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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

1. Introduction

There is a widespread perception that employment in so-called flexible staffing arrangements, including various temporary, on-call, and contract jobs, is large and growing. Many regard such a development as troubling, pointing out that workers in these arrangements often receive low wages and few benefits. Firms, it is argued, are using these arrangements to increase workforce flexibility, and, by implication, are reducing their commitment to training workers and providing them with stable employment. Moreover, some firms allegedly use flexible staffing arrangements to circumvent employment and labor laws, raising concerns that existing laws are inadequate to protect the growing number in these arrangements.

Others, citing recent BLS statistics on "contingent" employment, counter that the phenomenon is small. Moreover, firms and workers often benefit from these arrangements. Firms often use these arrangements to increase their workforce flexibility, thereby helping them to reduce costs, remain competitive, and generate high employment growth. At the same time, workers in these arrangements may prefer flexible schedules to accommodate school or family responsibilities. Additionally, it is argued that firms increasingly use staffing companies to screen workers for permanent positions. To the extent that this practice results in better job matches, both workers and firms stand to benefit. Some even believe the government should promote the use of staffing companies to place disadvantaged workers in jobs, and several states have begun referring unemployment insurance and welfare recipients to temporary agencies.

In this report, I endeavor to shed light on this debate by reviewing existing research on a wide range of flexible staffing arrangements: agency temporary, on-call, direct-hire temporary, leased, contract company, and independent contractor employment. Specifically, I discuss 1) the magnitude and trends of employment in these various arrangements; 2) the characteristics of workers in these arrangements; 3) the quality of these jobs in terms of wages, benefits, and job security; 4) the training workers in flexible staffing arrangements receive; 5) why firms use, and in some cases are increasing their use of, various flexible staffing arrangements; 6) the coverage of workers in flexible staffing arrangements by employment programs and labor standards; and 7) recent initiatives by several states to place unemployment insurance and welfare recipients with temporary help agencies. I also point to the many gaps in our knowledge of flexible staffing arrangements and their implications for workers and firms.

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