The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools
AbstractWe examine why employers use temporary agency and contract company workers and the implications of these practices for the wages, benefits, and working conditions of workers in low-skilled labor markets. Through intensive case studies in manufacturing (automotive supply), services (hospitals), and public sector (primary and secondary schools) industries, we define the circumstances under which these workers are likely to be adversely affected, minimally affected, or even benefitted by such outsourcing. Adverse effects on compensation are clearest when companies substitute agency temporaries or contract company workers for regular employees on a long-term basis because low-skilled workers within the organization receive relatively high compensation and employment and labor law or workers and their unions do not block companies from such substitution. Often, however, organizations only contract out management functions or utilize agency temporaries for brief periods of time, with little direct effect on in- house, low-skilled workers. Moreover, employers often use temporary agencies to screen workers for permanent positions. Because temporary agencies lower the cost to employers of using workers with poor work histories or other risky characteristics, agencies may benefit these workers by giving them opportunities to try out for positions they otherwise might not have had.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 03-90.
Date of creation: Jul 2002
Date of revision:
Note: A revised version of this paper appears in Eileen Appelbaum, Annette Bernhardt, and Richard J. Murnane, eds. Low-Wage America: How Employers are Reshaping Opportunity in the Workplace (pp. 368-406). New York: Russell Sage Foundation, 2003. Please cite the revised version.
Contact details of provider:
Postal: 300 S. Westnedge Ave. Kalamazoo, MI 49007 USA
Web page: http://www.upjohn.org
More information through EDIRC
temporary; contingent; contract; workers; low-skilled; Houseman; Erickcek; Kalleberg; Upjohn;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
- J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Susan N. Houseman, 2001. "The Benefits Implications of Recent Trends in Flexible Staffing Arrangements," Upjohn Working Papers and Journal Articles 02-87, W.E. Upjohn Institute for Employment Research.
- Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2001. "The Role of Temporary Help Employment in Tight Labor Markets," Upjohn Working Papers and Journal Articles 01-73, W.E. Upjohn Institute for Employment Research.
- Katharine G. Abraham & Susan K. Taylor, 1993.
"Firms' Use of Outside Contractors: Theory and Evidence,"
NBER Working Papers
4468, National Bureau of Economic Research, Inc.
- Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
- Lewis Segal & Daniel Sullivan, 1996.
"The growth of temporary services work,"
Working Paper Series, Macroeconomic Issues
WP-96-26, Federal Reserve Bank of Chicago.
- Corinne Perraudin & Nadine Thèvenot & Bruno Tinel & Julie Valentin, 2006. "Sous-traitance dans l'industrie et ineffectivité du droit du travail : une analyse économique," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00265959, HAL.
- Michael Beckmann & Dieter Kuhn, 2012. "Flexibility vs. screening: The performance effects of temporary agency work strategies," Working papers 2012/03, Faculty of Business and Economics - University of Basel.
- Matthew Dey & Susan Houseman & Anne Polivka, 2010.
"What Do We Know About Contracting Out in the United States? Evidence from Household and Establishment Surveys,"
in: Labor in the New Economy, pages 267-304
National Bureau of Economic Research, Inc.
- Matthew Dey & Susan Houseman & Anne Polivka, 2009. "What Do We Know about Contracting Out in the United States? Evidence from Household and Establishment Surveys," Upjohn Working Papers and Journal Articles 09-157, W.E. Upjohn Institute for Employment Research.
- James Peoples & Bin Wang, 2007. "Privatization and Labor Cost Savings: Evidence from Health Care Services," Atlantic Economic Journal, International Atlantic Economic Society, vol. 35(2), pages 145-157, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.