RESEARCH Business Labor

WORKFORCE
Productivity, not profits, rises with increasing use of part-timers

Mark Reutter, Business Editor
(217) 333-0568; mreutter@uiuc.edu

6/1/2000

CHAMPAIGN, Ill. -- The use of "contingent" workers in the United States has increased labor productivity but not necessarily employer profits, according to a wide-ranging study by scholars at the University of Illinois and other institutions.

One of the most striking changes in recent years has been the emergence of part-time, on-call, free-lance and other workers. Collectively known as "contingent" workers because they work under terms that differ from regular full-time employment, they constitute the fastest growing segment of the labor market. As many as 40 million Americans now work under such arrangements.

The nature and implications of contingent work are the subject of a book to be published by the Industrial Relations Research Association, whose national office has moved to the UI Institute of Labor and Industrial Relations.

"During the 1990s, the hallmark features of the labor market, including long-term mutual attachments of a firm and a worker, have been fading," notes Marianne Ferber, UI professor emerita of economics who is co-editing the book. "There is a good deal of disagreement not only about the extent of the changes in employment arrangements, but about their advantages and disadvantages for workers, employers and the economy."

Thirty researchers have contributed to the upcoming IRRA book, and their research papers draw a number of conclusions, including:

Employers rather than employees favor non-standard work arrangements.

As measured by wages, productivity, legal risks and ease of discharge, non-standard "flexible" work benefits employers. These benefits, however, have not so far been translated into a measurable increase in employer earnings.

Not all non-standard jobs are of poor quality. In particular, older men who are self-employed generally earn more than men doing similar work in regular full-time jobs.

An important predictor of the earnings of non-standard workers is education. Well-educated contingent workers are typically well paid, such as the "permatemps" at Microsoft Corp., but they do not generally receive the same level of health insurance and retirement benefits as regular full-time employees.

Gender and race heavily affect the earnings of contingent workers. Unmarried, less educated, black women who live in central cities are among the most rapidly increasingly market for non-standard jobs -- and the most poorly paid relative to full-time standard employment.

The researchers further found that in some sectors, such as electronics manufacturing and insurance, employers are retaining or returning to full-time employment contracts to keep skilled personnel and to improve service and stability.