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Annu. Rev. Sociol. 2000. 26:341â€“65
Copyright c 2000 by Annual Reviews. All rights reserved
NONSTANDARD EMPLOYMENT RELATIONS:
Part-time, Temporary and Contract Work
Arne L. Kalleberg
Department of Sociology, University of North Carolina at Chapel Hill, Chapel Hill, North
Carolina 27599-3210; e-mail: Arne [email protected]
Key Words contingent work, part-time work, temporary work, contract work
â– Abstract Nonstandard employment relationsâ€”such as part-time work, temporary help agency and contract company employment, short-term and contingent work,
and independent contractingâ€”have become increasingly prominent ways of organizing work in recent years. Our understanding of these nonstandard work arrangements
has been hampered by inconsistent definitions, often inadequate measures, and the
paucity of comparative research. This chapter reviews the emerging research on these
nonstandard work arrangements. The review emphasizes the multidisciplinary nature
of contributions to this field, including research by a variety of sociologists, economists,
and psychologists. It also focuses on cross-national research, which is needed to investigate how macroeconomic, political, and institutional factors affect the nature of
employment relations. Areas for future research are suggested.
Nonstandard work arrangementsâ€”such as part-time work, temporary employment
and contract workâ€”have become an important topic in research and writing on
work and employment relations. Nonstandard employment relations (Goldthorpe
1984, Casey 1991, Green et al 1993, Kalleberg et al 2000) have also been referred to
as alternative work arrangements (Polivka 1996a, Sherer 1996), market-mediated
arrangements (Abraham 1990), nontraditional employment relations (Ferber &
Waldfogel 1998), flexible staffing arrangements (Abraham 1988, Houseman 1997),
flexible working practices (Brewster et al 1997), atypical employment (CÂ´ordova
1986, Delsen 1995, De Grip et al 1997), vagrant or peripheral employment
(Summers 1997), vulnerable work (Tregaskis et al 1998), precarious employment
(Treu 1992), disposable work (Gordon 1996), new forms of employment (Bronstein 1991), and contingent work (see Polivka & Nardone 1989, Belous 1989).
These labels have in common their identification of employment relations
that depart from standard work arrangements in which it was generally expected
that work was done full-time, would continue indefinitely, and was performed at
the employerâ€™s place of business under the employerâ€™s direction. Standard work
arrangements were the norm in many industrial nations for much of the twentieth
century and were the basis of the framework within which labor law, collective
bargaining, and social security systems developed.
Changes beginning in the mid-1970s created conditions that led countries, organizations, and workers to search for greater flexibility in employment. Consequently, the standard employment relationship began to unravel (Rubin 1995,
Cappelli et al 1997, Cappelli 1999). Global economic changes increased competition and uncertainty among firms and put greater pressure on them to push for
greater profits and to be more flexible in contracting with their employees and responding to consumers. Sluggish economic growth triggered high unemployment
that made it clear, especially in Europe, that economies were incapable of generating enough jobs to provide full-time wage employment for all workers (CÂ´ordova
1986). The adoption of nonstandard work was facilitated by technological improvements in communication and information systems that made it easier for
organizations to specialize their production, assemble temporary workers quickly
for projects, and rely more on outside suppliers. Labor laws designed to protect
permanent employees also fueled the growth in nonstandard work by encouraging
employers to avoid the mandates and costs associated with these laws (Lee 1996,
Cappelli et al 1997). So too did demographic changes in the composition of the
labor force, such as the increase in married women workers and older workers, who
often preferred the flexibility available through nonstandard work arrangements
(Pfeffer & Baron 1988).
Nonstandard employment relations are not new. There have always been work
arrangements that did not fit the model of full-time work, and history is replete
with examples of peripheral labor forces and flexible labor markets in which work
is unstable and temporary (Morse 1969, Peck 1996, Summers 1997). For instance,
in the inside contracting system that existed in the United States in the nineteenth
century, management provided machinery and space in the factory, supplied raw
material and capital, and arranged for the sale of the product while contractors were
responsible for production and hired the workers and paid and supervised them
(Butrick 1952). Employers have a choice between organizing work in markets or
hierarchies (Williamson 1980). The efficiencies associated with organizing work
in standard, hierarchical employment relations and internal labor markets in the
postâ€“World War II period may have been more of an historical irregularity than is
the use of nonstandard employment relations.
This review surveys recent theory and research on the major kinds of nonstandard work arrangements: part-time work, temporary agency and contract company
employment, short-term employment, contingent work, and independent contracting. The literature on these topics is multidisciplinary and includes research by
sociologists of work, organizations, occupations, labor markets and social stratification, as well as by economists and psychologists. This review does not cover
nonstandard work arrangements such as home working or telecommuting; employee ownership of companies; flexible scheduling such as flextime, job-sharing,
home-based work, and compressed workweeks; or clandestine activities such as
NONSTANDARD EMPLOYMENT RELATIONS 343
undeclared, illegal, or family work. An effort has also been made not to cover the
material on nonstandard work previously reviewed by Smith (1997).
Definitions, Incidence, Trends
Part-time work is usually defined as regular wage employment in which the hours
of work are less than â€œnormalâ€ (Thurman & Trah 1990). In the United States, parttime work is generally defined as less than 35 hours a week. This definition varies
across countries. Canada and the United Kingdom normally use 30 hours as the
cutoff for part-time (Kahne 1992). In France, part-time is defined as at least 20%
below the statutory level of working hours (which became 35 hours on January
1, 2000), while in Germany it is less than 36 hours of work per week (Houseman
1995). By contrast, part-time employment in Japan is explicitly related to status
within the firm and not to hours worked; indeed, recent Japanese surveys indicate
that 20â€“30% of those classified by their employers as â€œpart-timeâ€ actually work
as many hours as â€œfull-timeâ€ workers (Houseman & Osawa 1998).
