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Nonstandard work arrangements: a challenge for workers and labor unions.

The Teamsters' successful strike last summer against United Parcel Service suggests that UPS executives miscalculated the extent to which the American public would - and did - support the union rank and file. That the public supported the strikers by a two-to-one margin should not have come as a surprise. The strike merely brought to light what many working people already understood - that there is a dark side to the strong US economy. The unemployment rate has dipped to 4.7%, as low as it was in 1969, and profits are at their highest level in almost 40 years. But unlike the 1960s, the rising tide has not lifted all boats. Far too many American workers are stuck at the bottom of a two-tier economy.

Many of the jobs in the bottom tier, like the part-time jobs at UPS, are "nonstandard" employment that is also called contingent work. Nonstandard work is the absence of a regular, full-time, employee-employer relationship. This arrangement differs from standard jobs in at least one of the following ways: 1) the absence of an employer, as in self-employment and independent contracting; 2) a distinction between the organization that employs the worker and the one for whom the person works, as in contract work and in work for temporary-help agencies; and 3) the temporal instability of the job, as in temporary work, day labor, on-call work, and some forms of contracted work. In addition, we consider workers in part-time employment in a standard employment relationship to be in a nonstandard job.

Workers in nonstandard jobs include:

* independent contractors (freelancers or independent consultants);

* contract workers (e.g., janitors or computer specialists employed at a janitorial or computer services firm that contracts to provide services to other firms where these employees actually spend their working hours);

* on-call workers like substitute teachers;

* temps (workers employed by a temporary help agency); * day laborers;

* the self employed who own and run their own business; and

* workers employed in a regular employer-employee relationship who work less than 35 hours per week.

Although no data exist to document trends, the use of nonstandard work arrangements (NSWAs) appears to have increased over the last two to three decades. As shown in Table 1, by 1995, fully 29.4% of workers (some 37 million people) were in nonstandard jobs: 34.4% of female workers and 25.4% of males. Both Blacks and Latinos/as were more likely to work in regular full-time jobs than were whites, primarily because they were less likely to be self employed or independent contractors. Among nonstandard workers, 47% were [TABULAR DATA FOR TABLE 1 OMITTED] in regular part-time jobs (of these, 72% were women), 41% were independent contractors or self employed (64% male), and 5.4% were on-call workers (53% female). Most observers expect to see the number of nonstandard workers rise in coming years.

Nonstandard jobs can make sense, provided that they lead to new career paths or meet increased needs for flexibility on the part of both employers and workers. If, however, these arrangements are driven by employers' desires to reduce labor costs or if workers seeking regular full-time employment are forced to settle for nonstandard employment, such arrangements may fail to provide employees with the flexibility and economic security they require.

It is also critical to look at the quality of nonstandard jobs. Do they pay wages similar to those paid in regular full-time jobs to people with similar characteristics? Are they as likely as regular full-time jobs to provide fringe benefits? Do they provide an equivalent level of job security? Does such employment reflect the preferences of workers? The quality of nonstandard jobs is of heightened importance because the majority of nonstandard workers are women who may already be disadvantaged in the workplace in terms of wages and promotions. Nonstandard jobs also pose problems for trade unions. Labor law inhibits unions' ability to organize these workers and makes worker protections more difficult, even in organized settings.

Job Quality

Consider some of the most important aspects of a job: wages, fringe benefits, and job security. Here, compare standard (regular full-time) and nonstandard jobs on each of these three dimensions. In each case, we examine women and men separately.

Wages. Our evaluation of wages compares workers with similar education and other personal characteristics. We find that workers in all types of NSWAs except contract work are paid less per hour, on average, than regular full-time workers (see Table 2). For example, women who are self employed earn 25% less per hour than similar women in regular full-time jobs. The penalty for women working on call is 21%, and it is 20% for regular part-time workers. Men in regular part-time work are paid 24% less per hour than similar men working full time, and male temps face a pay penalty of 21%.

Part of the pay penalty occurs because nonstandard jobs are more likely to be found in low-wage industries and occupations, and in nonunion jobs (which on average are lower paid). More than half the women employed in retail trade, personal services, and entertainment and recreation services are in nonstandard jobs. The large number of these jobs pulls down the pay for regular full-time employees in these low-wage industries that have accounted for much of the job growth in the 1990s.

Employer-Sponsored Health Insurance and Pensions. A much smaller share of nonstandard than standard workers receive health insurance or a pension from their own employer. Among regular full-time workers, fully 69.4% and 62.6%, respectively, receive health insurance or a pension. However, among workers in NSWAs, just 12.1% receive either of these benefits.

