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The Role of Temporary Help Employment in Tight Labor Markets

Author

Listed:
  • Susan N. Houseman

    (W.E. Upjohn Institute for Employment Research)

  • Arne L. Kalleberg

    (University of North Carolina Chapel Hill)

  • George A. Erickcek

    (W.E. Upjohn Institute for Employment Research)

Abstract

This paper examines the reasons why employers used and even increased their use of temporary help agencies during the tight labor markets of the 1990s. Based on case study evidence from the hospital and auto supply industries, we evaluate various hypotheses for this phenomenon. In high-skilled occupations, our results are consistent with the view that employers paid substantially more to agency help to avoid raising wages for their regular workers and to fill vacancies while they recruited workers for permanent positions. In low-skilled occupations, our evidence suggests that temporary help agencies facilitated the use of more "risky" workers by lowering their wages and benefits and the costs of firing them. The use of agency temporaries in both high- and low-skilled occupations reduced the pressure on companies to raise wages for existing employees, and thereby may have contributed to the stagnant wage growth and low unemployment observed in the 1990s.

Suggested Citation

  • Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2001. "The Role of Temporary Help Employment in Tight Labor Markets," Upjohn Working Papers 01-73, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:01-73
    Note: A revised version of this paper appears in Industrial and Labor Relations Review, Vol. 57, No. 1 (October 2003), pp. 105-127. Please cite the revised version.
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    References listed on IDEAS

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    1. Susan N. Houseman, 2001. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
    2. Jamie Peck & Nikolas Theodore, 1998. "The Business of Contingent Work: Growth and Restructuring in Chicago's Temporary Employment Industry," Work, Employment & Society, British Sociological Association, vol. 12(4), pages 655-674, December.
    3. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," NBER Working Papers 7557, National Bureau of Economic Research, Inc.
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    Keywords

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    JEL classification:

    • J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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