Contingent and Alternative Employment Arrangements, February 2001

Technical information: (202)  691-6378          USDL 01-153
        http://www.bls.gov/cpshome.htm

                                                For release:  10:00 A.M. EDT
Media contact:                691-5902          Thursday, May 24, 2001

                                     
     CONTINGENT AND ALTERNATIVE EMPLOYMENT ARRANGEMENTS, FEBRUARY 2001
                                     
                                     
   From February 1999 to February 2001, the proportion of U.S. workers
holding contingent jobs edged down, the Bureau of Labor Statistics of the
U.S. Department of Labor reported today.  Contingent workers are persons
who do not expect their jobs to last or who report that their jobs are
temporary.  Using three alternative measures, contingent workers accounted
for 1.7 percent to 4.0 percent of total employment in February 2001,
compared with 1.9 percent to 4.3 percent in February 1999.  (See table A.)
The broadest measure of contingency is well below that recorded in February
1995 (4.9 percent), when the survey was first conducted.  The drop in the
contingency rate over the period coincided with declining unemployment and
increasing employment.
   
   The analysis in this release focuses on the broadest measure of
contingency, which includes 5.4 million workers who do not expect their
current job to last.
   
   In addition to contingent workers, the February 2001 survey also
identified persons in alternative work arrangements.  The survey found 8.6
million independent contractors (6.4 percent of total employment), 2.1
million on-call workers (1.6 percent of total employment), 1.2 million
temporary help agency workers (0.9 percent of the employed), and 633,000
contract company workers (0.5 percent of total employment).  The
proportions of workers employed in all four alternative arrangements were
about unchanged since February 1999.  With the exception of independent
contractors, for whom there was a slight decline, these rates were little
changed from those of the first survey in February 1995.
   
   A worker may be in both a contingent and an alternative work
arrangement, but is not automatically so, because contingent work is
defined separately from the four alternative work arrangements.  In
February 2001, the proportion of workers in alternative work arrangements
who also were classified as contingent under the broadest estimate ranged
from 4 percent of independent contractors to 55 percent of temporary help
agency workers.
   
   Data on contingent and alternative employment arrangements have been
collected in biennial supplements to the Current Population Survey (CPS)
since February 1995.  The CPS is a monthly survey of 50,000 households that
is the primary source of information on the nation's labor force.  A
description of the concepts and definitions in the supplement is shown in
the Technical Note that follows the analysis.  Highlights from the February
2001 survey are:

                                  - 2 -

Table A. Contingent workers and workers in alternative arrangements
as a percent of total employment, February 2001
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                                                   |  Percent of
        Definition and alternative estimates       |    total
               of contingent workers               |   employed
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Contingent workers are those who do not have an
implicit or explicit contract for ongoing employ-
ment.  Persons who do not expect to continue in
their jobs for personal reasons, such as retirement
or returning to school, are not considered contin-
gent workers, provided that they would have the
option of continuing in the job were it not for
these personal reasons.

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Estimate 1                                         |
                                                   |
Wage and salary workers who expect their jobs will |
last for an additional year or less and who had    |
worked at their jobs for 1 year or less.  Self-    |
employed workers and independent contractors are   |
excluded from the estimate.  For temporary help    |
and contract workers, contingency is based on the  |
expected duration and tenure of their employment   |
with the temporary help or contract firm, not with |
the specific client to whom they were assigned.    |       1.7
                                                   |
Estimate 2                                         |
                                                   |
Workers, including the self-employed and indepen-  |
dent contractors, who expect their employment to   |
last for an additional year or less and who had    |
worked at their jobs (or been self-employed) for 1 |
year or less.  For temporary help and contract     |
workers, contingency is determined on the basis of |
the expected duration and tenure with the client   |
to whom they are assigned, instead of their tenure |
with the temporary help or contract firm.          |       2.2
                                                   |
Estimate 3                                         |
                                                   |
Workers who do not expect their jobs to last. Wage |
and salary workers are included even if they       |
already had held the job for more than 1 year and  |
expect to hold the job for at least an additional  |
year.  The self-employed and independent           |
contractors are included if they expect their      |
employment to last for an additional year or less  |
and they had been self-employed or independent     |
contractors for 1 year or less.                    |       4.0
---------------------------------------------------|
          Type of alternative arrangement          |
---------------------------------------------------|
                                                   |
Independent contractors                            |
Workers who were identified as independent         |
contractors, independent consultants, or free-     |
lance workers, whether they were self-employed or  |
wage and salary workers.                           |       6.4
                                                   |
On-call workers                                    |
Workers who are called to work only as needed,     |
although they can be scheduled to work for several |
days or weeks in a row.                            |       1.6
                                                   |
                                                   |
Workers who were paid by a temporary help agency,  |
whether or not their job was temporary.            |        .9
                                                   |
Workers provided by contract firms                 |
Workers who are employed by a company that         |
provides them or their services to others under    |
contract and who are usually assigned to only one  |
customer and usually work at the customer’s        |
worksite.                                          |        .5
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                                  - 3 -

