America’s growing temporary workforce

By THE DATA TEAM

AMERICA’S temporary help industry first emerged after the second world war, when companies like Manpower and Kelly Girl Service began “renting out” office workers on a short-term basis. In those early years, temps numbered in the hundreds of thousands. Today, the industry employs some 2.9m people, over 2% of America’s total workforce. Since the country’s economic recovery began in 2009, temporary employment has been responsible for nearly one in ten net new jobs. But as temping has grown, the quality of the jobs it provides has deteriorated. According to government statistics, temps earn 20-25% less per hour than their permanent counterparts in similar roles. And few are covered by health-care or pension plans.

The proliferation of ill-paid temp work also affects permanent staff. Many of the costs that employers of temps avoid, such as health insurance, are now borne in part by taxpayers in the form of increased social-benefits spending. Temp work may also suppress the wages of permanent employees. In states where less than 2% of the workforce was employed by temping firms in 2000, full-time workers’ salaries grew by an average of 3% a year between 2000 and 2015. In contrast, they rose by just 2.6% annually in states with a higher proportion of temp workers. Such findings lend support to the view of David Autor of MIT that the use of temping agencies, while beneficial to individual workers and firms, “may exert a negative externality on the aggregate labour market—that is, it is a ‘public bad’.”