The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools

W.E. Upjohn Institute Staff Working Paper No. 03-90

45 Pages Posted: 15 May 2003

See all articles by George A. Erickcek

George A. Erickcek

W.E. Upjohn Institute for Employment Research

Susan N. Houseman

W.E. Upjohn Institute for Employment Research

Arne L. Kalleberg

University of North Carolina (UNC) at Chapel Hill - Department of Sociology

Date Written: July 2002

Abstract

We 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.

Keywords: low-skilled, temporary, contingent, contract, workers, Houseman, Erickcek, Kalleberg, Upjohn

JEL Classification: J31, J32, J41, J42, J45, J51, J81, K31

Suggested Citation

Erickcek, George A. and Houseman, Susan N. and Kalleberg, Arne L., The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools (July 2002). W.E. Upjohn Institute Staff Working Paper No. 03-90. Available at SSRN: https://ssrn.com/abstract=372541 or http://dx.doi.org/10.2139/ssrn.372541

George A. Erickcek

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States

Susan N. Houseman (Contact Author)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States
616-343-5541 (Phone)
616-343-3308 (Fax)

Arne L. Kalleberg

University of North Carolina (UNC) at Chapel Hill - Department of Sociology ( email )

Chapel Hill, NC 27599
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
402
Abstract Views
2,738
rank
72,281
PlumX Metrics