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Flexible Recession: The Temporary Staffing Industry and Mediated Work in the United States

Authors: Jamie Peck and Nik Theodore

Introduction

  • The Temporary Staffing Industry (TSI) in the US is examined with focus on:

    • Structural functions during the 1990s boom.

    • The ‘flexible’ recession of 2001.

    • The subsequent ‘jobless’ recovery.

  • Argument put forth:

    • TSI plays a systemic, macro-regulatory role in the US labor market.

    • Disproportionate share of costs related to labor-market adjustments.

  • TSI's development is entwined with the US economy's restructuring.

  • TSI has a significant presence as a supplier of low-cost, flexible labor.

Keywords

  • Temporary work, temporary employment agencies, US labor market, recession, jobless recovery.

  • JEL classifications: J40, J63, J65, J80.

1. Understanding the Temporary Staffing Industry

1.1 The Role of TSI in Economic Cycles

  • Focus on the recession of 2001 and employment slowdown from 2000 to 2004.

  • TSI faced challenge and achievement: shed half a million temp jobs and saw the collapse of hundreds of agencies.

  • The losses highlight TSI's capacity as a large-scale labor-market intermediary.

1.2 Historical Context

  • Over three decades, shift from stopgap staffing provider to systematic mediator between companies and labor supply.

2. TSI in the Labor Market

2.1 Macro-Level Flexibility

  • TSI not only meets micro-level demands but also mediates macroeconomic pressures.

  • Employment dynamics during the:

    • 1990s boom.

    • 2001 recession.

    • Subsequent ‘jobless’ recovery.

2.2 Nature of TSI Employment Relationships

  • Triangulated employment relationship: defined by agency-mediated temporary work.

  • Characteristics of temporary workers:

    • Denial of access to employment benefits.

    • Lower wages and career advancement prospects.

    • Alienation from unions and coworkers.

    • Subject to perfunctory discipline, with limited recourse.

  • Normalized insecurity as part of the employment relationship.

  • TSI offers ‘disposability’ that employers capitalize on.

2.3 Growth and Indicators of TSI’s Evolution

  • Spectacular growth from under 250,000 workers in the early 1970s to nearly 2.7 million by 2000.

  • Claims of the impending ‘death of the job’ often overstated.

  • Less than 3% of US jobs are temporary on any given day.

2.4 Varied Functions of Temporary Employment

  • Types of jobs sourced from TSI vary:

    • High-turnover or undesirable jobs (construction, assembly).

    • Recruitment pools for permanent positions in clerical jobs.

    • Seasonal employment and fluctuations management.

    • Use as a ‘core-periphery’ employment strategy in larger organizations.

2.5 Profile of Temporary Workers

  • **Composition of temps: **

    • Approximately 40% in clerical roles, 40% in blue-collar jobs, rest in various white-collar positions, including scientific and technical fields.

  • Characteristics vary:

    • Wages, duration of assignments, demographics (e.g., undocumented immigrants vs suburban Anglos).

3. The Impact of the 2001 Recession on TSI

3.1 Short-Term Job Loss Patterns

  • Significant downturn in TSI jobs, with estimates showing between 556,000 to 740,000 job losses during the recession.

  • Comparison with early 1990s recession proves TSI is much more sensitive to economic downturns now.

    • 2001 downturn saw TSI losses 4-5 times higher than the previous recession.

3.2 Absorptive Capacity of TSI

  • TSI acts as ‘shock absorber’ facilitating businesses to externalize economic fluctuations’ costs.

  • Temp workers accounted for over 25% of job losses in the economy while representing only 2.5% of the workforce.

3.3 Quantifying the Flexibility Quotient

  • Ratio identifying TSI's increasing role in managing job losses during economic downturns increased dramatically by the 2001 recession:

    • Ratio rose from 3.8 in the early '90s to 10.7 in 2001.

4. TSI's Systemic Role and Macroeconomic Functions

4.1 Regulatory Implications

  • The TSI manages and adjusts labor market dynamics and wage pressures across various sectors.

  • Average wages of temps significantly lower than those of directly hired permanent employees in similar occupations.

  • Occupations where temporary workers face significant wage penalties outlined in detail.

4.2 Jobless Recoveries and Structural Changes

  • Jobless recoveries from 2001 recession show a decline in traditional robust job growth patterns post-recession.

    • Temporary staffing becomes an ingrained employment strategy.

4.3 Historical Re-examination of TSI Growth

  • TSI growth is tied to broader labor market restructuring and regulatory challenges.

    • The story reflects not only growth but transformative regulatory implications for the labor market.

5. Evolution and Future of TSI

5.1 Transition through Decades

  • TSI emerged significantly in the 1970s, grew through the 1980s and 90s driven by changes in employer strategies.

5.2 Challenges and Limitations

  • Increased demand for flexibility juxtaposed with low margins and undercutting in pricing—leading to suppressed worker wages and benefits.

5.3 Conclusion

  • The TSI's foundational role transitioned from fulfilling temporary needs to becoming a central part of the labor economy, providing flexible employment solutions while also suppressing wages and undermining job security.