At the BMW factory in Spartanburg, S.C., brand-new sport-utility vehicles roll off the assembly line with the regularity of a German express train. Work schedules, alas, are not always so reliable. Between 2007 and 2009, amid the turmoil of the financial crisis and ensuing recession, BMW hired, then laid off and then rehired some 700 temporary workers through a firm called Management, Analysis and Utilization (MAU). Josef Kerscher, the luxury carmaker’s American boss, likened the conditions that prompted the wild fluctuations in Spartanburg’s temporary workforce to a “roller coaster.”
Such volatility is not uncommon for America’s temps, however, whose numbers are growing even as their lot in life diminishes.
Demand for temps has never been higher. The industry now provides work for some 2.9 million people, more than 2 percent of the total workforce. The American Staffing Association, an industry group, estimates it generated more than $120 billion in revenue in 2015. Since the economic recovery began in 2009, temporary employment has been responsible for nearly one in 10 net new jobs.
But as temp work has grown, the quality of the jobs it provides has deteriorated. In the 1950s and 1960s, temping was seen as a way for educated people with time on their hands to earn a little extra cash. Census statistics show that today’s temps are disproportionately young, single and black or Hispanic and more likely than permanent workers to be high school dropouts.
Perhaps unsurprisingly, given all that, temps earn 20 to 25 percent less than their permanent counterparts. Even after controlling for demographic characteristics such as age and education, Lawrence Katz, an economist at Harvard University, said temps face a 15 percent earnings penalty. In 2014, 15 percent of temps lived below the poverty line.
The growth of the temping industry affects labor markets in several ways. On the positive side, by offering positions to workers who might otherwise be unemployed, temping reduces the unemployment rate. Temps also insulate permanent employees from downturns in the business cycle, thereby improving job stability.
Yet David Pedulla of Stanford University found permanent employees who work alongside temps worry more about job security. They also take less pride in their firm and have worse relationships with managers and co-workers. While some of those factors could be caused by the economic environment that led to using temp workers and not the actual use of temp agencies, they cannot be ignored either.