Nearly one in five workers in the United States currently works part-time,
making it by far the most widely used form of nonstandard work. [Part-time work
also overlaps with other forms of nonstandard work, such as temporary work. Casey
(1991) found that 54% of temporary workers in his British sample worked parttime.] The proportion of part-timers in the United States increased gradually from
13% in 1957 to 19% in 1993, with most of the growth coming before 1980 (Tilly
1996). This percentage has decreased slightly since the mid-1990s, though changes
in the measurement of part-time work by the Current Population Survey (CPS) in
1994 have hampered assessments of trends since then (Nardone 1995). Part-time
work has historically increased during economic recessions and decreased during
economic expansions as those desiring full-time work are better able to obtain it
(Sightler & Adams 1999).
The incidence of part-time work in Europe is slightly lower than in the United
States, with an average of about 16% of the European Unionâ€™s total labor force
working part-time in 1996 (Fagan 1999). There is, however, wide variation among
countries (Bosch et al 1993). In the Netherlands, about 38% of the labor force,
and 69% of women, work part-time, leading Freeman (1998:2) to characterize it
as the â€œonly part-time economy of the world, with a finger in the dike of unemployment.â€ Part-time employment is also relatively common in Scandinavia (with
the exception of Finland), with over 20% of the labor force working part-time. By
contrast, part-time work constitutes relatively small proportions of the labor force
in Greece, Spain, Portugal (DeGrip et al 1997, Tregaskis et al 1998), and Italy (5%
overall, 3.5% of women) (Thurman & Trah 1990). Unlike in the United States,
part-time employment is increasing relatively rapidly in Europe, where it has been
used as a way to alleviate unemployment and is the major source of employment growth since the 1980s (Brewster et al 1997). Again, there is wide variation
among countries: Part-time employment has increased particularly rapidly in the
Netherlands and Austria (increases of about 65% and 114%, respectively, since
1985) (Fagan 1999).
In all industrial countries, most part-time workers are women (Blossfeld &
Hakim 1997, Fagan & Oâ€™Reilly 1998). This reflects in part womenâ€™s greater responsibilities for housework and raising children. Womenâ€™s share of part-time
employment in the United States (about 65%) is much lower than in Germany
and France (about 90%) and in the United Kingdom and Japan (about 80%). The
lower proportion of women part-timers in the United States may reflect the greater
incidence of part-time work among students, both male and female.
Demand for Part-time Jobs
Most of the increase in part-time work before 1970 in the United States was
due to the growth of voluntary part-time work, mainly among women and young
people who wanted to work part-time. Since 1970, virtually all of the increase
has occurred among those who would prefer full-time work (i.e., â€œinvoluntaryâ€
part-timers), who currently make up about one quarter of part-timers (Tilly 1996).
The overall incidence of voluntary part-time employment has not changed since
the early 1970s, though the composition has changed (e.g., women aged 22â€“54 are
less likely to be voluntary part-timers, while workers aged 16â€“24 and men over
55 are more likely to work part-time voluntarily) (Nardone 1995). Stratton (1996)
found substantial evidence that those classified as involuntary part-time do indeed
work part-time involuntarily.
Part-time work in the United States and other countries (such as Japanâ€”see
Houseman & Osawa 1998) in recent years has thus changed from an activity that
mainly accommodates the needs of the workforce for shorter hours to one that
meets employersâ€™ needs and preferences for such things as lower costs and more
flexible staffing. This makes it important to study the demand for part-time work,
by examining industry and organizational differences in the use of part-timers
(Tilly 1996, Houseman 1997).
Employers have been motivated by cost-containment to use part-timers, since
typically they cost less in wages and particularly in fringe benefits (though see
Larson & Ong 1994). A substantial fraction of the recent increase in involuntary
part-time workers is the result of legislation (such as the Federal Family and
Medical Leave Act of 1993), which increases the cost to employers of full-time
relative to part-time workers (Stratton 1996). Differences among industries in
compensation, particularly health care provision, have a significant effect on the
distribution of part-timers across industries (Pitts 1998). Montgomeryâ€™s (1988)
analysis of over 4500 US establishments found that larger establishments had lower
proportions of part-timers, which he attributes to part-timers constituting higher
quasi-fixed labor costs (e.g., recruiting and training costs) in larger establishments.
Employers also use part-timers to meet staffing needs (Thurman & Trah 1990).
Part-time employment is flexible since it can be relatively easily decreased or
NONSTANDARD EMPLOYMENT RELATIONS 345
increased and can be moved to a different time during the day. The health care
industry, for example, has long used part-timers among both lower-level and professional jobs (nurses) as a way of staffing hospitals twenty-four hours a day, seven
days a week (Sightler & Adams 1999). Zeytinoglu (1992) found that unionized
organizations in Canada used part-timers primarily because of the flexibility they
provided (for both employers and workers), rather than to save wages and benefits.
The growth in part-time work in the United States since 1979 appears to have
been due to the expansion of industries that typically employ many part-timers
(services, retail trade, finance, insurance, real estate) rather than to the substitution
of part-time for full-time workers within industries that occurred mainly in the
1970s (Appelbaum 1992, Nardone 1995). The growth of part-time employment
has similarly accompanied the expansion of the service sector in other industrial
countries (Houseman 1995).
Good vs. Bad Part-time Jobs
Most studies have shown that part-timers in the United States usually earn less per
hour than full-timers, even after controlling for education, experience, and other
relevant factors (Tilly 1996, Ferber & Waldfogel 1998). Part-timers also obtain
lower wage returns relative to experience (Corcoran et al 1984) and seniority
(England et al 1999) than do full-timers. An exception is Blankâ€™s (1990) analysis,
which found that part-time women earned more than equivalent full-time women,
after controlling for selection into the labor market and part-time work. Part-timers
in the United States also receive fewer fringe benefits than full-time workers do.
Despite differences in wages and fringe benefits, part-timers are often as likely as
full-timers to regard work as a â€œcentral life activityâ€ and are equally committed to
their organizations (Kalleberg 1995).
