Monthly Labor Review October 1996 55

Into contingent and alternative

employment: by choice?

Anne E. Polivka is a

research economist in

the Office of Employment Research and

Program Development, Bureau of Labor

Statistics.

Workers enter contingent and alternative arrangements

from many different activities and for a wide variety

of reasons; while some workers are involuntarily

in such arrangements, as a proportion

of the employed, they are relatively few

Recent reports of corporate downsizing,

the growth of temporary help agencies,

and the phenomenon of “outsourcing”

have fueled the perception that the number of

contingent workers and workers in alternative

work arrangements is increasing. In addition to

participating in debates over the number of workers in such arrangements, economists are interested in the long-run effects of these arrangements on individuals’ employment patterns and

labor market behavior. Some have argued that

being a contingent worker or being in an alternative work arrangement consigns a person to the

bottom of the economic ladder, where the worker

experiences frequent job changes and has little

economic security and no hope of economic advancement.1

 Further, proponents of this position

argue that, as a result of the apparent growth in

the number of contingent workers and those

working in alternative work arrangements, the

economic hardship associated with these types

of jobs is increasing. Others argue, by contrast,

that contingent employment and alternative work

arrangements offer individuals pathways into the

labor market that they otherwise would not have,

as well as flexibility that helps them balance work

with other, non-labor-market obligations. Without contingent work and alternative work arrangements, these observers insist, individuals

with poor access to jobs or with conflicting needs

would either be unemployed or drop out of the

labor force altogether.2

 Proponents of these types

of work arrangements also go so far as to argue

that some alternative work arrangements, such

as temporary help service employment, offer individuals more stable employment and greater

chances for upward job mobility than they would

be able to obtain on their own.3

 Implicit in the

discussion of the growth of contingent and alternative work arrangements and their effect on individuals' labor market prospects is the notion

that the job market has undergone a fundamental

shift in the last several years. The importance of

internal labor markets, it is argued, has declined,

and employers have altered the ways they hire

and fire workers.4

Using data from the February 1995 supplement

to the Current Population Survey (CPS) on contingent workers and workers in alternative work

arrangements, this article explores the effect of

such employment arrangements on individuals’

positions in the labor market. It begins by examining the importance of these arrangements for

those who started in their current work relationship relatively recently and goes on to consider

what these individuals were doing prior to entering into that relationship. The article then investigates the preferences of all contingent workers

and workers in alternative arrangements regarding their arrangement, as well as their reasons for

being in that type of employment relationship. All

this information is used in various combinations

to construct several measures of the proportion

of those employed who involuntarily entered into

Anne E. Polivka

Contingent Employment: By Choice?
56 Monthly Labor Review October 1996

Contingent Employment: By Choice?

either a contingent or an alternative work arrangement. As a

further measure of individuals’ satisfaction or dissatisfaction

with their current work arrangements, the article proceeds with

an examination of the proportion of contingent workers and

workers in alternative work arrangements who are looking

for a new job. Finally, to obtain a gauge of the importance of

alternative work arrangements in leading to wage and salary

employment directly with a single employer, the article presents the proportion of workers in traditional jobs who started

working for their current employers in an alternative work

arrangement.

In what follows, contingent workers are defined as individuals who do not have an implicit or explicit contract for

long-term employment. As in the article, “Contingent and alternative work arrangements defined,” this issue, three estimates of contingent workers are constructed using CPS data.

Statistics relating to all three estimates are shown in tables;

however, the analysis focuses on individuals classified as contingent under the broadest measure, estimate 3: wage and salary workers who, based on other than personal reasons such

as retirement or returning to school, did not expect their jobs

to last, and self-employed and independent contractors employed as such for a year or less who expected to remain selfemployed or working as an independent contractor for at most

an additional year. When comparisons are made with

noncontingent workers, these workers are defined as individuals who were not classified as contingent under estimate 3.

In addition to collecting information on contingent workers, the February 1995 supplement to the CPS collected data

on alternative work arrangements, where individuals in such

arrangements were defined either as workers whose employment was arranged through an employment intermediary,

such as a temporary help agency, or as workers whose place,

time, and quantity of work were potentially unpredictable.

Four alternative work arrangements were identified in the

CPS: independent contractors, temporary help agency workers, on-call workers, and workers provided by contract companies. Workers who were not in any of these categories were

defined as working in a nonalternative or traditional arrangement. As is pointed out in other articles in this issue, not all

workers in alternative work arrangements are contingent, and

conversely, not all contingent workers are in alternative arrangements. Therefore, by and large, contingent workers and

workers in alternative arrangements are analyzed separately.

Further, because there are large differences among the average workers in the four alternative arrangements, workers in

these arrangements frequently are discussed separately from

each other.5

Recent starters in their arrangement

One concern is that individuals who recently were separated

from their jobs, as well as those who are reentering the labor

market or entering it for the first time, face a substantially

less secure and different job market than did workers in the

past. Table 1 indicates that the rate of contingency among

workers with 3 or fewer years of tenure in their current job

(individuals relatively new to their jobs) was dramatically

higher than the rate of contingency of the population as a

whole (8.8 percent versus 4.9 percent). Further, this relationship also held for those not enrolled in school and those 25

years and older—individuals who were more likely to be on

“permanent” career paths or in adult vocations.

The proportions of workers with 3 or fewer years of tenure

who were in alternative work arrangements also were higher

than those of workers with more than 3 years of tenure, with

the exception of independent contractors. (See table 1.) The

proportion of workers with 3 or fewer years of tenure who

were independent contractors was 5.2 percent, compared with

8.0 percent for those with more than 3 years of tenure. Further, independent contractors tended to be older than workers

in traditional arrangements, and there is evidence that they

tend to start as independent contractors later in their work

lives: only 1.6 percent of those under age 25 with 3 or fewer

years of tenure were independent contractors, as against 6.6

percent of those 25 years and older with the same tenure.

Research has shown that it takes a measure of labor market

experience and a great deal of human capital to embark on

self-employment, which may explain why independent contractors tend to be older.6

Prior activity of recent starters

On the basis of the higher estimated rates of contingency or

being in an alternative work arrangement (except independent contracting) for workers with 3 or fewer years of tenure,

we might conclude that these individuals entered into such

arrangements involuntarily and were significantly worse off

with respect to the job market than their counterparts with

more than 3 years of tenure. However, before reaching such a

conclusion, it is necessary to examine what those workers

were doing prior to entering into their arrangements.

Contingent workers. One of the concerns surrounding contingent employment is whether, because of corporate downsizing and restructuring, individuals are being forced out of

“good permanent jobs” and increasingly entering into contingent employment. Although not always corroborated by

the evidence, the fear is that the cost of job displacement has

risen.7

 To address this issue, individuals who had been employed for 3 or fewer years were asked a series of questions

to determine what they were doing prior to entering into their

current arrangement. Estimates combining the responses to

these questions for all workers with 3 or fewer years of tenure in contingent or alternative arrangements are presented
Monthly Labor Review October 1996 57

Job tenure of employed contingent workers and those in alternative work arrangements, by age and school

enrollment, February 1995

Age

Total, 16 years and older:

No tenure restriction ................ 123,208 4.9 6.7 1.6 1.0 0.5

 Tenure of 3 or fewer years ....... 54,187 8.8 5.2 2.4 2.0 .9

16 to 24 years:

No tenure restriction ................ 18,056 10.2 1.8 2.1 1.6 .5

 Tenure of 3 or fewer years ....... 15,703 10.9 1.6 2.1 1.8 .6

25 years and older:

No tenure restriction ................ 105,152 4.0 7.6 1.5 .8 .5

 Tenure of 3 or fewer years ....... 38,483 7.9 6.6 2.6 2.0 1.0

School enrollment

Enrolled in school:

No tenure restriction ................ 7,294 14.7 1.7 2.5 .8 .3

 Tenure of 3 or fewer years ....... 6,542 15.2 1.4 2.4 .9 .3

Not enrolled in school:

No tenure restriction ................ 115,914 4.3 7.1 1.5 1.0 .6

 Tenure of 3 or fewer years ....... 47,645 7.9 5.7 2.5 2.1 .9

in tables 2 through 5. Also presented are estimates for those

with 3 or fewer years of tenure who were not enrolled in

school. Only the prior activites of those who were not enrolled in school are discussed in the text. For purposes of

comparison, estimates for all workers in noncontingent or traditional arrangements with 3 or fewer years of tenure and for

those with 3 or fewer years of tenure who were not enrolled

in school are presented.

Examination of the prior work activities of contingent

workers reveals that more than half of those who were contingent under estimate 3 were employed in another job directly prior to becoming contingent. (See table 2.) Further, if

those who had been employed, but then became separated

from their job and undertook a job search directly prior to

becoming contingent, are included, the figure for previous

employment rises to 60.5 percent. Nevertheless, contingent

workers were more likely than their noncontingent counterparts both to have been searching for work without an immediately prior period of employment and to have been out of

the labor force before taking their contingent job. Many of

those who had been out of the labor force were in school or

were attending to personal or family obligations. And while

not the majority, the proportion of workers in either of these

groups who were in contingent jobs was fairly substantial.

For example, a little more than 11 percent of those who reported that they were going to school, and 9.6 percent of those

who said that they were attending to personal or family obligations, prior to working in their current arrangement were in

contingent jobs. Similarly, 11.3 percent of those who were

not employed prior to starting their job search were in contingent jobs. Also, while a relatively small proportion of all contingent workers, former retirees seem to be choosing contingent work as a viable employment option: of those who said

that they were retired prior to starting work in their current

arrangement, 19.2 percent were in contingent positions.

Even among those who had been working prior to taking

contingent jobs (that is, both those working immediately before they took their contingent jobs and those who had a period of job search between their previous job and their contingent one), relatively few appear to have lost “permanent”

jobs. Only 17 percent said that they had lost their jobs prior

to undertaking contingent employment. (See table 3.) This

percentage was only slightly higher than the percentage for

those in noncontingent jobs. Contingent workers, however,

NOTE: Data on tenure of 3 or fewer years exclude persons who did not

report specific tenure, but did report that tenure was more than 1 year. School

enrollment status is asked only of those persons under 25 years. Older persons are assumed not to be enrolled in school.

Percent contingent or in alternative arrangements

Workers in alternative arrangements

Age and school enrollment Contingent

workers

(estimate 3)

Total employed

(thousands)

Independent

contractors

On-call

workers

Workers

provided by

contract firms

Table 1.

