend on numerous complex factors.

Some researchers argue that today’s staffing agencies actively shape labor markets rather than simply react to impersonal market supply-and-demand forces. Staffing agencies, through the various services enumerated above, are playing a critical role inside their client firms, becoming, in some cases, institutionalized actors taking on a range of functions that were once reserved for internal human resource departments or unions. They also work on behalf of workers themselves. Although evidence indicates that outcomes vary, it is well-known that employees are turning to staffing agencies for help with job placement, training, and career development as they search for help in navigating the complex terrain of contemporary labor markets. Many workers use these agencies to obtain the temporary positions they believe will be bridge positions into permanent jobs in a company.

Nonprofits, Unions, and Public Agencies

In addition to the private sector staffing industry, nonprofit, public, and union-sponsored organizations also provide services and/or advocacy programs for contingent workers. Some public sector employment agencies have partnered with private sector staffing agencies, channeling public funds to the private sector to provide workers with training or temporary employment opportunities. A number of researchers have criticized these partnerships because employment through the private sector staffing industry is often associated with low wages, bad working conditions, and lack of health insurance coverage and retirement benefits. There is a belief that public and nonprofit sector programs are by nature more oriented to the needs of employees. In recent years, a number of organizations have arisen to ensure that staffing agencies and corporations are accountable to the needs of the contingent workforce.

For example, Working Today, a New York-based organization, organizes contingent employees and independent contractors. This organization provides programs aimed at collectively solving the problem of health insurance and retirement pensions so that their members can more easily move from job to job while retaining benefits. Unions themselves have moved beyond their traditional mission of primarily serving the needs of permanent employees and are now advocates on behalf of the contingent workforce. Several unions have extended collective bargaining conditions to temporary, part-time, and contract workers. A number of unions are operating their own staffing/employment agencies, placing temporary workers in positions with higher standards for wages and benefits packages than what the private sector offers.

Labor advocates have long documented the need to organize temporary, part-time, and contract workers to provide them with greater workplace protections, increased wages, better working conditions, and improved opportunities for career advancement. However, researchers have identified many obstacles to collective mobilization of the contingent workforce. In particular, because this workforce is very mobile and because contingent workers span a wide range of occupational groupings, efforts to organize the contingent workforce have been limited. Despite these obstacles, there is evidence that advocates for contingent workers are making progress in changing public policies and influencing corporate practices to better meet the overall needs of today’s growing contingent workforce.

Contingent employment, a melange of different corporate practices and lived experiences, shows all signs of remaining a dominant approach to staffing and hiring. Although many researchers worry that the size of the contingent workforce will grow, with deleterious consequences for American workers, the evidence to date suggests that the field is variegated and shifting; thus, the long-term implications remain inconclusive.

See also:

References:

  1. Barker, K. and Christensen, K. 1998. Contingent Work: American Employment Relations in Transition. Ithaca, NY: Cornell/ILR Press.
  2. Barley, S. and Kunda, G. 2004. Gurus, Hired Guns, and Warm Bodies: Itinerant Experts in a Knowledge Economy. Princeton, NJ: Princeton University Press.
  3. Benner, C. 2002. Work in the New Economy: Flexible Labor Markets in Silicon Valley. Oxford, UK: Blackwell.
  4. Carre, F., Ferber, M. A., Golden, L. and Herzenberg, S. A., eds. 2000. Nonstandard Work: The Nature and Challenges of Changing Employment Arrangements. Champaign, IL: Industrial Relations Research Association.
  5. Kalleberg, A. L., Reskin, B. and Hudson, K. 2000. “Bad Jobs in America: Standard and Nonstandard Employment Relations and Job Quality in the U.S.” American Sociological Review 65:256-278.
  6. Neumark, D., ed. 2000. On the Job: Is Long-Term Employment a Thing of the Past? New York: Russell Sage Foundation.
  7. Neuwirth, E. 2004. Blurring Corporate Boundaries: Staffing Agencies, Human Resource Practices, and Unions in the New Employment Relationship. PhD dissertation, Department of Sociology, University of California, Davis, CA.
  8. Ofstead, C. M. 1999. “Temporary Help Firms as Entrepreneur­ial Actors. Sociological Forum 14:273-294.
  9. Rogers, J. K. 2000. Temps: The Many Faces of the Changing Workplace. Ithaca, NY: Cornell/ILR Press.
  10. Smith, V. 2001. Crossing the Great Divide: Worker Risk and Opportunity in the New Economy. Ithaca: Cornell/ILR Press.