In the last 30 years, the U.S. economy has faced increased competition and globalization in product markets, rapidly changing technology, increased capital mobility, globalization of financial transactions, and the growth of merger and acquisition activity. The resulting structural and institutional changes have led to changing patterns of labor demand and supply. One of the manifestations is the increase in the use of flexible and non-traditional employment arrangements as firms seek to remain competitive in a global economy. Concern has been expressed that in unregulated form, non-standard, "flexible" work, even if it is on a continuous basis, cannot provide a satisfactory level of economic independence or provide adequate job security and gives limited protection against arbitrary unemployment [Walsh 1990]. The expansion of contingent and non-standard forms of work raises the potential for renewed growth of a secondary labor market and underemployment. Employers are shifting more responsibility for adequate wages, health insurance, and pension plans onto workers. This unilateral employer abdication of responsibility may turn flexibility from a positive into a negative for workers and may represent a mandate for intervention in the public policy and collective bargaining arenas [Carte, duRivage, and Tilly 1995].
Outcomes associated with marginal or secondary sector type employment include not only low wages, but also lack of health insurance, lack of pension or retirement plans, and job insecurity. A stylized fact is that minorities tend to be clustered in the less desirable jobs that are sometimes described as secondary sector jobs. Given the growth of non-traditional types of employment relations, the question arises whether patterns of marginal employment and the outcomes of marginal employment for a substantial percentage of minority workers are being reproduced within or enhanced by non-standard employment.
In investigating contributory factors of employment inequality in general and as it affects minority workers in particular, a goal of this paper is to analyze the data on non-standard labor in a more systematic manner. The first section of this paper gives a brief overview of how standard and non-standard employment arrangements are constructed. A clear taxonomy of employment arrangements will help clarify issues surrounding non-standard employment. The second section examines the various categories of employment to determine if there are qualitative differences between the categories and whether there are distinct outcomes for various groups of workers within the broad clusters of employment arrangements. The focus of the third section is the demographic composition of the various employment arrangements and a comparison of selected economic outcomes by race for the different employment arrangements. The final section is comprised of logistic regression analysis testing the contribution of employment arrangements and race in predicting selected employment outcomes.
To begin categorizing different types of employment, the focus is first on who are the parties to the employment contract. Direct employment arrangements are defined as when workers perform work for the firm or the employer that hired them or when they are employees of the recipient of the services of the employee. Direct employment implies that by common law the employer is entitled to specify the tasks to be accomplished and to control virtually every aspect of the workplace. This includes discipline and the authority to terminate the employee at-will. The right to terminate is an important factor indicating the employment status, and the person possessing that right is the employer [Hylton 1996].
Indirect employment arrangements are defined as jobs where workers are not employed by the recipients of their services. Within indirect employment arrangements, there may be third-party or intermediated employment arrangements and non-intermediated arrangements. Third-party or intermediated employment arrangements would include employees of temporary help services or leasing companies who perform their services for a third party or business. These workers are the direct employees of the temporary or leasing agency that acts as an intermediary between the worker and firm. Indirect, non-mediated work arrangements would include independent contractors, subcontractors, and consultants where an individual is hired without an intermediary for a specific job or project on a...