To the extent that this is happening, some employment that, in the past, was counted in the industry of the business site is now being counted in the services industry. The result distorts time series and can lead to faulty analysis about job trends in an industry. This has been of particular concern in the manufacturing industries. Much research has been done to explain the shift from direct hires of permanent workers to contingent workers. Flexible work arrangements have been used as a means to meet fluctuations in demand for the firm's product, to supplement staff due to absences from work, and to reduce labor costs.
Some studies indicate that firms purchase services to avoid unionism.
2 Other studies cite increased competition and profit maximization as factors that lead to increased use of flexible staffing arrangements. 3 Still others show that more companies are taking advantage of greater economies of scale achieved by service firms or the specialized skills they offer. This article focuses on business services and engineering and management services, two industry groups that provide flexible labor services and have been adding employees more rapidly than the overall U.S. nonfarm economy. This excerpt is from an article published in the August 1997 issue of the Monthly Labor Review . See How to view a PDF file for more information.