Temporary help

agency workers
58 Monthly Labor Review October 1996

Contingent Employment: By Choice?

were much less likely than noncontingent workers to have

quit their previous employment (43.5 percent versus 63.8

percent)8 and much more likely to have been in a temporary

job that ended (23.7 percent versus 9.2 percent). Furthermore,

the immediately previous jobs of contingent workers were

much more likely to be short term than were those of

noncontingent workers: more than 50 percent of contingent

workers had less than 1 year of tenure in their previous jobs,

compared with only 38.4 percent of their noncontingent counterparts. While these data certainly show that some individuals were involuntarily leaving “permanent” jobs for contingent work, they suggest that movements into contingent

employment by individuals formerly not in the labor force

were just as important. And even among those coming to contingent jobs from previous employment, moving from one

contingent job to another may have been as likely as moving

from a “permanent” position to contingent employment.

Independent contractors. Estimates presented in table 4 of

what workers with 3 or fewer years of tenure in an alternative

arrangement were doing prior to their current situation reveal

a wide degree of heterogeneity. Again, independent contractors were strikingly different from workers in other alternative arrangements, as well as those in traditional jobs. Among

independent contractors, 71.8 percent were employed prior

to starting work as an independent contractor, compared with

67.0 percent of workers in traditional arrangements. Further,

the proportions of independent contractors and traditional

workers who voluntarily left their previous jobs were approximately equal (when the written responses coded as “other”

were examined and classified as voluntary or involuntary, as

appropriate).9

 Thus, given that a larger proportion of independent contractors were previously employed, an almost

equal rate of “quits” implies that independent contractors

were somewhat more likely to have voluntarily left their previous employment than were traditional workers.

In addition to having a higher rate of leaving previous

employment voluntarily, independent contractors changed

their work relationships at a different point in their careers

than did workers in traditional jobs. The average tenure for

independent contractors in their previous arrangement was

5.8 years, about 2 years more than the previous job tenure for

workers in traditional arrangements. (See table 5.) Further,

the proportion of independent contractors who had more than

5 years in their previous arrangement was almost double the

proportion for workers in traditional arrangements. This relationship, although somewhat weaker, held for women as well

as men: of women who were independent contractors, 26.9

percent had worked more than 5 years in their previous jobs,

compared with only 16.0 percent of women in traditional arrangements. These differences in previous job tenure further

support the proposal that independent contracting seems to

be a work relationship that is entered into relatively late in

individuals' careers, either because of its demand for finanPrior labor force status of employed contingent and noncontingent workers with 3 or fewer years of tenure in current

job, February 1995

[In thousands]

Total , 16 years and older ........ 2,667 2,037 3,312 2,626 4,757 3,766 49,430 43,879

Employed .................................... 1,324 1,049 1,625 1,338 2,385 1,966 32,101 29,689

Looking for work2 ........................ 656 541 756 626 1,029 862 8,146 6,889

Not employed directly prior

to looking ............................... 426 335 513 411 674 541 5,346 4,248

Previously employed ............... 228 203 241 213 348 314 2,768 2,610

Not in the labor force:

Going to school ....................... 334 117 424 181 655 278 3,974 2,242

Retired ..................................... 45 45 61 61 87 87 366 366

Had personal or family

obligations ............................. 172 162 265 255 325 315 2,998 2,978

Other activities ......................... 90 86 129 122 185 178 1,136 1,093

Status not reported ..................... 46 38 53 43 91 79 709 623

Table 2.

Prior status

Estimate 1 Estimate 2 Estimate 31

Noncontingent workers

Total Total Not in

school

Not in

school

Not in

school

Not in

school Total Total

Contingent workers

of contingent workers. The total number of workers who were contingent

under estimate 1 or estimate 2 is less than the total for the same categories

presented elsewhere because individuals who were both contingent and in

an alternative arrangement were excluded if they had been in an alternative

arrangement for more than 3 years.

1Data exclude persons who did not report specific tenure, but did report

that tenure was more than 1 year. 2

 Subcategories do not sum to total looking for work because there were a

few individuals whose activity directly prior to looking for work was unknown.

NOTE: Noncontingent workers are those who do not fall into any estimate
Monthly Labor Review October 1996 59

cial capital or because of the need for previous work experience, with its accrued human capital skills and professional

networks. This notion is still further borne out by the proportion of retirees who entered into independent contracting. Although only 1.1 percent of all independent contractors with 3

or fewer years of tenure were former retirees, 7.1 percent of

former retirees were independent contractors. The latter figure contrasts with the 5.7 percent of all those with 3 or fewer

years of tenure in their current arrangement who became independent contractors.

Although, by and large, individuals entered into independent contracting from previous employment relationships, a

substantial minority of independent contractors were outside

of the labor market, attending to personal or family obligations, directly prior to starting work as an independent contractor. Almost 11 percent of those with 3 or fewer years of

tenure as an independent contractor were previously attending to personal or family obligations, as opposed to 6.6 percent of those not in alternative work arrangements. From another perspective, 9.0 percent of those who were attending to

personal or family matters prior to working in their current

arrangement were independent contractors. This rate is more

than 1-1/2 times the 5.7 percent of all those with fewer than 3

years of tenure in their current arrangement who were independent contractors. The proportion of female independent

contractors who were attending to personal or family obligations directly prior to starting work as an independent contractor was even higher than that of all independent contractors: about one-fourth of women who had been independent

contractors for 3 or fewer years were previously outside of

the labor market attending to personal or family obligations.

This figure also contrasts with a little less than one-fifth of

women who were in traditional arrangements for 3 or fewer

years and who had been previously attending to personal or

family obligations. These statistics imply that, for some individuals—especially women—independent contracting may

provide a method of balancing the demands of the labor market with non-labor-market obligations.

The only previous activity that was underrepresented

among independent contractors with 3 or fewer years of tenure was looking for work: only 8.0 percent of independent

contractors were looking for work in another type of arrangement prior to becoming an independent contractor, compared

with 16.3 percent of workers in traditional arrangements. This

Previously employed contingent and noncontingent workers with 3 or fewer years of tenure on current job, by

reason for termination and tenure on previous job, February 1995

[Percent distribution]

Total, 16 years and older

(thousands) ............................... 1,552 1,252 1,866 1,551 2,732 2,280 34,869 32,299

Reason for termination1

Percent .................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Lost last job ................................. 14.2 17.0 15.0 17.4 14.9 17.0 13.2 13.7

Quit last job ................................. 42.9 40.9 43.2 41.7 44.9 43.5 64.9 64.4

Temporary job ended .................. 28.3 26.7 26.6 25.1 25.1 23.7 9.6 9.2

Other reasons ............................. 14.6 15.3 15.1 15.8 15.0 15.7 12.2 12.6

Tenure on previous job2

Percent .................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1 year or less .............................. 61.4 58.3 57.5 54.1 53.8 50.3 40.7 38.4

2 years ........................................ 14.7 15.5 14.6 15.3 15.8 16.7 15.6 15.6

3 years ........................................ 6.3 7.2 7.5 8.4 7.5 8.2 10.0 10.3

4 years ........................................ 6.1 6.0 7.0 7.1 7.7 7.6 11.7 12.3

5 or more years ........................... 7.9 9.1 10.4 12.0 11.9 13.7 17.6 18.8

Tenure not reported ..................... 3.7 3.9 3.0 3.1 3.4 3.5 4.5 4.6

Average years of tenure .............. 2.1 2.4 2.5 2.8 2.8 3.1 3.6 3.8

Table 3.

Estimate 1 Estimate 2 Estimate 3

Noncontingent workers

Total Total Not in

school

Not in

school

Not in

school

Not in

school Total Total

Contingent workers

Reason for termination and

tenure on previous job

1 Excludes a small number of persons for whom reason for termination

was not reported.

2 Categories listed include the time span from the next lower integer (but

not including that integer) to the year listed. For example, “2 years” represents a reported tenure greater than 1 year, but less than or equal to 2 years.

NOTE: Previously employed workers include both those who were employed directly prior to the current job and those who had a spell of job search

after the previous job. Noncontingent workers are those who do not fall into

any estimate of contingent workers. Data on tenure of 3 or fewer years

exclude persons who did not report specific tenure, but did report that tenure was more than 1 year. Details may not sum to 100 percent because of

rounding.
60 Monthly Labor Review October 1996

Contingent Employment: By Choice?

smaller percentage is consistent with the notion that it takes

financial resources to become an independent contractor,

which the unemployed might not have, and that independent

contracting is much less likely than other jobs or work arrangements to be a transitory relationship for individuals who

are in between jobs.

Temporary help agency workers. In contrast to the prior activities of independent contractors, those of temporary help

agency and on-call workers indicate that these alternative arrangements are probably serving quite different labor market

functions from those of independent contracting. Among temporary help agency workers, 26.7 percent were looking for

work directly prior to becoming a temporary help agency

worker, compared with 16.3 percent of those in traditional

arrangements. Further, 64.0 percent of temporary help agency

workers who were searching for work reported that they had

not been employed right before their job search.

Almost 58 percent of temporary help agency workers,

however, did report that they had worked at another job directly prior to starting to work for a temporary help firm.

Combined with the percentage of those who reported that they

were employed prior to starting a job search, this figure indicates that almost 67 percent of temporary help agency workers had worked in another job relatively close to the time

they started as a temporary help agency worker. However,

this was considerably below the 73.1 percent of workers in

traditional arrangements with 3 or fewer years of tenure who

were not enrolled in school. Furthermore, an examination of

the reasons that individuals who currently were working for

temporary help agencies left their previous jobs indicates that

42.9 percent either lost their jobs or were in temporary jobs

that ended. Also, of those individuals who had worked prior

to becoming a temporary help agency worker, 53.6 percent

had been in their previous job for less than a year, compared

with only 39.6 percent of workers in traditional arrangements.

The high proportion of temporary help agency workers with

relatively short tenure in their previous jobs, combined with

the comparatively large proportion who had been looking for

work without having been employed directly prior to starting

as temporary help agency workers, suggests that temporary

help agencies may be serving individuals who are having difficulties finding other jobs or who are in other, unstable labor

market arrangements.

On-call workers. A relatively large proportion of on-call

workers said they were looking for work prior to starting as

on-call workers, suggesting that this kind of arrangement also

may be a source of employment for those having difficulties

finding jobs. Among on-call workers with 3 or fewer years in

their arrangement, 24.0 percent said they had been looking

for a job directly prior to starting work as an on-call worker.

Of this 24.0 percent, 56.8 percent reported that they had not

worked in another job just before undertaking their job search.

