Labor

Tempting Fate

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Are we becoming a nation of temps? Of "disposable" and "throwaway" workers? That's the message in a glut of media stories that have appeared during the last 18 months or so. In one overheated account after another, we're told that employers are cutting back on permanent staff, relying instead on "contingent" workers who receive lower pay, few if any benefits, and no job security.

It's the numbers that hook you. The most aggressive and most often quoted numbers are from "The Temping of America," a six-page article that appeared in the March 29, 1993, issue of Time. The piece claims that contingent workers account for a third of all workers, up from a quarter in 1988, and that "their ranks are growing so quickly they're expected to outnumber permanent full-time workers by the end of the decade." Time says temporary-help firms send out 1.5 million workers daily, up 250 percent since 1982, while "another 34 million start their day as other types of contingent workers." According to Time, the list of postmodern peons includes part-timers, free-lancers, short-timers, contractors, leased employees, per-diem workers, independents, consultants, and supplementals.

We read of a "fragile and frightening new order," an "economy too addicted to treating workers like interchangeable, disposable grunts," and "some profound betrayal of the American dynamic." We are informed that "Communism deconstruct-ed itself [and] Capitalism has done something of the same to its work force." Time wants you to make no mistake about it: "This `disposable' work force is the most important trend in business today."

It isn't. Although wrenching change is transforming the American workplace and the human toll is enormous, the contingent work force is a myth. And, unlike myths whose origins are shrouded in the mists of antiquity and whose meanings are difficult to interpret, this one was invented in a particular time and place, to advance the political agenda of unions.

In his 1989 book, The Contingent Economy, Richard Belous, chief economist at the union-backed National Planning Association, cobbles together four categories of workers that he labels "contingent": part-time, self-employed, business services, and temporary. Contingent workers, according to Belous, lack long-term "attachment" to their employers. Unattached workers are likely to withhold their loyalty and best effort (there goes quality, productivity, and competitiveness), and employers are likely to deny contingent workers a living wage, decent benefits, training, and respect (there goes the American dream). Based on this work-force double whammy, Belous maintains that a rapidly growing army of contingent workers is bad for business, bad for contingent workers, and bad for permanent workers who could be replaced by them.

Most important, however, it's bad for unions. Since the workers in the four categories are normally excluded from collective bargaining, Belous sees "a more difficult environment for unions" as a major "cost" of contingent (read: flexible) work arrangements.

The contingent work force idea got a boost when another union-backed Washington organization, the Economic Policy Institute, which has Labor Secretary Robert Reich on its research committee, published New Policies for the Part-Time and Contingent Workforce in 1992. The book provides no estimate of the size and rate of growth of the so-called contingent work force. Instead, it simply cites Belous: "The total number of contingent workers in 1988 was between 29.9 and 36.6 million and represented 25-30 percent of the civilian labor force." Not surprisingly, given the EPI's backing, New Policies implies that union involvement would "protect" contingent workers and prevent the wholesale conversion of permanent full-time jobs into temporary work by ensuring that workers' interests are represented in how employment relationships within a company are structured.

Belous provides two estimates of the size of the contingent work force. His "liberal" estimate is the sum of the four categories, which he acknowledges counts some workers twice. His "conservative" estimate, which he says under-counts, is the sum of part-time and self-employed workers. Based on Bureau of Labor Statistics data, in 1992 the liberal estimate equaled 32.6 percent of all workers, up from 31.8 percent in 1988; the conservative estimate equaled 26 percent, up from 25.8 percent, over the same time period. It's not really kosher to compare, as Time apparently did, the liberal estimate in 1992 with the conservative estimate in 1988, but there's no other way to get the rapid growth claimed. Whatever the figures, as a percentage of all workers, part-time and self-employed workers have yet to regain peaks reached in 1983.