Part-time jobs and workers are heterogeneous (Feldman 1990, Tilly 1996). This
heterogeneity has been characterized by some writers as the dualism of part-time
work. Kahne (1992), for example, argued that part-time work is both â€œa hope
and a peril,â€ encompassing both good jobs (â€œnew conceptâ€ part-time jobs that are
often used to retain valued professional employees such as librarians, teachers,
editors, and nurses) and bad ones that have low wages and few benefits. Similarly,
Tilly (1996) applied dual labor market theory to the analysis of part-time work,
distinguishing between retention and secondary part-time jobs.
Part-time work in Europe is often associated with marginal employment in lowpaid, low status jobs (such as sales, catering, and cleaning). There is, however,
also some growth of higher-level part-time jobs in some countries. There are also
country differences in whether the use of part-timers represents a marginalization
strategy that provides employers with a source of cheap labor or an integration
strategy used to retain valued workers. One source of difference among countries is
related to labor law and employment regulations such as job security entitlements.
In some countries (Sweden, France, Belgium, The Netherlands, Spain), labor law
enforces equal treatment between full-time and part-time workers (Thurman &
Trah 1990), preventing the use of part-time workers as a cheap labor source. By
contrast, in the United Kingdom, Germany, and Japan, part-time employeesâ€™ hours
or income generally fall below thresholds that exclude them from coverage under
certain laws (Houseman 1995, Fagan & Oâ€™Reilly 1998).
Some nonstandard employment relations involve the externalization of administrative control and responsibility (Pfeffer & Baron 1988). This creates â€œdetachedâ€
workers (Summers 1997) or â€œtriangularâ€ employment relations where a worker
establishes connections with several employers (CÂ´ordova 1986, Bronstein 1991,
Vosko 1997). Examples of such nonstandard work arrangements include temporary
help agency, leased, and contract company employment.
Temporary Help Agencies
Temporary help agencies employ workers and send them out to customers to work
on an hourly basis at the clientâ€™s premises and direction. These agencies recruit
and screen employees, sometimes provide training, and are responsible for hiring
and firing, issuing paychecks, withholding payroll taxes, and making required
employer contributions to unemployment insurance and Social Security (Carey &
The temporary help industry in the United States originated in Chicago during
the late 1920s, with the first agencies supplying calculating-machine operators on
a temporary basis. By 1956 there were still only about 20,000 employees in the
temporary help industry (Gannon 1984). Since 1972, employment in the temporary
help services industry has experienced explosive growth, increasing at an annual
rate of over 11%, and its share of total US employment has risen from under 0.3% in
1972 to nearly 2.5% in 1998. By contrast, total nonfarm employment grew at an annual rate of 2% during this period (Segal & Sullivan 1997a, Laird & Williams 1996).
Changes in temporary work exhibit much greater variance than do other forms of
employment and are very sensitive to the business cycle, rising and falling with
the state of the economy (Gannon 1974, Golden & Appelbaum 1992, Segal 1996).
Temporary help agencies are also growing rapidly in Europe (Bronstein 1991),
though there is considerable variation among countries. Some nations feel that they
are useful as employment intermediaries, while others object to them for reasons
such as the principle that job placement should be done by public, not profit-making
agencies. In the mid-1980s, temporary help agencies were authorized (subject to
some restrictions) in Argentina, Belgium, Brazil, Denmark, France, Germany,
Ireland, Japan, the Netherlands, Norway, Portugal, and Switzerland, among other
countries. They were banned in Algeria, Costa Rica, Gabon, Greece, Italy, the
Libyan Arab Jamahiriya, Madagascar, Mauritania, Senegal, Spain, Sweden, and
Zaire (CÂ´ordova 1986: 657, note 16).
NONSTANDARD EMPLOYMENT RELATIONS 347
Demand for Temporary Help Agencies The growth of temporary help agency
employment in both the United States and Europe has been generally driven by
employersâ€™ needs (De Grip et al 1997), as well as by the entrepreneurial efforts
of temporary help agencies themselves (Ofstead 1999). Golden & Appelbaum
(1992) found that the two-and-a-half times increase in the level of temporary help
employment between 1982 and 1988 was due mainly to demand-side forces and
employersâ€™ needs rather than the supply of labor. Golden (1996) found this as
well for 1982â€“1992, a period when employment in the temporary help industry in
the United States more than tripled. Laird & Williams (1996) found that supply
(increase in married women workers) as well as demand variables contributed
to the observed growth in the temporary help service industry between 1982 and
1992. [Golden (1996) also found that the proportion of married women in the labor
force was positively related to temporary help agency employment levels, but its
impact was dwarfed by the effects of demand-side variables.] However, Segal &
Sullivan (1997a) point out that the rise in womenâ€™s labor force participation is
probably not a driving force behind the growth in temporary agency employment
because much of this has come from increased male participation in temporary
work. Moreover, studies of the preferences of temporary workers have found that
most (e.g., 60%â€”Cohany 1998) work in temporary jobs involuntarily.
Temporary help agencies constitute a modern-day â€œreserve labor armyâ€ that
helps employers to solve problems associated with understaffing as well as overstaffing positions with expensive full-time, permanent workers who may not be
utilized. By using temporaries, employers can staff minimally and then add temporary employees on an as-needed basis. In support of this hypothesis, Houseman
(1997) found that the seasonality of employment demand was positively related to
both the incidence and intensity of organizationsâ€™ use of temporary help agencies
(see also Abraham 1990). While companies have always used temporaries to help
out with special projects or at busy times, temporaries tended to be peripheral to
the companyâ€™s main business. What appears to be new is that the use of temporaries has become an integral feature of firmsâ€™ personnel strategy (Nollen 1996,
von Hippel et al 1997) that enables them to respond to the business cycle and
makes their workforce problems more manageable and less costly (Gannon 1974).