Job Security. Another important dimension of job quality is job security - whether, with a satisfactory performance, a worker may continue in his or her job indefinitely. We define a job to be of uncertain duration if a survey respondent: 1) reports the job is temporary; 2) reports he cannot work for his employer as long as he wishes; 3) is not sure about criteria 1 or 2; or 4) expects his job to last for one year or less. Just 5.4% of regular full-time workers report their job is of uncertain duration, but among nonstandard workers, 17.9% of women and 18.2% of men report this uncertainty.

Worker Characteristics and Job Quality

While all types of nonstandard work are worse, on average, than regular full-time employment, there is some variation in job quality among the types of NSWAs. based on wage comparisons among standard and nonstandard workers, the various nonstandard arrangements can be categorized into three groups. Group 1 arrangements are those with the greatest wage penalties and include male and female regular part-time workers, female on-call workers and the self employed, and male temps. Group 3 arrangements are those with the highest wages compared to those of regular full-time workers: male and female contract workers and independent contractors, and self-employed men. Group 2 arrangements are those in between and include male on-call workers and female temps. Among all nonstandard workers, 58% are in the lowest-paid (relative to regular full-time workers) Group 1 arrangements, 4% are in Group 2, and 37% are in Group 3, the highest paid arrangements.

Gender and Race/Ethnicity. There are variations by sex, race, and ethnicity in the way workers sort into these three groups. Women are more likely than men to be in the Group 1 arrangements (the lowest paid) and less likely to be in Group 3 (the highest paid). Fully 81% of women in nonstandard work are in Group 1 arrangements. Just 31% of men in nonstandard jobs are in this group. Group 3 arrangements include 63% of men in NSWA and just 16% of women. The distribution of low- and high-quality jobs among women in NSWAs is very similar across these three racial and ethnic groups. As a share of all female nonstandard workers, 81% of whites are in Group 1, as are 82% of Blacks, and 84% of Latinos. Only 16% of white women, 11% of Black women and 13% of Latinas in NSWAs are in Group 3.

But among men, Blacks and Latinos are more likely than whites to work in the lowest-paid types of nonstandard work. Just 28% of white male nonstandard workers are in low-quality Group 1 jobs, compared to 53% of Blacks and 43% of Latinos. However, 67% of white men in NSWAs are in the better paying Group 3 jobs, compared with just 37% of Blacks and 44% of Latinos.

Education and Experience. For both women and men, the share of nonstandard workers in Group 1 jobs falls and Group 3 jobs rise with increasing levels of education. However, this gradient is much steeper for men than for women. Among females with a high school education, 33.3% of all workers are in NSWAs and, of these, 83% are in Group 1 arrangements. Just 13% are in Group 3. Even among college graduates, 75% of women in NSWAs are in Group 1 jobs and 21% are in Group 3. Among males with a high school education, 22.3% of workers are in nonstandard arrangements and, of these, 27% are in Group 1 jobs while 66% are in Group 3. For male college graduates in NSWAs, 79% are in Group 3 and just 18% are in Group 1.

Although large shares of both men and women work in the lowest quality nonstandard jobs when they are young (16 to 24), few men in nonstandard employment are in 1 ow-quality jobs in their prime-age work years (25-55) and beyond. For women, however, the story is different. Even during their prime working years (25-55), more than three-quarters of women in nonstandard jobs are employed in low-quality Group 1 jobs.

Men shift from low-quality to high-quality nonstandard jobs as they age and gain work experience and reach higher levels of education. This suggests that men use nonstandard jobs for career advancement and to meet career goals. This is much less true for women. There is no evidence of a shift by women to higher quality nonstandard arrangements with rising age. Even gains in education bring a much smaller shift to higher quality jobs than is true for men. Thus, although women are the majority of workers in NSWAs, women are disproportionately found in the lowest paid arrangements. Even after gaining additional years of education or experience in the workforce, women remain predominately in the low-quality jobs. Men, however, with education and experience, are able to move from the lower to higher quality arrangements.

Preferences far Nanstandard Work

Most workers in nonstandard jobs prefer this type of work arrangement. In the 1995 survey, just 23.6% reported they prefer a standard arrangement. However, preferences for standard employment vary greatly depending on work arrangement. Fully 72.6% of temps and 66.2% of on-call workers and day laborers prefer standard employment. These jobs are in the lower-quality Group 1 and 2 arrangements. Among regular part-time workers, 35.5% of men and 20.5% of women would like to work full time. Among women who work part time and who either have children and/or are married, fully 59% work part time for family reasons. Among the self employed, both sole proprietors and independent contractors, just 7.9% and 8.8%, respectively, prefer standard employment. These arrangements are Group 3, higher-quality jobs.

