Temporary Help Work: Earnings, Wages, and Multiple Job Holding*

• Date: 01 January 2014
• Published date: 01 January 2014
• Author: Carolyn Heinrich,Peter Mueser,Sarah Hamersma
• DOI: http://doi.org/10.1111/irel.12047

Temporary Help Work: Earnings, Wages, and

Multiple Job Holding*

SARAH HAMERSMA, CAROLYN HEINRICH, and PETER MUESER

Temporary help services (THS) employment has been growing in size, particularly

among disadvantaged workers. An extended policy debate focuses on the low earn-

ings, limited benefits, and insecurity that such jobs appear to provide. We investi-

gate the earnings and wage differentials observed between THS and other jobs in a

sample of disadvantaged workers. We find lower quarterly earnings at THS jobs but

a $1 per hour wage premium. We reconcile these findings in terms of the shorter

duration and lower hours worked at THS jobs. We interpret the premium as a com-

pensating wage differential.

Introduction

EXCEPT DURING THE MOST RECENT RECESSION,THE TEMPORARY HELP SERVICES (THS)

industry has been growing faster than regular employment, with THS employment

more than doubling (from 1.1 to 2.3 million) during the 1990–2008 period (Luo,

Mann, and Holden 2010). Studies suggest that as many as 15 to 40 percent of

former welfare recipients have gone to work in the temporary help sector since

1996 (Autor and Houseman 2010; Heinrich, Mueser, and Troske 2005), prompt-

ing concern about the disproportionate share of low-skilled and disadvantaged

workers among THS employees. Autor and Houseman (2000) and Luo, Mann,

and Holden (2010) also point to a marked shift in the sectors of employment in

which THS workers are taking jobs, from largely clerical and office work to an

increasing share in blue-collar occupations and other low-wage jobs that are

filled by less-skilled workers. Manufacturers, for example, significantly increased

*

The authors’saffiliations are, respectively, Maxwell School of Citizenship and Public Affairs, Syracuse

University, Syracuse, NY. Email: sehamers@maxwell.syr.edu; Lyndon B. Johnson School of Public Affairs,

Austin, TX. Email: cheinrich@austin.utexas.edu; Department of Economics and Harry S. Truman School of

Public Affairs, University of Missouri, Columbia, MO. Email: mueserp@missouri.edu.

JEL: J3, J4.

INDUSTRIAL RELATIONS, Vol. 53, No. 1 (January 2014). ©2013 Regents of the University of California

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford, OX4 2DQ, UK.

72

their use of staffing services

1

to fill core production jobs in the 1990s, contribut-

ing 9.2 percent to manufacturing employment by 2006, compared with 2.3 per-

cent in 1989 (Dey, Houseman, and Polivka 2012).

This substantial concentration of disadvantaged workers in THS employ-

ment has spurred additional research about the implications of THS employ-

ment for these workers’wages, access to fringe benefits, job stability,

subsequent labor market transitions, and longer-term earnings. The dispropor-

tionate job loss that the THS sector bears during recessions also adds to these

concerns; in the latest recession (2007 to 2009), employment in staffing ser-

vices fell by 30 percent (compared to a 4.9 percent decline in average annual

nonfarm payroll employment), although it is also leading net job growth in the

recovery (Dey, Houseman, and Polivka 2012). THS jobs accounted for 26 per-

cent of new private-sector jobs in 2010, compared with 7.1 percent in the

same period following the 2001 recession (Nash and Romero 2011).

Of key interest in policy debates is whether THS employment provides

some benefits to these workers—in the form of flexibility in work hours, a

wage premium and/or access to on-the-job training—or by opening a path to

more stable, long-term employment for workers who might otherwise be

excluded from permanent job opportunities. There does appear to be some

consensus that if the next best alternative to a THS job is no employment, then

working in a THS job provides potential benefits; however, workers who

remain in the THS sector are likely to have long-run earnings that are substan-

tially below those who transition to work in other sectors (Andersson, Holzer,

and Lane 2005, 2007; Booth, Francesconi, and Frank 2002; Heinrich, Mueser,

and Troske 2005, 2009).

The majority of U.S.-based research on this topic has used administrative

data that include information on workers’quarterly earnings, although some

have implemented surveys to gather workers’self-reports of hourly wages,

hours worked, and earnings in THS and non-THS jobs. Benner, Leete, and

Pastor (2007) suggest that many of the differences in findings across seminal

studies were likely due to differences in data, measurement, and comparison

groups.

In this study, we break new ground by drawing on a unique compilation of

administrative data that allow us to examine hourly wages and total hours of

work, as well as quarterly earnings, in investigating employment and compen-

sation patterns in THS work. We use these data to explore the possibility that

THS workers receive a wage premium relative to pay at a traditional job. If

the answer is affirmative, this might suggest that THS work is, in fact, less

1

Temporary help services accounted for 77 percent of staffing services in 2010. (The other two catego-

ries are professional employer organizations and employment agencies.)

Temporary Work and Compensating Differentials /73