Organizations also use temporary help agencies to lower recruitment and screening costs, by hiring employees who perform well: Houseman (1997) found that
21% of the establishments in her sample said this was a reason for their use of
temporary help agencies (see also von Hippel et al 1997). Organizations may also
be able to reduce training costs through the use of temporary help agency workers,
as is suggested by Krueger (1993), who reports the results of a survey that found
that 62% of temporary help agencies trained clerical temps in the use of office
Major temporary help agencies are increasingly entering into long-term contracts with firms, suggesting further that the use of temporary workers has become a permanent strategy for them (Carnoy et al 1997). In many of these cases,
the temporary help agency is really an extension of the client firmâ€™s human
resources department. Peck & Theodoreâ€™s (1998) study of temporary help agencies
in Chicago underscored the polarization that is occurring within the increasingly
heterogeneous temporary help industry: Some agencies restructure down into the
lowest-paid and lowest-skill parts of the labor markets, while others restructure
up to establish long-term relations with clients that involve insourcing and on-site
management deals. In the latter cases, the temporary help agency often takes over
supervisory and performance monitoring functions for its employees at the clientâ€™s
site, helping the client to â€œmanage hassleâ€ and providing its employees with more
Using temporary help agencies is not always a low-cost strategy, despite the
average low wages and fringe benefits that employees of these agencies receive
(see below). The total hourly cost to customers may be more for temporaries than
for permanent employees (Carey & Hazelbaker 1986); in 1995, client firms paid,
on average, 40% more for temporary workersâ€™ time (the temp agencyâ€™s â€œbilling
rateâ€) than these workers received as wages (Segal & Sullivan 1997a). Temporary
help agencies may lower firmsâ€™ costs, though, by providing them with a convenient
way of creating a two-tier wage structure. Firms may wish to pay some, but not all,
workers efficiency wages (wages above their market wage) and pay different kinds
of fringe benefits to different kinds of workers. It may be illegal for firms to institute
such differential compensation schemes with their regular full-time workers, but
they can do so with their regular full-time vs. temporary workers (Segal & Sullivan
1997a). In support of this hypothesis, Moore (1965) found that high-wage firms
were most likely to use temporary help agencies; Mangum et al (1985) found that
the use of agency temporaries (who do not receive benefits) was greater in firms
that had a higher fringe benefit cost structure; and Houseman (1997) found that
establishments that provided more fringe benefits to their regular employees were
significantly more likely to use temporary help agencies.
Control of Temporary Workers The defining characteristic of the temporary help
industry is the triangular employment relationship (CÂ´ordova 1986, Moberly 1987,
Gonos 1997, Vosko 1997), in which the temporary agency is the legal employer,
while the client organization supervises the employee. This raises complex legal
issues as to which organization is responsible for complying with governmental
regulations and especially as to who is liable for accidents and other aspects of
the employment relationship. These debates are often framed around principles
of â€œjoint employerâ€ or â€œco-employmentâ€ (e.g., Axelrod 1987, Tansky & Veglahn
1995). One of the key factors that determine whether or not an organization is
a workerâ€™s employer is the extent to which it supervises the workerâ€™s activity
(Carnevale et al 1998). In order to avoid being considered a joint employer (and thus
being liable for some employer responsibility), clients employing temporary help
agencies (and contract companies) often use buffers to differentiate the way they
treat contractors and regular employees (Jarmon et al 1998). The most severe buffer
is time, specifying that the temp must leave after a fixed time period (Smith 2000).
The problem of control over temporary help agency workers is rooted in the need
to manage individual workers dispersed over multiple job sites, since temporary
NONSTANDARD EMPLOYMENT RELATIONS 349
workers have multiple bosses and are separated from their co-workers. This control problem differs from those explained by theories that assume that wage work
takes place at the employerâ€™s place of business (e.g., industrial models of bureaucratic controlâ€”Collinson 1987). Gottfried (1991) found that temporary help
agencies developed a dualistic form of control characterized by both centralization and decentralization. This dualistic control process involved a process of
selection and transmission of information, employee recognition programs, and
maintenance of uncertainty to retain the temp agencyâ€™s control between assignments. It also included a fragmented labor process at the client site that isolated
temps from regular workers to prevent temps from internalizing norms of output restriction. Cohen & Haberfeld (1993) found that temporary help agencies
could not monitor their workers directly. Hence, they relied either on professional credentials for occupations where performance can be assessed (bookkeepers) or steep wage progressions (albeit from a very low base) as incentives in cases where performance could not be assessed very accurately (clerks).
Peck & Theodore (1998) showed how temporary help agencies may take over
supervision and performance monitoring at the high end of the temporary help
These problems of control make it difficult for unions to organize temporary
help agency employees. Unless the client and temporary help agency (or contract
company) are considered â€œjoint employers,â€ the client can fire employees of the
temporary help agency (or contractor) for joining a union. In addition, the capacities for collective opposition against an employment system characterized by
temporary jobs are limited by structural divisions within the ranks of temps that
are created by the systems used to control them (Smith 1998).
Careers of Temporary Workers For many workers, working as a temporary is
often temporary. However, the extent to which temporary workers are able to
obtain permanent jobs is an unresolved issue. Segal & Sullivanâ€™s (1997b) analysis
of administrative data from the unemployment insurance system of Washington
State showed that about 58% of agency temps found permanent jobs by the end
of six quarters; the remaining 42% either became unemployed, dropped out of the
labor force, or remained with the agency. Using Current Population Surveys (CPS)
data, Houseman & Polivka (2000) found that approximately 52% of agency temps
had changed employers one year later; this is an upper-bound estimate of those
finding permanent employment, since they might have switched to another temp
agency (see also Segal 1996).
One reason why temps may obtain permanent jobs, either directly with a client (a
â€œtemp-to-permâ€ conversionâ€”Carey & Hazelbaker 1986) or indirectly, is because
they acquire skills (e.g., computer training) and experience with a variety of potential employers. Indeed, the primary motivation of temporary workers is often the
opportunity to acquire skills and experience (von Hippel et al 1997). On the other
hand, Nollen (1996) argues that most temporaries work in jobs that are low-skill
and without career potential, and that temporary employment is adverse to human capital development by either the staffing company or client (see also Dale &
Bamford 1988). In any event, having temporary work is often better than not having
a job at all (Lenz 1996, Segal & Sullivan 1997a).
Hiring temporary workers may affect the mobility of permanent workers, as is
suggested by Barnett & Minerâ€™s (1992) analysis of career interdependence between
core and temporary workers in a large US utility company. They found that the
presence of temporary help agency employees slowed mobility among permanent
workers in lower ranks and increased it among advanced workers.