 --There were 5.4 million contingent workers under the broadest measure
 of contingency (estimate 3), comprising 4 percent of total employment.
   
 --Contingent workers were more than twice as likely as noncontingent
 workers to be under age 25.  They were slightly more likely to be black or
 Hispanic than noncontingent workers.
   
 --Contingent workers age 25 to 64 were more likely than noncontingent
 workers to be high school dropouts and less likely to have graduated from
 college.
   
 --Over half (52 percent) of contingent workers would have preferred a
 permanent job.
   
 --The characteristics of workers in alternative employment arrangements
 differed widely among the four alternative arrangements and from workers in
 traditional arrangements.  For example, compared with workers in traditional
 arrangements, independent contractors were more likely to be white, male,
 and age 35 and older, while temporary help agency workers were more likely
 to be black or Hispanic, female, and between the ages of 20 and 34.
   
 --While 83 percent of independent contractors preferred their arrangement,
 49 percent of on-call workers and 45 percent of temporary help agency workers
 would have preferred to be in a traditional work arrangement.
   
Demographic characteristics of contingent workers
   
   In February 2001, 5.4 million workers were classified as contingent
under the broadest estimate.  The characteristics of contingent workers
were little changed from prior surveys.  About 31 percent of contingent
workers were 16 to 24 years old, compared with 14 percent of noncontingent
workers.  (See tables 1 and 2.)  Of those 16- to 24-year-old contingent
workers, 60 percent were enrolled in school in February 2001, compared with
41 percent of noncontingent workers of that age.  The predominance of
students in contingent work may explain why 42 percent of contingent
workers have part-time schedules, compared with 17 percent of noncontingent
workers.  Compared with noncontingent workers, contingent workers age 25 to
64 were more likely to have dropped out of high school and about as likely to 
have graduated from high school without going on to college.  (See table 3.)

   Contingent workers were somewhat more likely than noncontingent workers
to be women (50 percent compared with 47 percent).  Contingent workers were
slightly more likely than noncontingent workers to be black (13 percent
compared with 11 percent) or Hispanic (17 percent compared with 11
percent).  (See table 2.)
   
Occupation and industry of contingent workers
   
   As in prior surveys, contingent workers were spread across the different
occupational groups.  They were, however, more likely than noncontingent
workers to be in professional specialty, administrative support, services,
precision production, and farming occupations.  Over half of contingent
workers were employed in the services industry (55 percent)--a far greater
proportion than noncontingent workers.  They also were more likely than
noncontingent workers to be found in the agriculture and construction
industries.  (See table 4.)

                                  - 4 -
   
Job preferences of contingent workers
   
   Over half (52 percent) of contingent workers would have preferred a
permanent job in February 2001,  while 40 percent said they preferred their
contingent employment arrangement.  The percent of contingent workers who
preferred their employment arrangement was about the same as in February
1999 (39 percent), but was up substantially from February 1995 (31
percent).  (See table 10.)
   