Prior labor force status of employed workers in alternative and traditional work arrangements with 3 or fewer years

of tenure in current job, February 1995

[In thousands]

Total, 16 years and older ....... 2,792 2,704 1,322 1,166 1,061 1,000 466 448 48,456 42,244

Employed .................................. 1,961 1,941 587 517 606 577 311 306 31,009 28,307

Looking for work1 ...................... 231 216 307 280 285 267 81 77 8,223 6,866

Not employed directly

prior to looking ..................... 134 121 181 159 187 171 55 55 5,433 4,254

Previously employed ............. 97 94 119 114 95 92 26 22 2,762 2,584

Not in the labor force:

Going to school ..................... 182 131 111 53 50 38 21 11 4,252 2,273

Retired ................................... 32 32 32 32 8 8 5 5 376 376

Had personal or family

obligations ........................... 296 296 132 132 61 61 12 12 2,819 2,788

Other activities ....................... 77 74 39 39 34 34 36 34 1,134 1,087

Status not reported ................... 13 13 113 113 16 15 2 2 643 546

Table 4.

Total Not in

school

Total

Not in

school

Not in

school

Not in

school Total Not in

school

Workers in

traditional

arrangements Independent

contractors

On-call

workers

Temporary help

agency workers

Workers provided

by contract firms

Workers in alternative arrangements

Prior status

1

 Subcategories do not sum to total looking for work because there were a

few individuals whose activity directly prior to looking for work was unknown.

NOTE: Workers in traditional arrangements are those who do not fall into

any of the alternative-arrangement categories. Data on tenure of 3 or fewer

years exclude persons who did not report specific tenure, but did report that

tenure was more than 1 year.

Total Total
Monthly Labor Review October 1996 61

Only 44.3 percent of on-call workers reported that they had

been working in another job prior to starting as an on-call

worker, the lowest percentage among all of the alternative

arrangements and almost 23 percentage points lower than the

proportion of workers in traditional arrangements with a tenure of 3 or fewer years. Even including individuals who had

worked prior to searching for another job, only 54.1 percent

of on-call workers were employed in another type of arrangement prior to becoming on-call workers. These figures suggest that, like temporary help employment, on-call work is

an arrangement through which the unemployed can enter the

labor market.

On-call work also may provide individuals with the ability to balance work with other activities. For instance, the

proportion of on-call workers who reported that they were

attending to personal or family obligations prior to working

in their current arrangement was nearly double the proportion of workers with 3 or fewer years of tenure in traditional

arrangements (11.3 percent versus 6.6 percent). In addition,

the proportion of on-call workers who reported that they were

retired prior to starting work as an on-call worker, although

small, was the highest among all the alternative arrangements:

almost 3 percent of on-call workers were formerly retired,

compared with only 0.9 percent of those in traditional arrangements. Examining the matter from the perspective of

the distribution of work arrangements among all those who

reported that they were retired prior to starting their current

arrangement, one finds that 7.1 percent were employed as an

on-call worker. Overall, the figures for on-call workers who

reported that their prior activity was looking for work, being

in retirement, or taking care of family or other personal obligations suggest that working on call does seem to provide a

means for individuals to enter the labor market and, once in,

to balance work with other obligations.

Contract company workers. Only workers provided by contract firms had a distribution of activities prior to the start of

their current arrangements that was similar to that of workers

in traditional arrangements. This would be consistent with

the notion that the two arrangements are quite alike, at least

with respect to having fairly fixed hours and closely supervised work.

Previously employed workers in alternative and traditional work arrangements with 3 or fewer years of tenure on

current job, by reason for termination and tenure on previous job, February 1995

[Percent distribution]

Total, 16 years and older

(thousands) ............................. 2,058 2,035 707 631 702 669 337 329 33,771 30,891

Reason for termination

Percent1 ................................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Lost last job ............................... 14.5 14.7 15.9 14.8 25.1 25.4 16.6 17.0 13.0 13.6

Quit last job ............................... 57.1 57.1 44.1 43.1 43.7 43.8 47.2 46.2 64.8 64.5

Temporary job ended ................ 8.5 8.4 23.4 24.1 17.9 17.5 24.0 24.3 10.3 9.7

Other reasons ........................... 20.0 19.8 16.6 18.0 13.1 13.5 11.9 12.1 11.9 12.2

Tenure on previous job2

Percent .................................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1 year or less ............................ 24.2 24.1 53.0 48.7 54.7 53.6 49.2 48.8 42.1 39.6

2 years ...................................... 13.5 13.4 17.3 18.7 15.1 15.8 12.2 11.5 15.8 15.8

3 years ...................................... 12.7 12.5 3.1 3.4 8.6 9.0 12.4 12.7 9.8 10.2

4 years ...................................... 13.1 13.1 12.6 14.1 7.0 6.2 8.7 9.0 11.4 12.0

5 or more years ......................... 33.6 34.0 11.2 11.9 11.6 12.1 13.2 13.5 16.4 17.8

Tenure not reported ................... 2.9 3.0 2.9 3.2 3.2 3.3 4.4 4.5 4.6 4.6

Average years of tenure ............ 5.7 5.8 2.9 3.1 2.7 2.8 2.7 2.8 3.5 3.7

Table 5.

Total Not in

school

Total

Not in

school

Not in

school

Not in

school Total Not in

school

Workers in

traditional

arrangements Independent

contractors

On-call

workers

Temporary help

agency workers

Workers provided

by contract firms

Workers in alternative arrangements

Reason for termination and

tenure on previous job

1 Excludes a small number of persons for whom reason for termination was

not reported.

2 Categories listed include the time span from the next lower integer (but

not including that integer) to the year listed. For example, “2 years” represents

a reported tenure greater than 1 year, but less than or equal to 2 years.

NOTE: Previously employed workers include both those who were employed

directly prior to the current job and those who had a spell of job search after

the previous job. Workers in traditional arrangements are those who do not

fall into any of the alternative-arrangement categories. Data on tenure of 3 or

fewer years exclude persons who did not report specific tenure, but did report

that tenure was more than 1 year. Details may not sum to 100 percent because of rounding.

Total Total
62 Monthly Labor Review October 1996

Contingent Employment: By Choice?

Preferences of employed contingent workers for contingent and noncontingent work arrangements, 1995

Estimate 1

Total , 16 years and older

(thousands) .................................. 2,739 2,667 1,324 656 334 45 172

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer noncontingent arrangement ... 64.1 64.3 68.1 77.1 35.2 (2

) 55.8

Prefer contingent arrangement ......... 29.9 29.7 24.1 17.8 63.8 (2

) 41.5

It depends ......................................... 2.4 2.3 2.9 2.5 1.0 (2) 1.6

Preference not available ................... 3.6 3.7 5.0 2.6 (3

) (2) 1.1

Estimate 2

Total , 16 years and older

(thousands) .................................. 3,422 3,312 1,625 756 424 61 265

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer noncontingent arrangement ... 61.2 61.5 65.5 76.7 37.5 (2) 45.4

Prefer contingent arrangement ......... 32.6 32.7 27.6 18.5 60.8 (2

) 49.5

It depends ......................................... 2.5 2.5 2.8 2.5 1.3 (2

) 2.6

Preference not available ................... 3.7 3.3 4.1 2.3 .5 (2) 2.5

Estimate 3

Total , 16 years and older

(thousands) .................................. 6,304 4,757 2,385 1,029 655 87 325

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer noncontingent arrangement ... 55.8 58.4 62.2 76.1 31.3 5.7 44.1

Prefer contingent arrangement ......... 30.5 31.5 26.1 18.1 55.9 86.9 49.7

It depends ......................................... 3.1 3.1 3.9 2.2 3.2 1.5 2.7

Preference not available ................... 10.7 7.0 7.8 3.6 9.7 5.8 3.5

In general, the higher rates of contingent and alternative

employment among those who started working in their current arrangements within the last 3 years, combined with the

finding that many of these individuals entered into these work

relationships from previous employment, suggest that a proportion of these workers may have been involuntarily

“nudged” into such relationships. However, the high proportion of workers who quit their previous employment, combined with the substantial proportion who were engaged in

nonwork activities such as going to school, attending to personal or family obligations, or living in retirement, indicates

that many of these arrangements also may be satisfying the

requirements of individuals who desire or need greater flexibility in their work. To gain a clearer understanding of

whether individuals had been involuntarily directed into contingent or alternative arrangements with which they were not

satisfied, it is necessary to examine these individuals’ preferences and reasons for being in such arrangements.

Preferences and reasons

Contingent workers. Table 6 shows the preferences of contingent workers for their current arrangement, along with the

preferences of contingent workers with 3 or fewer years of

tenure, subdivided by the latter workers' activities prior to

becoming contingent. The figures indicate that the majority

of contingent workers would prefer to be in noncontingent

arrangements. Fewer than a third of all contingent workers,

under any definition, expressed a preference for their arrangement, and the proportion is similar for contingent workers

Table 6.

With 3 or fewer years of tenure1

Had personal

or family

obligations

Total

Total

Employed Looking

for work

Going to

school Retired

Preference

1Data exclude persons who did not report specific tenure, but did report

that tenure was more than 1 year, and includes those whose prior activity was

classified as “other” and a small number of persons for whom prior activity

was not reported.

2

Data not shown where base is less than 75,000.

3

Less than 0.05 percent.

NOTE: Noncontingent workers are those who do not fall into any estimate of contingent workers. The total number of workers who were contingent under estimate 1 or estimate 2 is less than the total for the same categories presented elsewhere because individuals who were both contingent

and in an alternative arrangement were excluded if they had been in an

alternative arrangement for more than 3 years. Details may not sum to totals

because of rounding.