Quality of Temporary Jobs Temporary workers earn, on average, lower wages
than regular workers (Segal & Sullivan 1997a), roughly one third less overall in the
United States in 1994 (Nollen 1996). However, there is considerable heterogeneity
in the wages that temporary workers receive (Williams 1989), as well as in the
characteristics of temporary work more generally (Feldman et al 1995, Gallie et al
1998). Salaries of temporaries vary considerably by occupation and are sometimes
higher than those of regular employees (Gannon 1974). Thus, temporary clerical
workers are generally employed at lower wage rates than their permanent counterparts, and temporary industrial workers often receive much lower pay. On the
other hand, engineers and technicians who are temporaries often earn more than
their counterparts in regular jobs (Carey & Hazelbaker 1986). Cohen & Haberfeld
(1993) found that some temporaries (bookkeepers) were similar to regular fulltime workers with regard to wages and their determination, while temporary clerks
resembled more those in secondary market jobs.
Temporaries usually receive fewer fringe benefits than do regular workers
(Gannon 1974, Segal & Sullivan 1997a, Kalleberg et al 2000). Temporary workersâ€™
fringe benefits are very limited, even in occupations where they may earn more than
regular workers such as engineers and technicians (Carey & Hazelbaker 1986).
Contract companies, in contrast to temporary help agencies, supervise their employeesâ€™ work, though, as our discussion above of co-employment suggests, the
degree of control exercised by the client may not always be clear-cut. Employees
of contract companies may work either at the clientâ€™s site or offsite (the latter is often called subcontracting) (Purcell & Purcell 1998). Until recently, subcontractors
were independent businesses that provided a product or service; since the mid1980s, subcontractors increasingly provide employees as well (Axelrod 1987).
Contracting arrangements are used for various reasons: to meet increased demand,
to provide skills that are not available in-house, and to reduce costs (Holmes
1986); these reasons may overlap, as shown by Harrison & Kelleyâ€™s (1993) study
of subcontracting in the metalworking industry.
Incidence and Trends While contract work has always existed in some industries, such as construction, there has been an increase in the purchase of services
(especially business services and engineering and management services) by US
NONSTANDARD EMPLOYMENT RELATIONS 351
firms since the 1970s (Clinton 1997). As firms began to contract out services that
were previously done in-house, they gained a greater appreciation of the variety
of services that could be contracted and realized that business service organizations could often supply these services more cheaply and efficiently (Abraham &
Taylor 1996). Consequently, it is likely that the trend toward contract companies
to supply business services (advertising, consumer credit reporting and collection,
mailing and stenography, maintenance and cleaning, personnel supply, computer
and data processing, protection, research and development) will continue. Largescale companies will continue to subcontract part of their production to smaller
concerns. New organizational formsâ€”such as network organizations, joint ventures, and strategic alliancesâ€”will also increase organizationsâ€™ opportunities to
contract out work.
The trend toward greater subcontracting also characterizes all major west European countries (Brewster et al 1997, Tregaskis et al 1998). France and Italy are
two countries with strong traditions of small-scale enterprise, and in which there
are abundant opportunities for subcontracting (Goldthorpe 1984). In the United
Kingdom, outsourcing has grown substantially in the 1990s after agencies in the
public sector were required in the 1980s to go through a process of competitive
tendering for catering, laundering, and domestic services (Rees & Fielder 1992).
Some employees who were transferred to subcontractors found that it enhanced
their careers by providing them with opportunities to improve their skills. Indeed,
clients increasingly expect in-house contractors to provide training for their employees (Purcell & Purcell 1998).
Rees & Fielder (1992) studied the process of subcontracting in two service
industries in the United Kingdomâ€”contract cleaning and cateringâ€”and found
that organizations in these industries reorganized their work differently. In cleaning, improved service quality was sought through a labor intensification strategy
involving more intense supervision and changes in organization of recruitment.
People were selected from the external labor market based solely on their social
characteristics. In catering, service quality improvements were sought through developing and retaining a high-quality staff by means of training and development
within internal labor markets.
Benson & Ieronimo (1996) compared the outsourcing of maintenance work of
Australian-owned firms to Japanese manufacturing firms operating in Australia.
The Australian-owned firms sought to improve their flexibility via externalization
(subcontracting), while Japanese firms sought to enhance flexibility via internalization strategies. Industrial relations issues such as labor rigidity, restrictive work
practices, and demarcation disputes were central to outsourcing decisions.
Abraham & Taylor (1996) found that contracting saved costs especially when
used for activities done by an organizationâ€™s noncore workforce. They reasoned
that there is little reason to pay high wages to workers who are easily monitored
and replaced, or who perform work (such as janitorial services) that is peripheral to
an organizationâ€™s main activity. Gramm & Schnell (1998) found that organizations
that had a low-cost producer strategy and whose core employees had a high relative
wage (measured by the ratio of core employeesâ€™ wages to average wages of production employees in the industry) were more likely to use subcontractors in core
Control of Contract Work Contract employment also raises questions about who
controls the employee, gives orders, directs work, hires and fires. A dramatic illustration of the dilemma of control was provided in the petrochemical industry, in
which contract workers are a significant component of the workforce, being used
to deal with fluctuations in demand for turnaround, renovation, and maintenance
work (Rebitzer 1995). A major accident in this industry spurred investigations of
contract work (Kochan et al 1994), which found that managers of petrochemical companies were advised by their lawyers not to train contract workers or to
supervise them closely, in order to avoid co-employment liabilities. This created
a fragmented system of managerial responsibility for training, supervising, and
overseeing direct-hire vs. contract workers. To avoid co-employment, clients simply specified what they wanted done, not how to do it. Clients assumed that the
contract companies trained their employees. This was often a dubious assumption
that resulted in more accidents involving contract workers (Rebitzer 1995). These
studies highlight some of the negative aspects of using contract workers, such as
lack of training, low trust, and low commitment. There were also tensions between
direct-hire and contract workers, and between management and labor, as unions
charged that contract workers were used to reduce unionsâ€™ presence in firms and to
provide cheaper (at least in the short term) and less trained workers (Kochan et al
Rousseau & Libuser (1997) discuss the issue of contingent workers in high-risk
environments more generally, suggesting that risk is highest when using temporaries and contractors because they are external (â€œoutsideâ€) employees who are
with the organization for only a short time. They suggest that the higher risks
associated with the use of contingent workers are rooted in characteristics of the
workers themselves (contingent workers tend to be younger, less experienced, and
less well-trained) and in the failure of management to adopt appropriate structures
for reducing risk. Managers can reduce risk by using structures characteristic of
high-reliability organizations (air traffic control, naval aviation) and strategies such
as developing quality relations with only a limited number of contractors.