"The Contingency Work Force," For-tune's January 24, 1994, cover story, grudgingly acknowledges as much, but only after it recycles a number of widely accepted myths about the so-called contingent work force. Despite references to "doomster excess," Fortune perpetuates two well-entrenched fallacies.

First, Fortune asserts, "There have never been so many Americans working part-time who say they would rather have full-time jobs–roughly 6.4 million in 1993, out of 21 million part-timers." The correct number is 4.4 million out of 21 million part-timers; the other 2 million are workers who usually work full-time but during the BLS survey week were working fewer than 35 hours due to equipment maintenance, slow delivery of raw materials, slack demand, or other reasons. The 1993 numbers for both are lower than the 1992 BLS numbers. And as a percentage of total employment, both are about a full point lower than in the early 1980s.

Second, Fortune claims that rapid growth in temporary employment has made Manpower Inc., the nation's biggest temporary-help firm, the largest private employer in the United States, with 600,000 on its payroll. This erroneous claim first surfaced in the Time article and has been endlessly recycled. In lambasting the Time piece in an April 26, 1993, op-ed in the Chicago Tribune, management consultant Tom Peters nonetheless wrote, "It is spooky to realize, as Time reports, that Manpower is now America's largest employer." A couple of months later, when a high Labor Department official repeated this in congressional hearings, citing Time as the source, the Los Angeles Times, in reporting on the hearings, made it appear as if the source was official government data.

Time and Fortune goofed. Temporary-help firms count everyone, even those who are on their payroll for only a day, in their yearly employment totals. This overstates the number on the payroll on an average day (the number used by industry and the BLS) by a factor of five to seven, meaning that on a typical day last year Manpower had not 600,000 people on its payroll but only 80,000 to 112,000.

Apart from the numbers game, the contingent work force myth becomes even more apparent when you look closely at who fits into the categories of part-time, self-employed, business services, and temps. Part-time workers (20.8 million, three-quarters of them women) make up the largest category. The great majority in this category want to work part-time. They are disproportionately young people, mothers with small children, and people over 65. Historically, about a quarter of all women who work choose to work part-time and their increased labor-force participation rates drove pre-1983 growth in this category. As to the "attachment" of part-time workers, in a 1988 study Northwestern University labor economist Rebecca Blank found that half of all part-time workers over the age of 24 had been with their present employer for 3.7 years, 70 percent of the median tenure (4.3 years) for all workers.

Self-employed workers (10.3 million), the second largest group, includes workers such as farmers, barbers, doctors, child-care workers, lawyers, consultants, plumbers, carpenters, insurance agents, marketing and sales people, free-lance writers and designers, and artists. While the composition of the self-employed has been changing, its numbers have stayed fairly constant. Agricultural self-employment, both in absolute numbers and as a percentage of agricultural employment, has been declining quite rapidly in recent years, and non-agricultural self-employment has been essentially flat as a percent of total employment since 1982. The self-employed, in doing business as unincorporated entities and paying for their own benefits and vacations, are choosing to give their loyalty to a profession or skill rather than an organization.

The third largest category is made up of workers classified by the Bureau of Labor Statistics under business services (4 million, minus help-supply services) and engineering and management services (2.5 million). The former include firms that offer such services as computer and data processing, advertising, janitorial, and credit checking. The latter include workers at engineering and architectural, public relations, accounting, research and testing, and management consulting firms. Most of the 6.5 million workers in this category have permanent, full-time jobs. According to Belous, however, they have low levels of unionization and short-er than average job tenures. In his book, that makes them contingent. Employees at Big Six accounting firms and consultants at McKinsey & Co., among many others, probably wouldn't see it that way.

Help-supply service workers (1.6 million, most of whom are employees of temporary-help firms) make up the smallest category. Though singled out as the most contingent and given the lion's share of media attention, temporary workers at large temp firms stay on the payroll for only about four weeks, on average. As noted above, due to high turnover, in a given year temporary-help firms employ five to seven times more workers than they send out on an average day. That means that in 1993 they provided short-term work assignments for 9 million to 11 million people, 80 percent of them wom-en. Clearly, for most of these, "temping" is not the permanent way of life it is made out to be. Temp workers hired by temporary-help firms that specialize (in engineers or accountants, for example) often have longer tenures. So do temporary employees hired directly by organizations, but there's no official count of these.