With prior labor force status of 
Monthly Labor Review October 1996 63

Previously employed contingent workers with 3 or fewer years of tenure,

by reason for termination of previous job and preference for contingent or

noncontingent work arrangement in current job, February 1995

Lost previous job

Total, 16 years and older

(thousands) .................................. 220 279 407

 Percent ........................................... 100.0 100.0 100.0

Prefer noncontingent arrangement ..... 85.8 85.3 80.7

Prefer contingent arrangement ........... 7.4 8.5 9.5

It depends ........................................... 1.6 2.2 2.9

Preference not available ..................... 5.2 4.1 6.9

Left previous job

Total, 16 years and older

(thousands) .................................. 666 806 1,226

 Percent ........................................... 100.0 100.0 100.0

Prefer noncontingent arrangement ..... 70.2 67.9 61.7

Prefer contingent arrangement ........... 21.7 25.5 25.8

It depends ........................................... 3.1 2.6 3.3

Preference not available ..................... 5.0 4.1 9.3

Temporary job ended

Total, 16 years and older

(thousands) .................................. 439 496 686

 Percent ........................................... 100.0 100.0 100.0

Prefer noncontingent arrangement ..... 66.2 61.5 63.4

Prefer contingent arrangement ........... 28.2 32.4 28.9

It depends ........................................... 3.9 4.2 4.6

Preference not available ..................... 1.7 1.8 3.1

Other reasons

Total, 16 years and older

(thousands) .................................. 226 282 410

 Percent ........................................... 100.0 100.0 100.0

Prefer noncontingent arrangement ..... 56.6 55.1 57.8

Prefer contingent arrangement ........... 33.0 36.2 31.1

It depends ........................................... .4 .8 3.2

Preference not available ..................... 9.9 8.0 8.0

NOTE: Previously employed contingent workers include both those who were employed directly prior to

the current job and those who had a spell of job search after the previous job. Noncontingent workers are

those who do not fall into any estimate of contingent workers. Data on tenure of 3 or fewer years exclude

persons who did not report specific tenure, but did report that tenure was more than 1 year. Details may not

sum to 100 percent because of rounding.

with 3 or fewer years of tenure.10 However, in examining preferences based

on the prior activities of those with 3

or fewer years of tenure, one finds

striking differences among the various

subgroups.

The highest level of dissatisfaction

with being in a contingent job occurred

among those who were searching for a

job prior to becoming contingent. Under estimates 1 and 2, about 77 percent

of these individuals said that they

would prefer to be in a noncontingent

arrangement. Still, approximately 18

percent of these workers said that they

preferred their contingent job, perhaps

implying that they were actually

searching for contingent work.

The next highest level of dissatisfaction was among those who had been

employed directly prior to taking a

contingent job. Under estimate 1, 68.1

percent of these workers said that they

would prefer to be in a noncontingent

job.

For those who had worked prior to

becoming contingent (regardless of

whether they did or did not have a spell

of unemployment in between their previous job and the contingent one), there

was some variation in the level of dissatisfaction with contingent work, depending on why the individuals had

left their previous employment. (See

table 7.) Job losers exhibited the highest level of dissatisfaction, with 85.8

percent under the narrowest estimate

indicating that they would prefer a

noncontingent job. By contrast, only

about 66 percent of those in a temporary job that ended and 70 percent of

those who quit their job would have

preferred a noncontingent job.

For individuals who were engaged in non-labor-market

activities prior to becoming contingent, it is not hard to imagine that the level of satisfaction with contingent work might

be higher. Indeed, individuals who were retired or attending

to personal or family obligations prior to becoming contingent expressed the highest level of satisfaction with contingent work. Of those who left retirement to accept contingent

work, about 9 in 10 said that they preferred their contingent

arrangement. Similarly, those who were attending to personal

Table 7.

Reason for termination and

preference Estimate 1 Estimate 2 Estimate 3

or family obligations prior to accepting contingent employment expressed a higher rate of satisfaction with their arrangement than did other contingent workers.

Perhaps one of the least intuitive findings is that the majority of individuals who were in school prior to taking a contingent job—between 55.9 percent and 63.8 percent, depending on the estimate of contingency examined—expressed

satisfaction with being in contingent employment. Even when

the estimates were restricted to those who were not currently

enrolled in school, between 40 percent and 44 percent of those
64 Monthly Labor Review October 1996

Contingent Employment: By Choice?

who were attending school prior to taking a contingent job

reported that they preferred the contingent arrangement over

a traditional one.

These estimates suggest that, for a proportion of the population, contingent work is exactly what they want. The very

high level of satisfaction with such work among the formerly retired belies the notion that there is a large pool of unhappy retired workers whose only outlet for finding work is

to accept contingent employment. Further, the fact that approximately half of those who were attending to personal or

family obligations reported that they preferred contingent arrangements indicates that contingent work probably is allowing these individuals to balance their work and non-labormarket activities.

Even among those who were dissatisfied with contingent

employment, it is not necessarily true that the labor market

led them involuntarily into such an arrangement. Rather, it

could be that their personal situations caused them to have to

accept contingent work. Consequently, although they may not

be pleased with their arrangement, it would be incorrect to

conclude that the labor market itself forced these individuals

into that arrangement. To obtain a clearer picture of the situation, it is necessary to examine individuals’ reasons for being in a contingent arrangement, in combination with their

preferences.

Table 8 gives the distribution of individuals’ reasons for

being in contingent employment, subdivided by sex and preference for a noncontingent arrangement. The correspondence

between those who expressed a preference for noncontingent

work and those who gave an economic (that is, job-marketrelated) reason for accepting contingent employment is not

as high as one might expect and certainly is not one to one.

For workers who were contingent under estimate 1, 44.0 percent provided an economic reason for accepting contingent

work, whereas 64.1 percent said that they would prefer to be

in a noncontingent arrangement. Even among those who said

that they did not like their current arrangement and would

prefer to be in a noncontingent job, only 63.8 percent of those

who were contingent under estimate 1 gave an economic reason for undertaking contingent employment.

Among all contingent workers, the most prominent noneconomic reason for accepting contingent employment was

being enrolled in school or a training program—about 18 percent under estimate 1. Being in school remained a prominent

reason even among those who would have preferred to be in

a noncontingent arrangement. However, among those who

did not like being in a contingent job, flexibility of scheduling became a more predominant reason than schooling. This

was especially true for women, who were significantly more

likely to provide a noneconomic reason for accepting a contingent arrangement than were men.

Other reasons which suggest that contingent work allowed

at least some individuals who were constrained by non-labor-market activities to participate in the market included

child care problems and other family obligations. Among all

women who were contingent under estimate 1, 15.2 percent

gave either of these two reasons or flexibility of scheduling

as their explanation for accepting contingent work. Among

women who would have preferred to be in a noncontingent

arrangement, the proportion who gave any of these reasons

fell to 10.7 percent.

It is interesting to note that 55.9 percent to 58.0 percent of

those under the age of 25 who were contingent workers gave

a personal reason for being in their current arrangement. The

vast majority were working in a contingent job because they

were enrolled in school or a training program. Even among

those who expressed a desire for a noncontingent job in this

age group, 32.1 percent to 36.3 percent offered a personal

reason for holding their contingent jobs. More than half of

these individuals were in school or training. Consequently,

despite some workers’ dissatisfaction with their current situation, something other than market forces appears to be causing a proportion of them to accept contingent jobs. Given

that under estimate 1, 29.9 percent of contingent workers said

that they preferred such work, and among those who said that

they would prefer noncontingent work, 36.2 percent still provided a personal reason for accepting a contingent job, it is

not hard to imagine that without the option of contingent

employment, many of these individuals would not be able to

work at all.

Alternative employment arrangements. Tables 9 through 11

present the preferences and reasons for being in alternative

arrangements for independent contractors, temporary help

agency workers, and on-call workers. Contract company

workers’ preferences for their arrangement were not collected

due to difficulties in phrasing a question that sounded as if

individuals were being asked about their preferences for

working for a specific contract company rather than for being a contract company worker in general.

(1) Independent contractors. More than 4 out of 5 independent contractors, regardless of tenure or prior labor force activity, reported that they preferred working as independent

contractors, as opposed to being someone else’s employee.

This level of satisfaction was only slightly lower among independent contractors with 3 or fewer years of tenure. (See

table 9.) Even the majority of those who had lost a job or

were in a temporary job that had ended prior to their becoming an independent contractor reported that they would prefer to be independent contractors, as opposed to employees

of someone else. (See table 10.) The high rate of satisfaction

among those who conceivably might have involuntarily become independent contractors through downsizing or some
Monthly Labor Review October 1996 65

Employed contingent workers, by reason for contingency and preference for noncontingent work, February 1995

[Percent distribution]

 Total

Total , 16 years and older ............ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Economic reasons .......................... 44.0 48.0 40.0 40.4 45.7 35.1 34.7 39.0 30.3

Employer laid off, but rehired ...... 1.2 1.9 .5 1.0 1.6 .4 1.2 1.7 .7

Could only find this type

of employment. .......................... 28.5 32.4 24.7 26.3 30.6 22.1 21.4 24.8 17.9

This job may lead to

permanent one .......................... 7.6 5.4 9.7 6.5 5.1 7.9 5.9 4.7 7.1

Other economic reasons ............. 6.7 8.3 5.0 6.6 8.5 4.8 6.2 7.8 4.6

Personal reasons ............................ 44.1 40.3 47.9 49.0 44.6 53.3 43.9 39.6 48.3

Flexibility of work schedule .......... 7.4 5.1 9.6 9.5 6.4 12.6 9.2 6.9 11.5

Child care problems .................... .4 .1 .7 .9 .2 1.6 .6 .1 1.0

Other family or personal

obligations .................................. 2.7 .4 4.9 3.8 1.0 6.6 3.5 .8 6.2

In school or training ..................... 18.3 16.7 19.8 15.5 14.3 16.7 14.7 13.7 15.6

Other personal reasons ............... 15.4 18.0 13.0 19.3 22.7 15.9 16.0 18.1 14.0

Reason not reported ....................... 11.9 11.7 12.2 10.6 9.7 11.6 21.4 21.4 21.4

Prefer noncontingent

arrangement

Economic reasons .......................... 63.8 66.1 61.3 60.9 64.1 57.4 55.9 59.5 52.0

Employer laid off, but rehired ...... 1.7 2.5 .9 1.4 2.1 .7 1.9 2.4 1.3

Could only find this type

of employment ........................... 42.6 46.2 38.8 41.0 44.5 37.2 35.7 39.6 31.6

This job may lead to

permanent one .......................... 11.4 7.6 15.5 10.1 7.4 13.0 9.6 6.9 12.4

Other economic reasons ............. 8.1 9.9 6.2 8.4 10.1 6.5 8.7 10.6 6.8

Personal reasons ............................ 26.8 25.0 28.7 31.0 28.3 33.9 28.8 26.2 31.5

Flexibility of work schedule ......... 4.7 2.7 6.8 5.7 3.1 8.5 5.9 4.0 7.8

Child care problems .................... .6 .2 .9 .9 .2 1.7 .6 .1 1.2

Other family or personal

obligations ................................. 1.7 .6 3.0 2.5 1.3 3.8 2.5 1.0 4.1

In school or training .................... 8.3 8.7 7.8 7.7 7.5 7.9 7.5 7.6 7.3

Other personal reasons .............. 11.5 12.8 10.1 14.2 16.3 11.9 12.3 13.5 11.1

Reason not reported ....................... 9.5 9.0 10.0 8.2 7.6 8.7 15.4 14.3 16.5

ent contractors who said that they would prefer to work for

someone else, the majority provided a personal reason for

working as an independent contractor instead. (See table 11.)

