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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

4. Trends

Very little is known about trends in flexible staffing arrangements. Agency temporary employment is the only flexible staffing category for which a relatively long time series exists. As noted above, the CES provides information on employment in the help supply services industry, SIC 7363, which is comprised primarily of temporary help agencies. According to this source, employment in the temporary help industry grew dramatically in the 1980s and 1990s. From 1982 (the first year for which data on this industry are available) to 1997, the share of non- farm payroll employment in help supply services grew from 0.5 percent to 2.3 percent.

Statistics for on-call, independent contractor, contract company, and direct-hire temporary workers were first collected in the February 1995 Supplement to the CPS. Between 1995 and 1997, the percent of employment in these categories was stable, but this two year time period, during which the economy was in rapid expansion, is too short to determine any trend. Future CPS Supplements on Contingent and Alternative Work Arrangements will provide valuable evidence on trends in these work arrangements.

In the absence of employment data on specific flexible staffing arrangements, some researchers have looked at the growth in business services employment (e.g. Abraham 1990). In addition to including agency temporaries within help supply services, business services is thought to include many employed as contract company workers. Figure 1 plots indexes of employment in help supply services, business services, and the aggregate non-farm payroll sector over the 1982-98 period. Help supply services grew more rapidly than aggregate business services, which, in turn, grew more rapidly than aggregate employment over the period. Within the business services sector, help supply services was the fastest growing component. However, each component of the business services sector also increased faster than aggregate employment over the period.

Figure 1. Employment Indexes
Employment Indexes
Source: Author's tabulations from the February 1997 CPS Supplement on Contingent and Alternative Work Arrangements.

Evidence from various employer surveys points to growth in other types of flexible staffing arrangements. For instance, in The Conference Board (1995) survey of members, 34 percent of companies reported sizable growth in their use of direct-hire temporaries in the preceding five years and 24 percent expected sizable growth in the coming five years. Thirty- one percent reported sizable growth in their use of independent contractors and 28 percent expected sizable growth in their use of independent contractors in the next 5 years. Data from BLS Industry Wage Surveys in 1986 and 1987 show growth in contracting out of services in thirteen manufacturing industries between 1979 and 1986/1987 (Abraham and Taylor 1996). In a survey of members of the Bureau of National Affairs, a larger percentage of employers reported an increase than reported a decrease between 1980 and 1985 in their use of direct-hire temporaries, on-call workers, administrative or business support contracts, and production subcontracting relative to regular workers (Abraham 1990). In the Upjohn Institute employer survey on flexible staffing arrangements, a much larger percentage reported contracting out work previously done in house than reported bringing work back in house since 1990. Moreover, two- thirds of respondents to the Upjohn Institute survey predicted that organizations in their industry would increase their use of flexible staffing arrangements in the coming five years (Houseman 1997). Thus, it is reasonable to assume that there has been some growth recently in other types of flexible staffing arrangements, though the amount they have grown is unknown.

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