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U.S. Labor Gets Flexible...

Economic Trends


Long-term jobs are waning

Two recent surveys underscore an ongoing debate about one of the most controversial U.S. labor market trends--the degree to which traditional work schemes offering regular long-term jobs are being replaced by more flexible, "contingent" arrangements under which workers are hired on a temporary or sporadic basis.

According to a detailed Conference Board canvass of some 93 major multinational companies, mostly U.S.-based, employment of contingent workers is already a well-entrenched policy. More than half of the respondents say they regularly employ on-call hourly part-time workers. And 84% to 90% use independent contractors and make regular use of temporary workers, either hired directly or supplied by agencies.

Further, such use is growing rapidly (chart). Within five years, no fewer than 35% of multinationals expect contingent workers to make up at least a tenth of their workforce--a trend fostered both by the need for labor force flexibility to meet demand fluctuations and by head-count restrictions imposed on managers in an era of continued downsizing.

Still, there's some question as to how widespread this trend really is. According to a household survey conducted by the Bureau of Labor Statistics in early 1995, only 6 million people, or about 4.9% of the workforce, are contingent workers. That's using the agency's widest definition, which counts all workers who expect their jobs to end within the next year or two.

The BLS also reports that about 10% of workers are now employed under what it terms "alternative arrangements"--including independent contractors and freelancers, on-call workers and day laborers, and workers for temporary-help agencies and contract firms. But it notes that not all such workers meet its definition of contingent.

Many experts feel the BLS definition is too narrow. For example, some would count the 4.4 million part-timers whose current jobs aren't in jeopardy but who would prefer full-time work.

What's indisputable is that workers themselves are far from happy about the growing trend toward contingent employment. Two-thirds of contingent workers interviewed by the BLS said they would rather have regular, permanent jobs. Those who didn't mind the arrangement were mainly students.BY GENE KORETZReturn to top

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Female part-timers are the key

Contingent work arrangements are on the upswing in Japan also. In a recent article in the Monthly Labor Review, economists Susan Houseman and Machiko Osawa report that part-time employment there jumped more than 80% between 1982 and 1992 and now accounts for more than 16% of the nation's workforce. And temporary workers, mainly those hired directly by companies on short-term contracts, compose another 11.5% of workers.

Tax breaks have bolstered the trend. Most part-time and temporary workers in Japan are married women, and secondary household earners who make less than $13,000 or so a year don't have to pay income taxes on their earnings. At the same time, Japanese employers don't generally have to pay unemployment, pension, and health insurance taxes for part-timers and temps.

Greater use of part-timers and temporary workers allows Japanese business to gain flexibility and hold down labor costs at a time of unprecedented economic pressure. It also helps explain the continuing survival of such traditional employment practices as lifetime job security and promotion based on seniority for regular "core" workers.BY GENE KORETZReturn to top

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