However, there were differences in the distribution of personal reasons between men and women. Forty-six percent of

men said that they were independent contractors because they

enjoyed being their own boss, whereas only 26.8 percent of

women offered this reason. On the other hand, 28.5 percent

of women reported that they were independent contractors

because of the flexibility of scheduling the arrangement offered, 2.5 percent reported being independent contractors

because of child care problems, and another 8.0 percent reported that they were independent contractors because of

other family or personal obligations. By contrast, only 15.7

Table 8.

Estimate 1 Estimate 2 Estimate 3

Total Men Women Total Men Women Total Men Women

Contingent workers

Reason and preference

other job loss is consistent with anecdotal evidence which

indicates that, while these workers may not have been happy

to have lost their previous wage and salary positions, they

still would prefer not to return to a situation in which they

would be a company employee. Instead, these individuals

may find that being an independent contractor affords them

more job security than being someone else’s employee does,

as well as giving them a degree of autonomy that they have

come to enjoy.

The reasons independent contractors offered for being in

their arrangement accorded well with the notion that most of

them were satisfied with the arrangement. A little more than

87 percent of independent contractors offered personal reasons for being in their arrangement. Even among independNOTE: Noncontingent workers are those who do not fall into any estimate of contingent workers. Details may not sum to 100 percent because of rounding.
66 Monthly Labor Review October 1996

Contingent Employment: By Choice?

percent of men’s reasons for being independent contractors

fell into any of these categories. These differences suggest

that men and women tend to have different motivations for

voluntarily becoming independent contractors. Regardless of

the underlying motivation, however, the outcome is the same:

independent contractors generally seem quite content with

their arrangements. Consequently, it would be difficult to argue that they were pushed, against their will, into becoming

independent contractors by labor market conditions.

(2) Temporary help agency workers. In contrast to independent contractors, 63.4 percent of temporary help agency

workers said that they would prefer to work for a different

type of employer. The reasons individuals gave for being temporary help agency workers supported the notion that working for temporary help firms was not their first choice and

that labor market conditions were the chief factor leading

them to work for such firms. Almost 65 percent of all temporary help agency workers provided an economic reason for

working in their arrangement, and 39.4 percent of all temporary help agency workers reported that this was the only type

of employment they could find. Among men, the dissatisfaction of working as a temporary help agency employee was

even higher: slightly more than 70 percent said that they

would prefer a different work arrangement. Women, however, were less dissatisfied: approximately 57 percent said

that they would prefer to be in another type of arrangement.

Consistent with their lower level of dissatisfaction, women

were much more likely than men to provide a noneconomic

reason for being a temporary help agency worker (42.3 perTable 9. Preference of employed workers in alternative work arrangements for a traditional or an alternative work

arrangement, by prior activity, February 1995

Independent contractors

Total, 16 years and older

(thousands) .................................. 8,309 2,792 1,961 231 182 32 296

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer traditional arrangement .......... 9.8 16.7 15.1 33.2 28.6 (2

) 7.3

Prefer alternative arrangement ......... 82.5 73.4 75.0 54.7 69.3 (2) 81.7

It depends ......................................... 5.1 6.8 7.3 9.3 1.1 (2

) 6.9

Preference not available ................... 2.6 3.2 2.7 2.8 1.1 (2

) 4.0

On-call workers

Total, 16 years and older

(thousands) .................................. 1,968 1,322 587 307 111 32 132

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer traditional arrangement .......... 56.6 61.6 65.0 82.0 45.4 (2

) 34.3

Prefer alternative arrangement ......... 36.6 32.8 28.4 13.5 47.7 (2

) 60.2

It depends ......................................... 4.2 3.6 3.9 3.5 1.3 (2) 4.1

Preference not available ................... 2.5 2.1 2.7 .9 5.5 (2

) 1.5

Temporary help agency workers

Total, 16 years and older

(thousands) .................................. 1,181 1,061 606 285 50 8 61

Percent .......................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Prefer traditional arrangement .......... 63.4 66.6 70.5 74.0 (2) (2) (2)

Prefer alternative arrangement ......... 26.6 23.6 20.8 17.9 (2

) (2) (2)

It depends ......................................... 8.1 9.0 8.3 6.7 (2

) (2) (2)

Preference not available ................... 2.0 .8 .4 1.5 (2) (2) (2)

With 3 or fewer years of tenure1

Had personal

or family

obligations

Total

Total

Employed Looking

for work

Going to

school Retired

1 Data exclude persons who did not report specific tenure, but did report

that tenure was more than 1 year, and include those whose prior activity was

classified as “other” and a small number of persons for whom prior activity

was not reported. 2

 Data not shown where base is less than 75,000.

NOTE: Workers in traditional arrangements are those who do not fall into

any of the alternative-arrangement categories. Data on workers provided by

contract firms are not shown because these workers were not asked for their

preferences. Details may not sum to 100 percent because of rounding.

Preference

With prior labor force status of
Monthly Labor Review October 1996 67

Previously employed workers in alternative work arrangements with 3 or

fewer years of tenure, by reason for termination of previous job and

preference for traditional or alternative work arrangement in current job,

February 1995

Lost previous job

Total, 16 years and older

(thousands) .................................... 297 112 176

Percent ............................................ 100.0 100.0 100.0

Prefer traditional arrangement ............ 24.2 66.6 80.0

Prefer alternative arrangement ........... 66.2 27.4 11.5

It depends ........................................... 8.6 1.4 8.6

Preference not available ..................... 1.1 4.6 (1)

Left last job

Total, 16 years and older

(thousands) .................................... 1,165 309 307

Percent ............................................ 100.0 100.0 100.0

Prefer traditional arrangement ............ 13.6 65.6 68.1

Prefer alternative arrangement ........... 78.9 27.0 25.4

It depends ........................................... 5.5 5.4 5.5

Preference not available. .................... 2.1 2.1 1.0

Temporary job ended

Total, 16 years and older

(thousands) .................................... 172 164 126

Percent ............................................ 100.0 100.0 100.0

Prefer traditional arrangement ............ 27.8 75.7 76.0

Prefer alternative arrangement ........... 56.1 19.1 16.2

It depends ........................................... 8.0 2.7 7.8

Preference not available. .................... 8.1 2.5 (1)

Other reasons

Total, 16 years and older

(thousands) .................................... 408 117 92

Percent ............................................ 100.0 100.0 100.0

Prefer traditional arrangement ............ 10.3 72.9 50.7

Prefer alternative arrangement ........... 76.3 25.0 27.2

It depends ........................................... 10.7 2.2 19.4

Preference not available. .................... 2.6 (1) 2.7

1Less than 0.05 percent

NOTE: Previously employed workers include both those who were employed directly prior to the current

job and those who had a spell of job search after the previous job. Workers in traditional arrangements are

those who do not fall into any of the alternative-arrangement categories. Data on tenure of 3 or fewer years

exclude persons who did not report specific tenure, but did report that tenure was more than 1 year. Data

on workers provided by contract firms are not shown because these workers were not asked their preferences. Details may not sum to 100 percent because of rounding.

Table 10. cent versus 23.2 percent). Almost 20

percent of women said that they

worked for a temporary help firm because of the flexibility it afforded their

schedule, and 3.9 percent said that they

were temporary help agency workers

because of other family or personal obligations. Even among female temporary help agency workers who reported

that they would prefer to work for another type of employer, 9.5 percent

said that they were in their arrangement because of the scheduling flexibility or other family or personal obligations. Thus, there appears to be

some validity to the argument that

temporary help firms offer a way for

some women to enter the job market

who might otherwise be precluded

from participating in it. However, it is

still fair to say that the majority of temporary help agency workers would

choose another work arrangement if

labor market conditions or their personal situations were different.

(3) On-call workers. These workers

are similar to temporary help agency

workers with regard to their preferences and the split between men’s and

women’s reasons for being in that particular alternative arrangement. Almost

57 percent of on-call workers preferred

to work in a job in which they had

regularly scheduled hours as opposed

to being on call, a proportion that increased to 61.6 percent for those who

had been on-call workers for 3 or fewer

years. Further, among those who were

looking for work prior to working on

call—a group of individuals who were

most likely to have involuntarily become on-call workers due

to labor market conditions—the level of dissatisfaction was

even higher: eighty-two percent of these individuals said that

they would rather work in a job with regularly scheduled

hours. On the other hand, 47.7 percent of those who were in

school prior to becoming an on-call worker, 60.2 percent of

those who were attending to personal or family obligations,

and more than 80 percent of those who were in retirement

prior to working on call preferred the on-call aspect of their

work.

Differences in the overall preferences based on what indiReason for termination and

preference

Independent On-call Temporary help

contractors workers agency workers

viduals were doing prior to becoming on-call workers were

even more striking when the sex of the workers was taken

into account. Women—in particular, those who were attending to personal or family obligations—had a high level of

satisfaction with working on call. This accords well with the

reasons individuals gave for being on call. Among all on-call

workers, only 47.4 percent provided an economic reason for

working in that arrangement. And while the proportion was

much higher among those who said that they would prefer to

work regularly scheduled hours, still, about 1 in 4 provided a

personal reason for working on call. As might be expected by
68 Monthly Labor Review October 1996

Contingent Employment: By Choice?