Compensation of contingent workers
   
   In February 2001, the median usual weekly earnings for contingent
workers who were full-time employees was $432.  (See table 13.)  Due to the
way in which the survey was conducted in February 2001, information on the
earnings of noncontingent workers is not available.  (See the box note at
the end of the text for a further explanation.)
   
   As in prior surveys, contingent workers were much less likely than
noncontingent workers to have employer-provided health insurance coverage.
Only about one-fifth of contingent workers had employer-provided coverage,
compared with a little over one-half of noncontingent workers.  (See table
9.)  Despite the fact that only a small proportion of contingent workers
had employer-provided coverage, about 64 percent had health insurance from
some source--usually from another family member.  This rate was still lower
than that of noncontingent workers (83 percent).
   
   Only about one-fifth of contingent workers were eligible for employer-
provided pension plans, compared with about half of noncontingent workers.
(See table 9.)
   
Alternative employment arrangements
   
   The February 2001 survey collected information on the number and
characteristics of workers in four alternative employment
arrangements--independent contractors, on-call workers, temporary help
agency workers, and workers employed by contract companies.  The
proportions of the employed included in these four arrangements did not
change significantly since the last survey in February 1999.  Also little
changed were the characteristics of these workers.  They continued to
differ widely from each other and, in most cases, from workers with
traditional arrangements.
   
Independent contractors
   
   In February 2001, there were 8.6 million independent contractors
identified in the survey.  Independent contractor remained the largest of
the four alternative arrangements, making up 6.4 percent of total
employment.  As in past surveys, independent contractors were more likely
than workers in traditional arrangements to be over the age of 35, white,
and male.  They also were more likely to hold a bachelor's degree.  (See
tables 5, 6, and 7.)
   
   Part-time work was more common among independent contractors than among
traditional workers.  Twenty-five percent of independent contractors worked
part time, compared with 17 percent of workers in traditional arrangements.
As in prior surveys, independent contractors were most likely to work in
the services and construction industries and in managerial, professional
specialty, sales, and precision production occupations.  The vast majority
of independent contractors preferred their arrangement to a traditional
one; eighty-three percent stated that they preferred to work as independent
contractors rather than as an employee.  (See tables 6, 8, and 11.)

                                  - 5 -

On-call workers
   
   In February 2001, there were 2.1 million on-call workers, making up the
second largest alternative work arrangement.  A major difference between on-
call and traditional workers was that on-call workers were much more likely
to be between the ages of 16 and 24.  Another difference was that on-call
workers were nearly three times more likely than traditional workers to work
part time.  About 47 percent of on-call workers worked part time, by far the
highest incidence of part-time work among the four alternative arrangements.
On-call workers were more likely than those in traditional arrangements to       
work in professional, service, precision production, and operator, fabricator,
and laborer jobs and to be employed in the construction and services indus-
tries.  Forty-three percent of on-call workers would have preferred to work
in a traditional arrangement.  (See tables 5, 6, 8, and 11.)
   
Temporary help agency workers
   
   The February 2001 survey identified 1.2 million temporary help agency
workers.  As in earlier surveys, they were more likely than workers in
traditional arrangements to be women, black or Hispanic, and between the
ages of 20 and 34.  About 1 in 5 temporary help agency workers had part-
time schedules--slightly more than traditional workers.  Temporary help
agency workers age 16 to 24 were less likely to be enrolled in school than
traditional workers of the same age.  Those age 25 to 64 were more likely
than traditional workers to have dropped out of high school, but over half
had completed at least one year of college.  Temporary help agency workers
were overrepresented in the manufacturing and services industries and in
the administrative support and operator, fabricator, and laborer
occupations.  Forty-four percent of temporary help agency workers would
have preferred a traditional job, down from 57 percent in February 1999.
(See tables 5, 6, 7, 8, and 11.)
   
