In the last two decades, the percentage of total U.S. employment in temporary help service firms has increased four-fold, rising from less than 0.5 percent in 1982 to almost 2.0 percent in 1996. Such mediated employment frequently offers less job stability, fewer fringe benefits and, for many low-skilled workers, substantially lower wages than traditional jobs. In addition to these concerns, the growth in the temporary help service industry has led to speculation that one of the causes of the relative deterioration in wages for low-skilled workers over this period is the substitution by “end-user” firms of low-wage workers employed by temporary help service firms for better-compensated permanent workers. On the other hand, for many low-skilled workers, employment through labor market intermediaries may provide a path to permanent and stable employment. By limiting the extent of employer commitment, such jobs may provide access to informal training and screening for workers who might otherwise be excluded from such opportunities.
In order to examine whether employment in the temporary help industry actually helps or hurts workers in the long-run, we explore the subsequent employment dynamics of workers who work in this industry and compare their experience with the experience of workers who either do not have a job or who have a job in an end user firm. The analysis here focuses on the impact of holding a temporary help job for individuals who have sought employment assistance or cash support through any of three state-federal programs in Missouri. We look at employment in the quarter following their first contact with any of these programs and examine how the type of job obtained at this point influences employment two years later.
Our first program is Temporary Assistance for Needy Families (TANF), the state’s “welfare” program, which experienced major reform in the 1990s. The next program is the Job Training Partnership Act (JTPA), a federally financed program that provides job skills training with an emphasis on disadvantaged workers. Finally, we consider those seeking job exchange and related services under the federal Wagner-Peyser Act, through the state’s Division of Employment Security (ES). In each case, we consider those who begin participation during calendar year 1997. The analyses are conducted separately for men and women. For most participants in these programs, entry into the program identifies a point of potential crisis in their lives or careers. Our analysis allows us to consider the role that temporary employment plays at such critical junctures.