Although many people prefer nonstandard work, their choice is often based on the need to balance work with other responsibilities such as caring for children or going to school. Choosing a nonstandard job should not also require a worker to choose lower pay, no benefits, and reduced job security.

Nanstandard Work and Trade Unions

While many aspects of nonstandard jobs are troubling for workers, they also create problems for unions. Nonstandard workers are much less likely to be union members or covered by a collective bargaining agreement than are regular full-time workers. Just 9.6% of nonstandard workers are represented by a union compared to 19.9% of standard workers. Four out of every five people represented by a union are regular full-time workers.

Unions may offer nonstandard workers the best private-sector remedy for achieving equity in the workplace. But labor law currently inhibits organizing among nonstandard workers. To ensure that all workers, standard and nonstandard, have an effective right to organize. labor law must be reformed. For example, members of an "appropriate bargaining unit." the workplace unit in which a representational election is held, should be selected based on the content of their work (and encompass part-time and contract workers, for example), regardless of whether they are standard or nonstandard workers. The Taft-Hartley ban on secondary boycotts needs to be amended to permit collective action by subcontracted employees against a leasing employer.

Reforms are also needed to protect employees of joint employers. Some nonstandard workers such as temps, contract workers, or leased workers, in effect, have two employers - the site employer (client company) where they do their work and the contracting company or temp agency that is the employer of record. These two employers jointly control working conditions and wages. However, the employer-like role of the client company is rarely recognized in labor law, health and safety regulations, or in other laws regulating the workplace. Consequently, workers may not be adequately protected on the job and have no legal recourse with client companies that engage in unfair or unsafe practices. Laws regulating the workplace must be amended to encompass these joint-employer situations.


No one objects when businesses hire part-time workers, temps, or independent contractors for business reasons - to handle the overflow crowds in the deli on a Saturday morning or to deal with the surge in automobile-accident claims during an icy January. However, pay differences of the magnitudes described here inevitably tempt some companies to whittle away at good full-time jobs in order to cut their payroll and pad profits.

There are two reasons why companies might hire nonstandard workers: to provide flexibility or to reduce labor costs. If the goal is flexibility, for example, to meet increased demand, employers should pay nonstandard workers at rates comparable to those of their regular full-time workers with similar qualifications and experience. If nonstandard workers are hired solely to reduce costs, this is bad for workers, and probably bad for companies and the economy for at least three reasons. First, a firm that hires a nonstandard worker just to obtain an inexpensive worker is unlikely to provide much training. This means that productivity will be reduced. Second, morale suffers among workers, both full time and part time, because of the unfairness of a two-tier pay structure. Poor morale lowers productivity. Third, because wages are low, benefits poor, and job security uncertain, turnover is relatively high among nonstandard workers. This also reduces productivity. Thus, productivity both in the firm and in the economy as a whole can be affected when nonstandard workers are hired just to reduce costs.

Policies to protect nonstandard workers. to boost their pay to bring it more in line with that of regular full-time workers, to ensure their right to organize, and to encourage firms to follow the high-wage, high-productivity path are needed.

Wages of Nonstandard Workers, Compared to Regular Full-Time Workers
with Similar Education and Other Personal Characteristics, by NSWA
and Sex (Difference in %)

Work Arrangement                Women         Men

Regular Part-Time                -20%         -24%
Temporary Help Agency            -17          -21
On-Call                          -21           -9
Self-Employment                  -25          -13
Independent Contracting          -14           -5
Contract Company                   0            7

Source: Kalleberg, Arne L., et al. 1997. Nonstandard Work,
Substandard Jobs: Flexible Work Arrangements in the U.S. Washington,
D.C.: Economic Policy Institute.

Edie Rosell is an economist and Eileen Appelbaum is associate research director, at the Economic Policy Institute, in Washington, DC. They coauthored two recent papers on nonstandard work arrangements by EPI: "Nonstandard Work, Substandard Jobs: Flexible Work Arrangements in the US," and "Managing Work and Family Nonstandard Work Arrangements Among Managers and Professionals."
COPYRIGHT 1998 Social Policy Magazine
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Author:Rasell, Edie; Appelbaum, Eileen
Publication:Social Policy
Date:Jan 1, 1998
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