The Benefits Implications of Recent Trends in Flexible Staffing Arrangements

Workers in flexible staffing arrangements—including temporary agency, direct-hire temporary, on-call, and contract workers—are much less likely than regular, direct-hire employees to be covered by laws mandating or regulating workplace benefits. Workers in such arrangements, in turn, are much less likely to receive pension, health insurance, and other benefits on the job. This paper documents these differences in coverage by benefits regulations and differences in benefits receipt. The paper also reviews evidence on the incentives employers have to use workers in these various flexible staffing arrangements. Although reducing benefits costs is not the only reason employers use flexible staffing arrangements, it is an important factor motivating many employers to use them, and te level of and growth in these arrangements would be lower in the absence of this incentive. Journal of Economic Literature Classification Numbers: J3, J8, K3 A recent and important trend in the U.S. labor market has been the growth in various types of temporary and contract employment. Best documented is increase in temporary agency employment, which grew 265 percent between 1990 and 2000 and accounted for about 10 percent of net employment growth over the decade. Although time series data on other types of temporary and contract employment arrangements do not exist, evidence from employer surveys suggests tha