The Consequences of Temporary Agency Employment for Low-Skilled Workers

Awarded Scholars:
David Autor, Massachusetts Institute of Technology
Susan Houseman, W. E. Upjohn Institute for Employment Research
Project Date:
Nov 2005
Award Amount:
$161,290
Project Programs:
Future of Work

Welfare reform measures of the 1990s prioritized an expedited route into the labor market for welfare dependents, claiming that employment served a valuable social and economic function. Recent analyses of state welfare-to-work programs show that 15 to 40 percent of all welfare recipients who found a job in the mid- to late-1990s were employed in the temporary help industry, raising the question of whether such jobs set workers on a trajectory towards career development and self-sufficiency, or relegate former welfare-dependents to permanent status among the working poor. Most studies of this question have used standard statistical controls and have found modest positive effects of temporary agency placements on subsequent labor market outcomes. However, RSF-sponsored research using a "quasi-experimental" design has contradicted other studies in the literature. David Autor and Susan Houseman compared outcomes of former welfare recipients assigned to either temporary agency employment or not. They found that individuals placed in temp-agency work showed no long-term gains in employment or earnings compared with clients who initially failed to get a job. Their study also found that temp placement was associated with an increased likelihood of falling back into welfare and may have reduced the probability of having sufficient earnings to escape poverty. Because the results of their study contrasted so sharply with other studies, the Foundation has decided to give further support to Autor and Houseman to shore up their study, investigate some of its implications for anti-poverty policy, scrutinize the difference between their results and previous studies by re-analyzing their data using standard statistical control techniques, and finally, present their work in a monograph that would provide a full review of the research literature on temporary jobs.

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