Pearce (1993) found that the presence of contractors in a large US aerospace
company was associated with less employee trust in the organization. While contractors (aerospace engineers) earned more than regular employees, they had less
job security and often had to move to different geographical locations in order
to keep working throughout the year. However, she found no difference between
contractors and regular employees with regard to behaviors such as willingness to
help with extra tasks and organizational commitment, which she interpreted as due
to contractors taking on the norms of the teams in which they worked. Jarmon et al
(1998) found that â€œcontractorsâ€ (actually, employees of temporary help agencies) in
high-technology settings in the United States performed overall as well as regular
NONSTANDARD EMPLOYMENT RELATIONS 353
comparable employees and that managersâ€™ perceived overall contractor performance seemed unaffected by amount of buffering maintained by the organization.
Types, Incidence, Trends
Employers may hire some workers directly on a temporary basis, either for a short
time on fixed-term contracts (which have a fixed ending point, determined by
completion of task or date) or an on-call basis (e.g., substitute teachers). While
the doctrine of employment at will in the United States implies that almost all
employment is in principle temporary (Summers 1997), the employment relation
is generally assumed to be permanent or at least nontemporary for an indefinite
period unless it is explicitly designated as fixed-term or temporary.
In the United States, there is a lack of good data on the incidence and trends
of short-term employment. A rough estimate is that 3.3 million workers (3.1%
of the employed) were direct-hire temporaries in 1995 (Polivka 1996b). Polivka
speculates that much of the growth of temporary help agencies (see above) may
reflect a shift from firms hiring their own temporary workers directly to relying
on outside agencies for them. If this is true, then the growth of the temporary
help services industry overstates the increase in temporary work. This explanation
would also help to reconcile data on the explosion in temporary help agency
employment with the finding that aggregate job retention rates remained fairly
stable in the United States since the 1970s (though there have been relative declines
in job stability for some groups, such as high school dropouts, high school graduates
relative to college graduates, and blacks relative to whitesâ€”Diebold et al 1997).
In Europe, temporary employment is usually equated with fixed-term contract
employment. The number of people on temporary contracts has increased in the
European Union by some 25% in the past decade, though this still represents only
11.5% of employees and there is significant country variation in this (De Grip
et al 1997, Reilly 1998, SchÂ¨omann et al 1998). Fixed-term contracts have been
particularly important in countries where employers have difficulty terminating
contracts of indefinite duration. This suggests that labor market rigidities can lead
to the greater use of temporary workers. For example, the proportion of fixed-term
contracts more than doubled between 1985 and 1996 in Spain and France (which
had 34% and 13% fixed-term contracts in 1996, respectively), two countries that
have strong restrictions on dismissals of regular workers (Fagan 1999). Spain also
has severe limits on the use of temporary help agencies. On the other hand, there
was no increase in fixed-term employment in the United Kingdom and Germany
between 1985 and 1996 (which remained at about 7% and 11%, respectively), and
some countries (e.g., Belgium, Greece, Luxembourg, and Portugal) experienced a
decrease in fixed-term employment during this period (Fagan 1999).
Temporary work in Europe has generally grown less than part-time work and
plays a lesser role in the overall labor market. There are also smaller inter-country
differences in temporary than in part-time employment. Moreover, unlike parttime work, temporary employment does not seem to mitigate unemployment, being
rather an indicator of weak worker labor market position (especially among youth)
in periods of high unemployment (De Grip et al 1997).
Organizationsâ€™ Use of Short-Term Temporaries
About 38% of US establishments use short-term hires (Houseman 1997). Employers appear to use short-term hires mainly to deal with seasonal demands, as well
as to provide staffing for special projects and unexpected increases in demand, and
to fill in for regular employees who are absent (Houseman 1997, Davis-Blake &
Uzzi 1993). Organizations with a low-cost producer strategy are also more likely
to use direct-hire temporaries in core occupations (Gramm & Schnell 1998). Uzzi
& Barsness (1998) found that older organizations were less likely to use fixed-term
temporaries in Britain.
Using temporary workers is not always beneficial for organizations (Delsen
1995). Geary (1992) found that the use of temporary workers by three US firms
operating in Ireland led to considerable conflict between permanent and temporary
workers as well as between management and labor. Nollen (1996, Nollen & Axel
1996) found that temporary work is not always cost-effective, since the productivity
of temporaries may be lower than that of regular workers. Using temporaries could
also result in a waste of training from the organizationâ€™s point of view.
Employers in different countries may use temporaries for different reasons, as
Casey et al (1989) showed in their study of temporary workers in Britain and the
(then) Federal Republic of Germany. British employers were more likely to use
temporaries to obtain numerical flexibility, in order to increase or decrease their
workforce size. German employers sought instead to obtain functional flexibility
(the ability of employees to do a variety of tasks) by giving temporaries permanent
contracts once they acquired the needed skills.
The notion of contingent work is related to short-term, unstable employment. The
label of contingent work was first coined at a 1985 conference on employment security by economist Audrey Freedman, who used it to refer to work arrangements
that were conditional on employersâ€™ needs for labor and thus lacked an attachment between employer and worker (Freedman 1996). Unfortunately, the term has
often been equated with nonstandard employment relations more generally (e.g.,
Belous 1989, Blank 1998), which is often misleading since nonstandard work
arrangements may differ considerably in their degree of employment security.