Employed men and women in alternative work arrangements, by reason for arrangement and preference for a

traditional work arrangement, February 1995

[Percent distribution]

Total

Total , 16 years and older ............ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Economic reasons .......................... 9.7 10.2 8.9 47.4 56.8 38.6 64.7 75.4 55.2

Employer laid off, but rehired ...... .3 .3 .3 (1) (1) (1) 2.9 3.8 2.0

Could only find this type

of employment ........................... 3.9 4.1 3.7 32.4 38.5 26.6 39.4 47.4 32.2

This job may lead to

permanent one .......................... .6 .6 .4 8.5 9.2 7.8 17.9 18.3 17.5

Other economic reasons ............. 5.0 5.2 4.5 6.6 9.1 4.2 4.7 5.9 3.5

Personal reasons ............................ 87.1 87.0 87.4 49.9 40.3 58.9 33.3 23.2 42.3

Flexibility of work schedule .......... 19.1 14.5 28.5 23.5 15.1 31.3 13.5 6.4 19.8

Child care problems .................... .8 (2) 2.5 1.3 .1 2.5 .8 .7 .9

Other family or personal

obligations ................................. 3.4 1.2 8.0 3.4 1.2 5.4 2.2 .3 3.9

In school or training ..................... .6 .3 1.2 5.6 5.1 6.0 2.4 3.1 1.8

Enjoys being own boss ................ 39.9 46.3 26.8 (1) (1) (1) (1) (1) (1)

Other personal reasons ............... 23.3 24.7 20.5 16.1 18.8 13.6 14.5 12.8 16.0

Reason not reported ....................... 3.1 2.9 3.7 2.7 2.9 2.5 2.0 1.4 2.5

Prefer traditional arrangement

Economic reasons .......................... 36.3 39.8 30.6 73.2 77.3 68.6 79.7 83.4 75.7

Employer laid off, but rehired ...... .8 .7 1.0 (1) (1) (1) 2.7 3.5 1.8

Could only find this type

of employment ........................... 23.7 27.1 17.9 53.0 56.3 49.2 53.7 58.0 49.0

This job may lead to

permanent one .......................... 3.4 3.8 2.6 12.7 12.4 13.0 19.1 17.0 21.4

Other economic reasons ............. 8.5 8.2 9.0 7.5 8.6 6.4 4.2 4.9 3.5

Personal reasons ............................ 63.3 59.9 68.9 26.1 22.0 30.8 19.0 16.1 22.1

Flexibility of work schedule .......... 14.7 12.2 18.8 9.0 4.7 13.8 5.6 3.7 7.7

Child care problems .................... 1.0 (2) 2.7 .7 (2) 1.5 .5 1.0 (2)

Other family or personal

obligations ................................. 6.1 2.3 12.6 2.0 1.1 2.9 1.0 .4 1.8

In school or training ..................... 1.8 .6 3.8 3.0 2.0 4.1 2.2 2.9 1.4

Enjoys being own boss ................ 13.6 16.2 9.1 (1) (1) (1) (1) (1) (1)

Other personal reasons ............... 26.1 28.7 21.9 11.5 14.2 8.5 9.6 8.2 11.3

Reason not reported ....................... .4 .3 .6 .7 .7 .6 1.3 .5 2.1

the male-female split in preferences, women in on-call jobs

were significantly more likely to provide a personal reason

for holding such positions than were men (58.9 percent versus 40.3 percent). The most common personal reason for

working on call was flexibility of scheduling, expressed by

23.5 percent of all on-call workers and 31.3 percent of female on-call workers. In addition, 7.9 percent of the latter

cited child care problems and attending to other family or

personal obligations as reasons that they were working on

call. Thus, even if not their first choice, on-call arrangements

appear to afford some individuals an otherwise lost opportunity to balance work with family obligations.

On-the-job changes to alternative work

The preceding discussion has focused on individuals who

entered into an alternative arrangement either from other

employment or from outside the labor market. Another group

of workers who might have involuntarily entered into an alternative arrangement consists of individuals who had their

status switched by their employers. To ascertain the number

of workers who found themselves in such a situation, individuals in each of the four alternative arrangements (except

for those independent contractors who were identified as selfemployed in the main CPS questionnaire)11 were asked

Table 11.

Total Men Women Total Men Women Total Men Women

Independent contractors On-call workers Tempory help

agency workers

Reason and preference

1Not available.

2Less than 0.05 percent.

NOTE: Workers in traditional arrangements are those who do not fall into

any of the alternative-arrangement categories. Details may not sum to 100

percent because of rounding.
Monthly Labor Review October 1996 69

Employed workers in alternative work arrangements who previously had

a different type of arrangement with current employer, by selected

characteristics, February 1995

[Percent distribution]

Total

Proportion that changed to an

alternative arrangement .................... 22.3 19.4 9.3 11.7

Proportion of changers that would

prefer a traditional arrangement .... 22.2 53.9 45.9 (2)

16 to 24 years

Proportion that changed to an

alternative arrangement .................... 16.8 17.5 6.0 1.7

Proportion of changers that would

prefer a traditional arrangement .... (3

) 73.8 74.8 (2)

25 years and older

Proportion that changed to an

alternative arrangement .................... 22.7 19.9 10.4 13.5

Proportion of changers that would

prefer a traditional arrangement .... 23.5 49.7 40.4 (2)

Men

Proportion that changed to an

alternative arrangement .................... 25.1 18.9 9.8 11.4

Proportion of changers that would

prefer a traditional arrangement .... 19.7 67.8 48.2 (2)

 Women

Proportion that changed to an

alternative arrangement .................... 19.2 19.9 8.9 12.6

Proportion of changers that would

prefer a traditional arrangement .... 25.8 41.5 43.6 (2

)

 White

Proportion that changed to an

alternative arrangement .................... 23.4 19.8 10.5 13.1

Proportion of changers that would

prefer a traditional arrangement .... 23.0 53.8 45.9 (2)

 Black

Proportion that changed to an

alternative arrangement .................... 16.5 16.0 5.1 7.5

Proportion of changers that would

prefer a traditional arrangement .... 18.7 42.6 70.2 (2

)

1

Only those independent contractors who were identified as wage and salary workers in the main CPS.

2

 Not available.

3 Less than 0.05 percent.

whether they had always worked in

that arrangement at the place they were

currently working . The proportions of

these workers who reported that their

status had been switched are presented

in table 12, along with various demographic characteristics, in order to ascertain whether there is any systematic

pattern with respect to who is or is not

being switched into these alternative

arrangements.

The data indicate that only about 1

in 10 temporary help agency workers

or contract company workers had previously been employed in another type

of arrangement at the place they were

working. In addition, fewer than half

of temporary help agency workers

who reported making such a transition

indicated that they disliked the change

in their status. (No corresponding figure is available for contract company

workers.) The proportions of on-call

workers and wage and salary independent contractors who had been

switched from another status with their

current employer were about twice as

large. However, it is important to note

that independent contractors who were

classified as wage and salary workers

constituted only 15 percent of all independent contractors, so that wage

and salary independent contractors

who were switched from another arrangement made up only about 3 percent of all independent contractors.

With regard to satisfaction with their

situation, almost 54 percent of on-call

workers who had been switched reported that they would rather be in an

arrangement in which they worked

regularly scheduled hours instead of

being on call. Among independent

contractors who were switched, however, the vast majority—just under 78

percent—reported that they preferred to work as independent

contractors.

Women and blacks were less likely than men and whites

to be converted to alternative arrangements. Specifically, 19.2

percent of female wage and salary independent contractors

made the switch, compared with 25.1 percent of male wage

and salary independent contractors, and the corresponding

Table 12.

Tempory

help agency

workers

Independent

contractors1

On-call

workers

Workers

provided by

contract firms

Characteristic

percentages for blacks and whites were 16.5 percent and 23.4

percent. Also, blacks were about half as likely as their white

counterparts to be converted to temporary help agency workers (5.1 percent versus 10.5 percent). In addition, workers

under the age of 25 were less likely to be converted to an

alternative work status, although, with respect to independent contracting and being on call, this probably is more a
70 Monthly Labor Review October 1996

Contingent Employment: By Choice?

function of age and skill level than it is a policy on the part

of employers. Overall, given the small magnitude of those

who made a transition, as well as the demographic characteristics of those who were switched, the fear that large numbers of employers are abusing their employees by switching

them from traditional to alternative arrangements appears

unfounded.12

Aggregate measures

The previous sections have presented disaggregated estimates

that are useful in determining whether individuals have had

to accept contingent work or an alternative employment arrangement despite their wishes to the contrary. To obtain a

more complete picture of these workers’ situation, the data

need to be combined into aggregate measures. Because there

can be various notions or degrees of what it means to be involuntarily employed in a contingent or alternative work arrangement, three sets of measures are constructed. The first

set is restricted to those who have 3 or fewer years of tenure

in their current arrangement, the second is further restricted

to include only those who were previously employed, and

the third set is expanded to include the entire working population. Within each of these groups, various parameters are

altered to reflect different notions of involuntariness.

Measures for those with 3 or fewer years of tenure. With

regard to the situation of those who recently entered the labor

market or changed jobs, it might be of interest to know what

proportion of them were in a contingent or an alternative arrangement. Consequently, the first measure calculates the

proportion of all workers with 3 or fewer years of tenure who

were in a contingent or an alternative work arrangement. According to this measure, the figure was approximately 16 percent. The rate was a little more than 2 percentage points higher

for those who were older than 25, compared with those who

were 25 or younger (16.9 percent versus 14.6 percent). The

rate was slightly lower for women than for men (15.7 percent, as opposed to 16.7 percent) and virtually identical for

blacks and whites (16.3 percent versus 16.1 percent).

It is difficult to argue, however, that individuals have been

pushed into a contingent or an alternative arrangement if they

are in the types of jobs they want to be in and they express no

desire to get out of such an arrangement. Hence, the second

measure estimates the proportion of all workers with 3 or

fewer years of tenure who were in a contingent or an alternative arrangement and who said that they would prefer to be in

either a traditional or a noncontingent work arrangement.13

Using this criterion, one might argue that 7.0 percent of all

those with 3 or fewer years of tenure had to settle for a contingent or an alternative work arrangement. As with the first

measure, under the second measure the proportion of workers younger than 25 who could be considered involuntarily in

such an arrangement was lower than the proportion of workers 25 and older (6.6 percent versus 7.2 percent). Somewhat

surprisingly, the rates did not differ substantially for men and

women (6.9 percent and 7.1 percent, respectively), but the

proportion of blacks who could be considered involuntarily

in a contingent or an alternative arrangement was significantly

higher than the proportion of whites (9.5 percent versus 6.4

percent).

As mentioned earlier, workers might be dissatisfied with

their current arrangement, but still be prevented from accepting traditional or noncontingent employment for personal

rather than labor market reasons. Therefore, to obtain a measure related exclusively to the labor market, the third measure

includes the criterion that an individual had to provide an

economic reason for being in a contingent or an alternative

arrangement.14 To be classified as having been pushed into a

contingent or an alternative arrangement under this measure,

an individual had to express a preference for being in a traditional or noncontingent work arrangement and provide an

economic reason for being in the contingent or alternative

arrangement. By this measure, 4.3 percent of those with 3 or

fewer years of tenure in their current arrangement were involuntarily in that arrangement. Again, those who were

younger than 25 exhibited a lower rate (3.7 percent) of having involuntarily entered into their work arrangement than

did those 25 or older (4.5 percent). Also, the proportion of

women who could be considered to be settling for a contingent or an alternative work arrangement was slightly lower

than the proportion for men (4.0 percent versus 4.5 percent).

