Book | Economic Growth

Nonstandard Work, Substandard Jobs: Flexible Work Arrangements in the U.S.

September 1997 | EPI Study

Flexible work arrangements in the U.S.

by Arne L. Kalleberg, Edith Rasell, Ken Hudson, David Webster, Barbara F. Reskin, Naomi Cassirer, and Eileen Appelbaum

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Executive Summary

For the past two decades, employment arrangements in the United States have been undergoing fundamental changes. In the past, the typical career paradigm was characterized by lifetime employment with a single employer, steady advances up the job ladder, and a pension upon retirement. But this pattern is becoming less the norm, while nonstandard work arrangements (NSWAs)–independent contracting, working for a temporary help agency, contract or on-call work, day labor, self-employment, and regular part-time employment–are growing more and more common. In 1995, 29.4% of all jobs were in nonstandard work arrangements, with 34.3% of female workers and 25.3% of males working in nonstandard jobs. (Because the data analyzed in this report are from the first nationally representative survey that questioned respondents about all types of work arrangements, we cannot assess historical trends–see the Appendix for a discussion of the growth in nonstandard work arrangements.)

The growth in nonstandard work is not inherently bad if these jobs are just as good as regular full-time jobs in terms of wages, benefits, job security, and other characteristics. We find, however, that typically all types of nonstandard jobs are inferior to regular full-time work. Nonstandard jobs pay less than regular full-time jobs to workers with similar characteristics, are less likely to provide health insurance or a pension, and are more likely to be of limited duration. While nonstandard workers receive lower wages than regular full-time workers with similar personal characteristics and educational qualifications, wage comparisons among standard and nonstandard workers that take into account not only personal characteristics but also occupation or industry, union status, and fringe benefits reveal somewhat smaller disadvantages for nonstandard workers. When these factors are considered, wage penalties shrink and some nonstandard workers actually receive wage premiums. These findings indicate that the wage differentials among nonstandard workers with similar personal and educational characteristics are largely due to the industry, occupation, or general quality of the jobs typical of these types of work arrangements. In other words, nonstandard workers are disadvantaged by (1) their work arrangement, and (2) the preponderance of low-quality jobs because they are more likely than regular full-time workers to be employed in low-quality jobs (e.g., working in low-wage industries and occupations that lack union representation or fail to provide health insurance and pension benefits).

In addition to paying lower wages, all types of nonstandard jobs are much less likely to provide health insurance or a pension than is regular full-time employment, are more likely to be of limited duration, and are poor ways to move to regular full-time employment, at least within a particular firm. Based on these indicators of job quality, all types of nonstandard jobs, on average, are of lower quality than standard jobs. However, there are great differences among the types of NSWAs regarding each of these dimensions of job quality.

Using wages to distinguish among the various types of NSWAs, we categorize nonstandard jobs into three groups. Group 1 jobs (which employ 58.2% of all nonstandard workers and 80.8% of all women in nonstandard work) are of the lowest quality; workers in this group are paid less than regular full-time workers with similar personal and job characteristics. Group 3 jobs (which employ 37.4% of nonstandard workers and 62.8% of men in nonstandard work) are the highest quality nonstandard jobs; workers are paid more than regular full-time workers with similar personal and job characteristics. Wages in jobs in Group 2 (where 4.4% of all nonstandard workers are employed) are similar to those of regular full-time workers with similar personal and job characteristics.

Group 1 includes

  • regular part-time workers,
  • female on-call workers,
  • women who are self-employed, and
  • male temps.

Group 2 includes

  • female temps
  • male on-call workers.

Group 3 includes

  • contract workers,
  • independent contractors, and
  • men who are self-employed.

Workers’ personal characteristics, especially sex and race/ethnicity, are important determinants of the type (i.e., quality) of NSWA in which they are employed. Women, more often than men, work in NSWAs, and women of all races and ethnic groups are highly concentrated in the lowest-quality types of nonstandard work. As a whole, men who do nonstandard work are concentrated in the higher quality types of work. However, nonwhite men are over-represented in low-quality nonstandard jobs and under-represented in high quality jobs.

As would be expected, workers in lower-quality nonstandard jobs express higher preferences for standard work; the greatest preferences for standard work were among part-time workers, temps, on-call workers, and day laborers. Given that a large and growing share of the labor force is employed in nonstandard work, and the majority of these workers are in the lowest-quality jobs, public policies are needed to improve job quality and provide greater workplace protections for these workers. These policies should:

  • prohibit discrimination in pay based on full-time/part-time status,
  • pro-rate benefits for part-time workers,
  • make child care affordable and available,
  • encourage employers to offer more flexible schedules to full-time workers,
  • expand family and medical leave,
  • maintain affirmative action and equal employment opportunity policies,
  • reform labor law to ensure nonstandard workers have an effective right to organize,
  • expand the earned income tax credit to raise incomes and reduce poverty, and
  • expand eligibility for unemployment compensation.

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