Workers provided by contract firms
   
   Contract company workers remained the smallest of the alternative work
classifications, with an estimated 633,000 persons in this arrangement in
February 2001.  These individuals work for companies that provide workers
or their services to other organizations under contract and usually were
assigned to one customer at a time and worked at the customer's worksite.
Contract company workers were disproportionately male (71 percent) and were
less likely than traditional workers to work part time.  Forty-two percent
of contract workers age 25 to 64 held a bachelor's degree, compared with 32
percent of traditional workers.  Contract company workers were most likely
to work in professional, service, and precision production occupations.
The majority of contract company workers were employed in the services and
manufacturing industries, and more than 1 in 10 worked in public
administration.  (See tables 5, 6, 7, and 8.)
   
Compensation of workers in alternative arrangements
   
   Among full-time workers in alternative arrangements, median usual weekly
earnings varied widely.  Contract company workers earned the most on
average ($790), followed by independent contractors ($644).  In contrast,
on-call workers earned only $517 and temporary help agency workers only
$396.  (See table 13.)
   
   The differences in earnings for workers in the four alternative
arrangements reflect in part differences in the occupational distributions
and the demographic characteristics of the workers in the arrangements.
For example, independent contractors tend to be older, highly educated
persons holding higher-paying professional specialty jobs, while temporary
help agency workers are more likely to be younger and are concentrated in
lower paying administrative support positions.

                                  - 6 -

   As in past surveys, workers with alternative arrangements were less
likely than workers with traditional arrangements to have health insurance
coverage from any source in February 2001.  As with earnings, however, the
coverage rates varied widely among arrangements.  Contract company workers
were the most likely of the four arrangements to have health insurance (80
percent).  This was very close to the rate for workers in a traditional
arrangement (83 percent).  Temporary help agency workers were the least
likely of the alternative arrangements to have health insurance (48
percent).  (See table 9.)
   
   A little more than half of contract company workers had employer-
provided health insurance, compared with 30 percent of on-call workers and
only 11 percent of temporary help agency workers.  (Independent contractors
do not have an employer in the same sense.)  Fifty-eight percent of workers
with traditional arrangements received health insurance benefits from their
employers.
   
   Compared with workers in traditional arrangements, only contract company
workers were as likely to be eligible for employer-provided pension plans
in February 2001.  Excluding independent contractors, the eligibility rates
ranged from 13 percent of temporary help agency workers to 56 percent of
contract company workers.  Fifty-five percent of workers with traditional
arrangements were eligible for employer-provided pension benefits.  (See
table 9.)

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 |         Sample change for the Contingent Work supplement           |
 |                                                                    |
 | In February 2001, the Contingent Work supplement was asked of about|
 |three-fourths of the Current Population Survey (CPS) sample of      |
 |50,000 households, rather than the entire sample.  A consequence    |
 |of this change is that usual weekly earnings estimates for workers  |
 |in noncontingent and traditional arrangements could not be gene-    |
 |rated from the February 2001 Contingent Work supplement.  While all |
 |workers in contingent or alternative arrangements are asked about   |
 |their usual weekly earnings, the earnings data on noncontingent     |
 |and traditional workers come only from the outgoing rotation groups,|
 |who were not asked the Contingent Work supplement in February 2001. |
 |(The outgoing rotation groups are households that are not scheduled |
 |to be interviewed the following month.  They constitute about a     |
 |quarter of the entire sample.)                                      |
 |                                                                    |
 | The sample change was an indirect result of a Congressionally-     |
 |mandated requirement that the Census Bureau improve data for the    |
 |State Children's Health Insurance Program (SCHIP).  The Census      |
 |Bureau obtains data for SCHIP from the Annual Demographic supple-   |
 |ment that usually is administered to the entire CPS sample in       |
 |March.  To boost the number of households that receive the supple-  |
 |ment, and thereby improve the SCHIP data, the Census Bureau took    |
 |a number of steps.  One was to administer the Annual Demographic    |
 |supplement to the outgoing rotation groups of the February sample.  |
 |Both BLS and Census Bureau staff agreed that asking respondents in  |
 |the outgoing rotation groups both the Annual Demographic supplement |
 |and the Contingent Work supplement would be unduly burdensome.      |
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