The four categories of contingent workers are shown in the chart. (Workers counted under engineering and management services are excluded due to lack of consistent data prior to 1988.) To portray these four categories of workers as a phenomenon that is either new, sinister, or fast-growing poses quite a challenge. "Temporary" has to be made synonymous with "contingent," and the workers profiled have to be cast as "living on the edge," which means ignoring the tens of millions of "contingents" who are planted securely on economic terra firma. Otherwise, the story falls apart.

Since the part of the contingent work force that's big isn't growing and the part that's growing isn't big, this means proponents of the myth must engage in a gutsy sleight of hand.

The challenge has been met. On April 27, the CBS Evening News, in its "Eye on America" segment, profiled a pregnant woman who worked at four temporary jobs. The account called her "one of 35 million so-called temps, temporary workers," adding, "By the end of this decade, fully half of the American work force will be temporary."

Labor Secretary Robert Reich appeared in the CBS account, lending it an "official" quality. Reich, along with Belous, is a permanent fixture of contingent-worker stories. Reich told Time that nobody's job is safe in the face of a fast-growing contingent work force. Belous chimed in with: "If there was a national fear index, it would be directly related to the growth of contingent workers."

Quotes from mainstream labor economists are conspicuously absent from these stories, with good reason. Top academic journals, unlike labor unions and their champions in the media, have yet to "discover" contingent workers. Likewise, highly respected policy and economic research institutions have yet to discover them. There are no references, for exam-ple, to contingent workers or a contingent work force (or to any phenomenon these names suggest) in two recent Brookings Institution books: A Future of Lousy Jobs: The Changing Structure of U.S. Wages, published in 1990, and Growth With Equity: Economic Policymaking for the Next Century, published in mid-1993.

Ironically, when the contingent work force concept was first trotted out in the late 1980s, it hit a wall erected by a slowing economy. As a percentage of total employment, temporary employment was basically constant during 1989-1991. The concept took hold when temporary employment jumped 12.5 percent in 1992 and another 16 percent in 1993. What's missed in the alarmism, though, is that temporary employment is highly sensitive to turns in the economy and always grows especially rapidly (34 percent in 1984, 25 percent in 1975) during the early period of recoveries. Contributing to the sharp speed-up in growth of temporary work over the last two years was the fact that, unlike previous postwar recessions, the recent downturn was structural rather than cyclical. This meant most layoffs were permanent; workers weren't going to be called back to their old job when things improved. Because of this, many sought temporary work to make ends meet while searching for another permanent job.

This option and others would be curtailed if proponents of the contingent-worker myth had their way. In his 1989 book, Belous says unions will renew efforts to reduce business's flexibility to "contract out" and its ability to hire temporary workers. When collective bargaining efforts fail, he adds, unions will fight in the courts and in Congress for rulings and legislation to reduce the cost advantage of hiring contingent workers.

Belous's scenario has supporters in high places. Secretary Reich has said that organized labor and the Clinton administration have the same agenda. Last June, the Senate Subcommittee on Labor held hearings bemoaning what one speaker, a high Labor Department official, called the "new and perplexing" growth in disposable workers. Richard Delaney of the AFL-CIO testified that a rapidly growing contingent work force "promises to fuel a continuing spiral of economic decline." Similar false and misleading claims, most of them recycled from media accounts, were recycled again in media coverage of the hearings. If the contingent-worker myth continues to circulate unchallenged, it may only be a matter of time before Congress, a deliberative body not particularly known for separating fact from fan-cy, may feel compelled to enact far-reaching job "protections" and "benefits" that will compromise the economy's ability to grow and adjust to change.