Contingent work may be defined as â€œany job in which an individual does not
have an explicit or implicit contract for long-term employment or one in which the
minimum hours worked can vary in a nonsystematic mannerâ€ (Polivka & Nardone
1989:11). This influential definition was the basis of an important program of data
collection undertaken by the Bureau of Labor Statistics (BLS) in their Contingent
NONSTANDARD EMPLOYMENT RELATIONS 355
Work Supplements to the February Current Population Surveys (CPS) in 1995,
1997, and 1999. (BLS plans to repeat this supplement every two years.) Based
on data from the first of these surveys, Polivka (1996a) estimated the number
of contingent workers in the United States as being between 2.2% (2.7 million
workers) and 4.9% (6 million) of the labor force. These estimates are considerably
lower than those of the proportions of workers in nonstandard jobs, which is
consistent with the view that many workers in alternative arrangements do not
really have contingent jobs (see Kalleberg et al 1997). A comparison of the 1995
and 1997 surveys suggests that the number and proportion of contingent workers
has declined, perhaps due to the expansion of the economy and tightening of the
US labor market in the late 1990s (Hipple 1998).
Contingent work may affect workersâ€™ psychological experiences, though the
nature of this relationship has not yet been well established. Beard & Edwardsâ€™
(1995) literature review suggests that contingent workers are more likely to experience job insecurity and unpredictability, to have low control over their work and
transactional psychological contracts, and to perceive themselves as disadvantaged
relative to noncontingent workers. Other studies have found few differences between contingent and noncontingent workers in their organizational commitment
(Pearce 1998). Van Dyne & Ang (1998) speculate that this may reflect the involuntary nature of contingent employment in the United States, where contingent
workers may display positive work attitudes in the hopes of obtaining regular jobs.
Accordingly, their comparison of work attitudes between contingent (temporary
or on-call) and regular employees in Singaporeâ€”a country with labor shortages
where contingent status is voluntaryâ€”found that contingent workers engaged in
fewer organizational citizenship behaviors such as helping coworkers.
Contingent work may benefit organizations by helping to import valuable
knowledge into the firm, such as public knowledge about industry best practices.
It can also act as a catalyst to generate new private knowledge. (On the negative
side, it can also help to leak private knowledge into the public domain.) Firms in
dynamic environments characterized by extreme competition are most likely to
benefit from using contingent workers, while organizations in environments that
are stable and characterized by mild competitive pressures are least apt to benefit
from contingent workers (Matusik & Hill 1998).
Independent contractors are self-employed; they have neither an employer nor a
wage contract and are responsible for their own tax arrangements. However, not
all self-employed persons consider themselves to be independent contractors. For
example, small shopkeepers who work at a fixed location are not likely to call
themselves independent contractors. Moreover, many independent contractors are
not capable of appropriating surplus value produced by labor but represent instead
a form of disguised wage labor whose only capital is their tools, materials, and
special expertise (Rainbird 1991).
Independent contractors are not employees. Unlike employees, whose work is
usually defined in terms of labor expended, independent contractors are generally given specifications for the final product or result and they decide how best
to accomplish it (Rebitzer 1995, Summers 1997). Indeed, controlling oneâ€™s own
work, along with bearing the economic risk of their employment, are key criteria
for establishing whether someone is legally an independent contractor rather than
an employee. Despite these conceptual distinctions, it is often difficult to distinguish between a â€œcontract for serviceâ€ (self-employed) and a â€œcontract of serviceâ€
(employed) (Purcell & Purcell 1998).
A client obtains several important advantages from hiring an independent contractor rather than an employee. Clients are not â€œvicariously liableâ€ for the actions
of independent contractors in the same way as they are for their own employees
(Rebitzer 1995). In addition, clients are not required to provide independent contractors with fringe benefits or to pay them unemployment compensation, Social
Security, or workmanâ€™s compensation taxes. These advantages have often led to
abuses: the US Internal Revenue Service (IRS) estimates that as many as 38% of
employers misclassify their employees as independent contractors to avoid paying
payroll taxes, despite the fact that many of these â€œindependent contractorsâ€ have
only one â€œclientâ€ who is their real employer (duRivage 1992). A landmark case
related to the classification of contractors was Vizcaino v. Microsoft, in which the
US Court of Appeals for the Ninth Circuit used a common-law definition of â€œemployeeâ€ to require Microsoft to treat a group of â€œindependent contractorsâ€ (who
worked on projects often exceeding two years) as employees for tax purposes
(Monthly Labor Review 1997).
Incidence and Trends
Relatively few hard data exist on the incidence of independent contractors within
the US labor force. Perhaps the best estimates come from the February 1995 and
1997 Supplements to the CPS: nearly 7% of the US labor force identified themselves as independent contractors in each year (Cohany 1998). Unfortunately, these
estimates are based on self-identification rather than on objective criteria such as
those used by the IRS or other agencies. An additional 5% to 6% of CPS respondents identified themselves as self-employed but not independent contractors in
these two years, suggesting that there is not a perfect correspondence between
peopleâ€™s understanding of these two work arrangements. Nevertheless, the best
time-series data related to independent contractors are probably those on selfemployment. These data suggest relatively little change in the proportion of the
US labor force that is self-employed since 1970 (Bregger 1996). Self-employment
growth also correlates only modestly with aggregate employment growth (Segal
Despite the absence of direct information on trends in independent contractors,
it is likely that this category of nonstandard work has increased in the past several
decades. Changes in tax laws in particular have generated growth in this category
NONSTANDARD EMPLOYMENT RELATIONS 357
of nonstandard work. The â€œsafe harborâ€ provision of the 1978 Revenue Act helped
to ensure the status of real estate brokers and members of other occupations as
independent contractors. In addition, the 1982 Tax Equity and Fiscal Responsibility Act required many brokers who had formerly been employees to become
independent contractors (Thomas & Reskin 1990, CarrÂ´e & Joshi 1999).