Finally, even including the reasons for being in an alternative

or a contingent arrangement, the proportion of blacks with 3

or fewer years of tenure who could be considered involuntarily in such an arrangement, 7.3 percent, was almost twice

as large as the proportion of whites.

Measures for those with 3 or fewer years of tenure who were

previously employed. Because there is interest in whether

individuals are involuntarily leaving “good permanent jobs”

and accepting contingent or alternative arrangements due to

corporate downsizing and restructuring, a second set of measures was constructed to include only those who had been previously employed. Of these four measures, the first three are

the same as those just examined, except that they are restricted

to individuals who were employed in another job prior to

entering into their current arrangement. Consequently, the

first measure calculates the proportion of all previously employed workers with 3 or fewer years of tenure who were in a

contingent or an alternative arrangement. This measure is

essentially a combination of information from tables 1, 2, and

4. It indicates that 14.8 percent of those who were employed

in another job prior to starting their current job in the last 3
Monthly Labor Review October 1996 71

years were in contingent or alternative arrangements. The

second measure uses the same employment criterion, but includes the requirement that individuals had to say that they

preferred a traditional or noncontingent work arrangement.

Under this measure, 6.4 percent of those who had worked

prior to starting in their current arrangement, either directly

or with a period of job search in between, could be construed

to have been involuntarily directed into a contingent or an

alternative work arrangement. The third measure tallies the

proportion of previously employed individuals with 3 or

fewer years of tenure who were in an alternative or a contingent arrangement, but would prefer not to be, and who provided an economic reason for being in that arrangement. According to this measure, 4.1 percent of those who had been

employed previously were involuntarily in a contingent or an

alternative arrangement. As with the measure for all workers

with 3 or fewer years of tenure in their arrangement, when

the measure is restricted to those who had been employed

previously, it reveals that blacks made up a disproportionate

share of those involuntarily in such an arrangement—7.0 percent, compared with 3.6 percent for whites. On the other hand,

those older than 25 and men had rates that were only slightly

higher than their younger and female counterparts.

In order to obtain an estimate of just those who might be

considered to have involuntarily left a “permanent” job, a

fourth measure was added which excluded individuals who

said that they had been in a temporary job which ended prior

to entering into a contingent or an alternative arrangement.

Specifically, the fourth measure estimates the proportion of

those employed in a “nontemporary” job prior to the start of

their current arrangement, who were in a contingent or an

alternative arrangement for an economic reason, but would

prefer not to be in it, and who had either quit or lost their

previous job. By this criterion, it is estimated that only 2.5

percent of those previously employed in a “nontemporary”

job had to settle for a contingent or an alternative arrangement. Even here, however, blacks were overrepresented

among the ranks of those who could be considered to have

involuntarily entered a contingent or an alternative arrangement, with 4.4 percent meeting the criterion, compared with

2.3 percent of whites.

Measures for the entire work force. The aggregate measures presented so far relate only to those with 3 or fewer

years of tenure. There also may be interest in similar measures for the entire work force, both because analysts want a

broader perspective of the labor force and because there are

individuals who could have been in an alternative or a contingent arrangement for more than 3 years, but still dislike it.

Accordingly, two measures for the work force as a whole are

constructed. The first measure estimates the proportion of all

those employed who were in a contingent or an alternative

work arrangement, but would prefer not to be in such an arrangement; the second measure is the same as the first, except that, in addition, individuals had to provide an economic

reason for being in a contingent or an alternative arrangement. Under the first measure, 4.0 percent of the work force

in February 1995, and under the second measure, 2.2 percent,

might be considered to have been involuntarily directed into

a contingent or an alternative work arrangement by the labor

market.15 The proportions of blacks and whites under the second measure were much closer than for any of the measures

restricted to those with 3 or fewer years of tenure in their

current arrangements. However, the rate under the second

measure for the entire labor force was still significantly higher

for blacks than for whites (3.5 percent versus 2.1 percent).

Job search

Contingent workers. Another measure of workers' satisfaction with their current arrangement is whether they are searching for another job. Table 13 contains estimates of the proportion of contingent workers who searched for a job in the 3

months prior to February 1995, or since the start of their current job if they had started working in that job sometime during those 3 months. Additional information is provided with

respect to whether jobseekers were looking for a new job as

opposed to a second job and whether those seeking new jobs

were looking for permanent jobs, temporary jobs, or any type

of new jobs that they could find. As a point of reference, the

proportion of noncontingent workers who were searching for

work is also presented.

Approximately 22 percent to 26 percent of contingent

workers had looked for a new job in the 3 months prior to

February 1995 (or since they had started their current contingent jobs), and the vast majority of these contingent workers

were looking for a “permanent” job as opposed to another

short-term job. These figures may seem low in view of the

fact that 56 percent to 64 percent of contingent workers reported that they would prefer to be in a noncontingent arrangement. However, the proportion of contingent workers

who were looking for a new job was 4 to 5 times higher than

the proportion of noncontingent workers who were looking

for a new job. Furthermore, given that, even under the narrowest definition of contingency, workers might have expected to remain in their current jobs for up to a year, contingent workers may not have been facing an imminent job loss;

and absent this pressure, there may have been no incentive

for them to search immediately for a job. In addition, among

contingent workers who said that they would prefer a

noncontingent arrangement, the fraction of those searching

for a new job increased to more than a third, ranging from 34

percent to 37 percent, depending on the definition of contingency used.
72 Monthly Labor Review October 1996

Contingent Employment: By Choice?

Job search of employed contingent and noncontingent workers and those with alternative and traditional work

arrangements who searched for a job in the previous 3 months, by selected characteristics, February 1995

[In percent]

Total

Total, 16 years and older

(thousands) ................................ 2,739 3,422 6,034 117,174 8,309 1,968 1,181 652 111,052

Percent ........................................ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Searched for a job ........................... 28.9 28.8 24.2 6.3 8.0 16.9 31.6 15.9 6.5

Searched for a new job ................. 26.0 25.7 21.5 4.9 5.1 16.9 31.6 15.9 5.2

“Permanent” ................................ 21.7 21.5 18.2 4.4 4.4 15.2 29.0 14.0 4.6

Temporary ................................... 2.4 2.4 1.9 .2 .2 .4 1.4 .5 .3

Any type ...................................... 1.8 1.7 1.4 .3 .5 1.4 1.2 1.4 .2

 With 3 or fewer years of tenure1

Searched for a job ........................... 28.9 29.0 26.2 10.0 13.3 19.3 33.4 20.0 10.2

Searched for a new job ................. 26.0 25.9 23.2 7.9 9.5 19.3 33.4 20.0 8.2

“Permanent” ................................ 21.7 21.6 19.6 7.1 8.8 17.5 30.5 17.7 7.3

Temporary ................................... 2.4 2.5 2.2 .4 .1 .5 1.5 .7 .5

Any type ...................................... 1.8 1.7 1.4 .4 .5 1.3 1.4 1.6 .4

Prefer a noncontingent or

traditional arrangement

Searched for a job ........................... 40.2 41.0 36.7 (2) 32.9 28.0 43.6 (3) (2)

Searched for a new job ................. 36.8 37.4 33.7 (2) 27.7 28.0 43.6 (3) (2)

“Permanent” ................................ 32.0 32.8 29.8 (2) 25.8 25.1 39.7 (3) (2)

Temporary ................................... 2.0 2.1 1.8 (2) .6 .6 1.9 (3) (2)

Any type ...................................... 2.6 2.4 2.1 (2) 1.4 2.3 1.9 (3) (2)

Workers in alternative work arrangements. The job search

pattern for those in alternative work arrangements corresponds closely to these workers’ satisfaction with their current arrangements.16 The estimates in table 13 indicate that

relatively few independent contractors were searching for a

new type of work arrangement. Furthermore, their job search

rate of 5.1 percent was almost identical to the 5.2-percent job

search rate of workers in traditional arrangements. Among

those who had become independent contractors within the

last 3 years, the rate of searching for a new job, 9.5 percent,

was nearly double the rate for all independent contractors.

Still, it was relatively low and was only slightly higher than

the job search rate for workers with 3 or fewer years of tenure

in traditional arrangements.

In contrast, the proportions of contract company workers,

on-call workers, and temporary help agency workers searching for new jobs not in alternative arrangements were considerably higher than the proportion of workers in traditional

arrangements who were looking for new jobs. Almost 16 percent of contract company workers and 17 percent of on-call

workers were searching for new jobs in which they would

not be contract company and on-call workers, respectively.

Furthermore, among those who had been in their arrangements for 3 or fewer years, the rates increased to 20.0 percent

and 19.3 percent, respectively. The comparable figures for

workers in traditional arrangements were 5.2 percent among

all workers and 8.2 percent among those who had started

working in the last 3 years.

The rate of searching for a job among temporary help

agency workers was even higher. Almost 32 percent of all

temporary help agency workers and 43.6 percent of such

agency workers who said that they would prefer to be employed in another type of arrangement reported that they had

been looking for new jobs other than with temporary help

firms. This higher rate of searching, compared with that of

contract company or on-call workers, could reflect tempoTable 13.

Characteristic

1 Excludes persons who did not report specific tenure, but did report that

tenure was more than 1 year.

2 Not applicable.

3 Workers provided by contract firms were not asked their preference.

NOTE: Noncontingent workers are those who do not fall into any estimate

of contingent workers. Workers in traditional arrangements are those who do

not fall into any of the alternative-arrangement categories. The distributions of

workers with 3 or fewer years of tenure who were contingent under estimates

1 and 2 differ from those for all contingent workers under estimates 1 and 2

because individuals who were both contingent and in an alternative arrangement were excluded if they had been in the alternative arrangement for more

than 3 years.

Contingent workers Workers in alternative arrangements

Temporary

help

agency

workers

Workers

provided

by contract

firms

Estimate 1 Estimate 2 Estimate 3 Independent

contractors

On-call

workers

Noncontingent

workers

Workers in

traditional

arrangements
Monthly Labor Review October 1996 73

rary help agency workers’ higher levels of dissatisfaction with

their current arrangements, but it also could reflect their different reasons for being in these arrangements, plus the shorter

expected duration and greater uncertainty of employment embodied in temporary help arrangements. For instance, 64.7

percent of temporary help agency workers provided economic

reasons for being in their current work arrangement, as opposed to only 47.4 percent of on-call workers.

