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Flexible Staffing Arrangements

A Report on Temporary Help, On-Call, Direct-Hire Temporary, Leased, Contract Company, and Independent Contractor Employment in the United States

Susan N. Houseman
August 1999

3. The Number of Workers in Flexible Staffing Arrangements

The February 1995 Supplement to the CPS represented the first attempt in government statistics to count the number of workers in a wide variety of alternative or flexible staffing arrangements. The Supplement on Contingent and Alternative Work Arrangements was repeated in February 1997 and February 1999. Table 1 presents the distribution of the workforce by staffing arrangement in 1997.6

In the survey, individuals were directly asked whether they were paid by a temporary help agency, whether they were an on-call or day laborer, or whether they were an independent contractor, independent consultant, or free lance worker. Those answering in the affirmative were classified as agency temporaries, on-call or day laborers, and independent contractors, respectively. The category agency temporaries includes the permanent staff of these agencies, though they represent a small percentage of those employed in that industry.7 As noted above, under the legal definition, independent contractors are self-employed. However, about 12 percent of those calling themselves independent contractors, independent consultants, or free lancers, also stated that they were wage and salary workers. Workers were classified as contract company workers if they responded that they worked for a company that contracted out their services, that they worked at the client's site, and that they primarily worked for one client.

Although the CPS does not include a specific question classifying individuals as direct- hire temporaries, I constructed this category from questions in the February Supplement.

Table 1. Distribution of Employment by Work Arrangement, 1997 (text version)

Employment Arrangement

As a Percent of Workforce

Percent Who are Direct Hire Temporaries

Percent Working Part-time

Agency Temporaries

1.0

NA

21.2

On-call or Day Laborers

1.6

26.7

54.1

Independent Contractors

6.7

1.6

28.1

Contract Company Workers

0.6

12.7

18.1

Other Direct-hire Temporaries

2.6

100.0

49.2

Other Self-employed

5.1

NA

22.8

Regular Employees

82.4

NA

17.4

Source: Author’s tabulations from the February 1997 CPS Supplement on Contingent and Alternative Work Arrangements.

Specifically, individuals were classified as direct-hire temporaries if they indicated that their job was temporary or they could not stay in their job as long as they wish for any of the following reasons: they were working only until a specific project was completed, they were temporarily replacing another worker, they were hired for a fixed period of time, their job was seasonal, or they expected to work for less than a year because their job was temporary.

To avoid double counting, the categories of employment in Table 1 are constructed to be mutually exclusive. The main overlap across categories occurs with direct-hire temporaries; a number of on-call workers, wage and salary independent contractor workers, and contract company workers are hired on a short-term basis. The proportion of workers in these categories who are also direct-hire temporaries is indicated in Table 1. The category “other direct-hire temporaries” are those short-term hires not classified in another flexible staffing arrangement. Including the on-call, independent contract, and contract company workers who are also direct- hire temporaries, 3.2 percent of the workforce are direct-hire temporaries. In addition, a small number of workers work on an on-call basis or for a contract company. They are classified as on-call workers in the table.8

Independent contractors comprise the largest category of flexible staffing arrangements. In fact, over half of all the self-employed call themselves independent contractors, independent consultants, or free lancers. Collectively, agency temporaries, on-call workers, independent contractors, contract company workers, and direct-hire temporaries comprise 12.5 percent of the workforce.

It is noteworthy that agency temporaries account for only one percent of total employment in the CPS Supplement, whereas they account for about 2 percent of employment in the Current Employment Statistics (CES), the Bureau of Labor Statistics' establishment survey. Data from the National Association of Temporary Services Staffing suggests employment in temporary services is slightly less than that reported in the CES, but is much higher than that reported in the CPS, and it is generally presumed that the CPS understates employment in temporary help agencies.9

Table 1 also shows that those in flexible staffing arrangements are more likely to work part time than workers in regular wage and salary positions. This is particularly true for on-call workers and direct-hire temporaries.

Data on the number of workers hired by employee leasing companies are not currently available. In the February 1995 CPS Supplement, respondents were asked if they were paid by an employee leasing agency. A very small percentage (0.3 percent) responded in the affirmative. Subsequent field tests by BLS showed considerable confusion among respondents over that question and so it was omitted from the 1997 and 1999 Contingent and Alternative Work Arrangement Supplements. A report on employee leasing prepared for the Department of Labor estimated there were 608,198 leased employees in 24 states in 1993. At the time, other states collected no data on the number of leased employees, and the report cast doubt on the accuracy of the figures from many of the states that did report data (KRA Corporation 1996). It is believed that many leased employees are classified in the help supply services sector along with temporary help agency workers in the CES. In an ongoing project, the BLS is attempting to provide separate estimates for leased employees and agency temporaries.

(6) The 1999 data were not publicly available at the time of this writing.

(7) A 1989 Industry Wage Survey indicated that permanent full-time staff constituted just 3.2 percent of employment in the industry Help Supply Services, which is primarily made up of temporary help agencies.

(8) The classification scheme used in this table follows that used in Houseman and Polivka (1999).

(9) Some of the difference in the CPS and CES figures on temporary agency employment stems from differences in the type of data collected in the two surveys. Specifically, the CES counts jobs in the temporary help services industry, while the CPS counts workers whose main jobs are in this industry. Consequently, individuals registered with more than one temporary agency would show up once in the CPS, but would show up more than once in the CES, if they worked two or more jobs for two or more temporary help agencies during the survey week. Also, multiple job holders with secondary jobs in the temporary help industry would not be counted in the CPS as agency temporaries, whereas those workers' secondary jobs would be counted in the CES. Another possible explanation for the differences is that, in spite of questions in the CPS designed to avoid this problem, some respondents may still view the client to whom they are assigned as their employer and thus fail to report that they are paid by a temporary help service. The widespread confusion over who is their employer is evidenced by the fact that among those identified as agency temporaries in the CPS, over half at first incorrectly named their client, rather than the temporary help agency, as their employer. Finally, many establishments classified as temporary help agencies in the CES may also provide contract company workers or leased employees (Polivka 1996).
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