Russell & Hanneman (1997) found that the use of independent contractors in
Russia is similar to patterns observed in the west (Davis-Blake & Uzzi 1993): larger
firms in Russia are less likely to use a high proportion of independent contractors.
To the extent that private businesses make greater use of independent contractors
than do state-owned businesses in Russia, then, it is because private firms are
Independent contractors tend to prefer this work arrangement to traditional employment (Cohany 1998). Many independent contractors earned higher wages than
workers in traditional arrangements but were less likely to receive health insurance and pensions (Kalleberg et al 1997, Kalleberg et al 2000, Hipple & Stewart
1996). Kahn (1998) suggests that increased competitiveness in occupations with
substantial numbers of independent contractors or self-employed persons may
have contributed toward decreasing inter-industry wage differentials in the 1990s,
though she notes that there were too few of these nonstandard work arrangements
to explain the large drop in inter-industry wage differentials.
Some independent contractors conform to the image of â€œportfolio workersâ€
(Handy 1990) who move from one firm to the next. Hakim (1994) describes this
phenomenon as reflecting the fact that â€œwe are all self-employedâ€ both inside and
outside organizations. DiTomaso (2001) describes the structural arrangements in
which many of these workers work as loosely coupled systems, also called webs,
networks, alliances, spin-offs, and new ventures. This phenomenon is illustrated by
the case of Silicon Valley, where many highly skilled employees prefer working as
independent contractors, since this status enables them to benefit from their ability
to move among firms. Carnoy et al 1997 (see also Kunda et al 1999) describe
the individualized, flexible employment defined by human capital portfolios of
these workers, as opposed to stable, permanent jobs. Tight labor markets help
independent contractors to move between workplaces filling particular positions
on demand or providing labor services as needed.
FUTURE DIRECTIONS FOR RESEARCH ON
NONSTANDARD EMPLOYMENT RELATIONS
Measuring Nonstandard Work Arrangements
Progress in understanding the nature and consequences of nonstandard work requires more valid and reliable measures of these work arrangements. For instance,
indicators of whether a person is an independent contractor need to go beyond
mere self-identification, yet be more amenable to survey research than the Internal
Revenue Serviceâ€™s 20-factor test. Such measures should help to refine the distinctions between independent contracting and self-employment more generally, as
well as to differentiate independent contractors from employees.
In addition, we need better measures of fixed-term temporary contracts and
of the nature of the psychological contracts that encompass employeesâ€™ and employersâ€™ understandings of the employment relation. More sophisticated indicators
of workersâ€™ relationships to temporary help agencies and contract companies are
also necessary to appreciate better the content and complexity of these relations.
Further, we need to understand better the heterogeneous nature of part-time work.
The Quality of Nonstandard Jobs
Much of the controversy and concern about the rise in nonstandard work arrangements is due to the assumption that they are associated with bad jobs. Most analyses
have shown that nonstandard work arrangements vary in their wages: Some nonstandard jobs (such as contract work) often pay better than standard work, while
other kinds of nonstandard work (especially part-time and temporary work) pay
relatively poorly (see Kalleberg et al 2000, Ferber & Waldfogel 1998; but see
Blank 1998). There is substantial agreement, though, that nonstandard work arrangements are associated with the lack of health insurance, pensions, and other
fringe benefits. This is particularly problematic in the United States since employment is the main source of these benefits. Further research is needed on the
heterogeneity within nonstandard work arrangements in wages and fringe benefits.
Additional research is also needed on the relations between working in nonstandard arrangements and careers. How common, for example, are â€œtemp-to-permâ€
contracts? Nonstandard working arrangements may be beneficial for workers if
such employment enhances their skills and enables them to adapt to the rapid
changes occurring in labor markets. Studies are also needed of the role of employment intermediaries in helping people make transitions from welfare to work.
Triangular Employment Relations
The emergence of triangular employment relations constitutes a major challenge to
labor law, unionization, and other aspects of industrial relations systems. Theories
of control systems also need to be revised to take into account the opportunities
and challenges posed by co-employment and joint employer arrangements. Issues
of who should provide training to workers emerge as critical public policy questions as well as matters of concern to employers and their employees. The effects
of triangular employment relations on collective bargaining and unionization are
particularly potentially devastating: The detachment of employees from their employers makes it difficult for unions to organize, and the existence of multiple
employers provides them with leverage against unions.
Research also needs to understand better the inter-organizational networks
that underlie triangular employment relations. Linkages between temporary help
NONSTANDARD EMPLOYMENT RELATIONS 359
agencies and contract companies, on the one hand, and client organizations, on
the other, are just beginning to be studied systematically. The interrelations among
employment intermediaries themselves also deserve careful scrutiny.
Organizationsâ€™ Staffing Practices
Nonstandard work arrangements reflect organizationsâ€™ attempts to achieve flexibility by externalizing some of their activities (Pfeffer & Baron 1988). The focus
on externalization contrasts with the dominant concern of organizational analysts
during the postâ€“World War II period, which was with how employers internalize
their workforces to develop their skills and protect them from competition in external labor markets. We need to know more about the conditions under which
organizations externalize their workforces. We also should explore the interrelations among the various types of nonstandard work arrangements, such as the
extent to which these are complements or substitutes for one another.
However, the focus on externalization does not mean that processes of internalization can be neglected. Research is particularly needed on the bundles of practices
that employers use to accomplish their human resource goals. The core-periphery
model suggested by Atkinson (1985) and debated and refined by others offers
a useful hypothesis for assessing systematically organizationsâ€™ human resource
The growth of interest in nonstandard work arrangements in recent years serves
to highlight the complexity of the relations between employers and their employees. The employment relation is potentially a very fruitful conceptual meeting
place for research that seeks to merge macro and micro levels from a variety
of disciplines, including economic, sociological, and psychological research on
work, labor markets, organizations, and the linkages between these structures and
individuals. In the coming decades, social science research on these topics will
increasingly come to appreciate the utility of a focus on employment relations for
understanding work-related issues.
I thank Eileen Appelbaum, Lonnie Golden, Susan Houseman, Barbara Reskin, and
Vicki Smith for their comments on earlier versions.
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