In general, although the estimates in the previous section

could be used to argue that relatively few workers involuntarily entered into a contingent or an alternative work arrangement, the much higher rates of searching for a new job among

contingent workers and workers in the majority of alternative

arrangements suggest that a substantial proportion of workers in these arrangements were experiencing a much higher

level of anxiety with respect to future employment than were

other workers.

Stepping-stones to other employment?

In examining the issues concerning whether contingent or alternative work arrangements are stepping-stones down or up

the economic ladder, it is important to estimate the proportion of workers in traditional and noncontingent arrangements

who began their employment with their current employers in

some other type of arrangement. In addition, given that 17.9

percent of temporary help agency workers and 8.5 percent of

on-call workers said that they were in their arrangements because they hoped that these arrangements would lead to “permanent” employment, it is important to examine the rate of

transition to “permanent” employment to see whether these

workers' expectations are realistic.

The following tabulation presents the proportion of all

workers who were in neither an alternative nor a contingent

arrangement in February 1995 and who had ever worked as a

temporary worker, contractor, consultant, freelancer, or oncall worker. (To get a sense of whether the transition from

some other type of arrangement to a traditional, noncontingent arrangement benefited one sex more than the other or

one particular race, the rates are split by men and women and

by blacks and whites.)

Percent who switched

All employed (who were in neither

an alternative nor a contingent

arrangement) .............................................. 4.3

Sex:

Men ...................................................... 3.6

Women ................................................. 5.1

Race:

White .................................................... 4.4

Black .................................................... 3.9

To determine whether these transitions are a relatively recent phenomenon, the next tabulation shows the distribution

of total tenure in the job for those who switched to a traditional arrangement:

1 year or less ............................................................ 22.9

More than 1 year to 2 years ..................................... 12.8

More than 2 years to 3 years ................................... 8.6

More than 3 years to 5 years ................................... 14.3

More than 5 years .................................................... 41.2

Not available ............................................................ .2

Average years of job tenure for

those who switched ............................................... 6.9

The first thing to notice in examining the preceding figures is that approximately 4.3 percent of those who were in

neither an alternative nor a contingent arrangement in February 1995 had worked at some point for their current employer

in some other type of arrangement. This estimate translates

into about 4.3 million workers. Fully 83 percent of these workers had made the transition to a nonalternative, noncontingent

arrangement directly, without a span of time in between. However, it is important to note that the average tenure for all

workers who switched (including the time they were in an

alternative arrangement) was 6.9 years, and 41.2 percent had

a tenure with their current employer that was greater than 5

years.17 Consequently, these transitions do not seem likely to

have been relatively recent ones for workers with short spells

in alternative arrangements.

With regard to the demographics of those making the transition, the rate for women, 5.1 percent, was significantly

higher than the 3.6-percent rate for men. However, whether

this difference is due to screening on the part of employers or

women availing themselves of flexible arrangements prior to

working “permanently” is impossible to say without additional data. The rate for blacks, 3.9 percent, was lower than

that for whites, 4.4 percent. Overall, the estimates suggest

that, although the expectations and hopes of temporary help

agency workers and on-call workers to switch directly into

“permanent” employment are not completely unfounded, they

probably exceed reality.

THE PRECEDING ANALYSIS SUGGESTS THAT, although the burden of being involuntarily directed by labor market conditions

into a contingent or an alternative arrangement may fall disproportionately on some segments of the population, the magnitude of the problem does not seem large. In addition, while

it cannot be determined what individuals’ other employment

opportunities might have been in the absence of contingent

and alternative arrangements, examination of the reasons

Percent

distribution of tenure in

the job
74 Monthly Labor Review October 1996

Contingent Employment: By Choice?

workers were in these arrangements does seem to indicate that

they are affording some individuals who are constrained by

conditions outside of the labor market (for example, those with

family or school obligations) an opportunity to work that they

might not otherwise have. At the same time, although it does

not seem that a large proportion of workers are involuntarily

entering into contingent or alternative arrangements, neither

does it appear that such arrangements are providing a particularly large boost for those who are trying to enter or reenter the

traditional labor market.

Footnotes

1

 See, for example, Garth Mangum, Donald Mayall, and Kristin Nelson,

“The Temporary Help Industry: A Response to the Dual Internal Labor

Market,” Industrial and Labor Relations Review, July 1985, pp. 599–611;

Eileen Applebaum, “The Growth of the U.S. Contingent Labor Force,” in

Robert Drago and Richard Perlman, eds., Microeconomic Issues in Labor

Economics (London, Harvester Wheatsheaf, 1989); Polly Callaghan and Heidi

Hartmann, Contingent Work: A Chart Book on Part-Time and Temporary

Employment (Washington, Economic Policy Institute, 1991); and Julie Quiroz,

James Auerbach, and Rubie Coles, “Strengthening Job Ladders for Contingent Workers,” in New Policies for Part-Time and Contingent Workers (San

Francisco, New Ways to Work, 1991), pp. 46–48. 2

 See, for example, Bruce Steinberg, “Temporary Help Services: An Annual Update for 1995,” Contemporary Times, Spring 1996, pp. 11–18; and

Lewis Segal and Daniel Sullivan, “The temporary labor force,” Economic

Perspectives, March/April 1995, pp. 2–19. 3

 Steinberg, “Temporary Help Services,” p. 15.

4

 See Paul Osterman, “Internal Labor Markets: Theory and Change,” in

Clark Kerr and Paul D. Staudohar, eds., Labor Economics and Industrial

Relations (Cambridge, MA, Harvard University Press, 1994); Anne E. Polivka,

Are Temporary Help Agency Workers Substitutes for Direct Hire Temps?

Searching for an Alternative Explanation of Growth in the Temporary Help

Industry (paper presented at the Society of Labor Economists Conference,

Chicago, May 3–4, 1996); Maria Ward Otoo, Contingent Employment and

Frictional Unemployment (Board of Governors of the Federal Reserve System, 1996); and Applebaum, “Contingent Labor Force.” 5

 For further discussion of the measurement and definition of contingent

workers and workers in alternative work arrangements, see Anne E. Polivka’s

article, pages 3–9, this issue. For a discussion of the differences among workers

in the various alternative work arrangements, see the article by Sharon R.

Cohany, “Workers in alternative arrangements,” pp. 31–45. 6

 See, for example, Thomas Dunn and Douglas Holtz-Eakin, Financial

Capital, Human Capital, and the Transition to Self-Employment: Evidence

from Intergenerational Links, Working Paper No. 5622 (Cambridge, MA,

National Bureau of Economic Research, 1996); Bruce Meyer, Why Are There

So Few Black Entrepreneurs? Working Paper 3537 (Cambridge, MA, National Bureau of Economic Research, 1990); and John E. Bregger, “Measuring self-employment in the United States,” Monthly Labor Review, January/

February 1996, pp. 3–9. 7 For a discussion of the comparative costs of displacement over time, see

Henry Farber, The Changing Face of Job Loss in the United States, 1981–

1993, Working Paper 5596 (Cambridge, MA, National Bureau of Economic

Research, 1996). 8

 Individuals could quit in anticipation of being laid off. However, the

literature on advance notification of job losses indicates that the quit rate for

those who know with certainty that they are losing their jobs is not particularly high. For example, using data from the 1988 Discouraged Worker Supplement to the CPS, Christopher J. Ruhm, “Advance Notice and Postdisplacement

Joblessness,” Journal of Labor Economics, vol. 10, no. 1, January 1992, pp.

1–32, found that only 13.9 percent of those who received advance notification avoided joblessness of a week or less. Further, in a study of job loss in

Arizona, Paul L. Burgess and Stuart A. Low, “Preunemployment Job Search

and Advance Job Loss Notice,” Journal of Labor Economics, July 1992,

found that more than 40 percent of workers who received advance notification of their job losses did not look for a new job prior to the loss of their old

one. 9 At first glance, the rates of those leaving previous employment voluntarily do not seem equal, as 57.1 percent of independent contractors who had

previously worked reported that they quit, compared with 64.5 percent of

previously employed workers in traditional arrangements. (See table 6.) However, an examination of the responses of independent contractors classified

as “other” indicates that a high proportion of the reasons for changing their

employment status were voluntary. Among these reasons were “buying out

or taking over the business,” “being promoted to an owner or partner,” and

“continuing to work at the previous job in addition to becoming an independent contractor.” When the “quit job” category and the appropriate parts of the

“other” category were combined into a single category, the distribution of

reasons for changing a prior employment relationship was little different for

independent contractors than it was for those who were in traditional work

arrangements.

10 In examining contingent workers’ preferences for their arrangement,

the preferences of contingent workers under estimates 1 and 2 are emphasized because preferences were not collected for a portion of those who were

contingent under the broadest estimate. Consequently, the distribution of preferences under estimate 3 was skewed by the unavailability of some of the

data.

11 Independent contractors who were identified as self-employed in the

main CPS questionnaire were excluded because they were not asked the question. A small number of workers who orginally were classified as self-employed, but who were switched to wage and salary status when the data were

edited, also were excluded.

12 Although 16. 7 percent of workers in the specified alternative arrangements were switched from another type of arrangement, workers who were

switched constituted less than 1 percent of all those who were employed in

February 1995.

13 Because data on contract workers’ preferences for their arrangement

were not collected, such workers are excluded from both the numerator and

the denominator of this and all subsequent measures that include workers'

preferences for their arrangements.

14 Readers familiar with the concept of persons working part time for

economic reasons will recognize the parallel between that notion and this

measure of workers who are involuntarily in a contingent or an alternative

work arrangement. Individuals who are classified as working part time for

economic reasons have to indicate that they want, and are available, to work

full time, as well as provide an economic reason related to the labor market

for being part-time workers.

15 Excluding workers provided by contract firms, the proportion of all

workers in contingent or alternative arrangements who would prefer to be in

a traditional or noncontingent arrangement and who gave an economic reason for being in their current arrangement was 17.7 percent. 16 In inquiring about the job search activities of those in alternative arrangements, the survey asked workers whether they were searching for employment in an arrangement different from the one they currently were in.

This phrasing was used to avoid confusion that might have arisen from the

use of terms such as “job” and “employer.” For example, independent contractors might classify separate contracts as different jobs, in which case

they could say “yes,” they were looking for another job, when they simply

meant that they were looking for another project, as opposed to an arrangement in which they would not be an independent contractor.

17 The average tenure for those who switched directly, without a period in

between, was 6.6 years, and the distribution of their job tenure was little

different from that of all workers who made a similar transition.