===================================================================== Center for Community Economic Development University of Wisconsin-Extension Community Economics Newsletter No. 283 May 2000 ===================================================================== A Newsletter from the Center for Community Economic Development; Community, Natural Resource and Economic Development Programs, and University of Wisconsin-Extension, Cooperative Extension Service ===================================================================== MEASURING JOB SECURITY It has been argued that in order to control costs, firms are increasingly seeking more flexibility in their use of labor. The Bureau of Labor Statistics has collected some information that can be used to analyze job security in the United States. In periodic supplements to the Current Population Survey (CPS), individuals are asked about job tenure- time spent with their current employer. In February 1995, the Bureau conducted the first supplement to the CPS designed to obtain more information on another aspect of this issue: contingent and alternative employment arrangements. Contingent jobs, as defined in the supplement, are structured to last only a limited period; alternative employment arrangements include those made through intermediaries and those without standard work schedules. Measuring job tenure Time spent with an employer, or job tenure, is a commonly used variable in studies of the labor market that focus on topics such as labor supply, job search, and job turnover. While certain subgroups of the population, such as those with less education, experienced less job security than in the past, for the most part these analyses indicate that there was no systemic change in the duration of jobs over time. Measuring contingent employment The first special CPS supplemental survey to produce estimates of the number of workers in contingent jobs- that is, jobs which are structured to last only a limited period of time- was completed in February 1995. Prior to this survey, the term “contingent work” had been used to refer to a variety of work arrangements, including part- time work, self- employment, employment in the business services industry, and , in fact, almost any work arrangement that might be considered to differ from the commonly perceived norm of a full- time wage and salary job. Initial results from the February 1995 survey show that, at that time, between 2.7 million, 3.4 million and 6.0 million workers- a range of 2.2 percent, 2.8 percent to 4.9 percent of total employment- were in contingent jobs. This range spans three alternative estimates that were developed to assess the impact of different assumptions about the factors that constitute contingent employment. The narrowest estimate includes only wage and salary workers who had been in their jobs for 1 year or less and expected the jobs to last for an additional year or less. Self- employed workers, both incorporated and unincorporated, as well as independent contractors, are excluded from this estimate, the rationale being that, by definition, people who work for themselves have ongoing employment arrangements, although they may face financial risks. Also, workers employed by temporary help agencies or contract companies are not considered contingent if they expect to be able to stay with the firms for more than 1 year or have been with the firms for that amount of time, even if the places to which they are assigned to work by the firms change frequently. The middle estimate adds the self- employed- both incorporated and unincorporated- and independent contractors in a situation similar to that of the wage and salary workers of estimate 1. That is, these workers expected to be, and had been in their respective employment arrangements for 1 year of less. In the third and broadest estimate, the limitation on how long workers had held their jobs and expected to remain in them was dropped for wage and salary workers; thus, this estimate includes almost any worker who believed that his or her job was temporary or who did not expect the job to continue. That is, the estimate effectively includes all wage and salary workers who did not expect their employment to last, except for those who, for personal reasons, expected to leave jobs that they would otherwise be able to keep. Some of the major findings regarding the characteristics of contingent workers are that they tended to be young and were slightly more likely to be women and black. Also, the majority of those in contingent jobs would have preferred more permanent employment arrangements. The February 1995 survey also produced estimates of the numbers of workers in several “alternative employment arrangements”, including persons working as independent contractors and on- call workers, as well as those working through temporary help agencies or contract companies. According to the survey, 8.3 million workers (6.7 percent of the total employed) said that they were independent contractors, 2.0 million (1.7 percent) worked “on call”, 1.2 million (1.0 percent) worked for temporary help agencies, and 652,000 (0.5 percent) worked for contract firms that provided the worker’s services to one customer at that customer’s work site. Contingent employment was defined separately from these four types of employment arrangements, although an individual’s employment could both be contingent and fall into on of the alternative employment categories. In comparison the February 1997 CPS gives some idea about how people feel over time regarding job security. Using the broadest definition from the 1995 CPS, the contingency rate dropped from 4.9 percent to 4.4 percent. Thus, suggesting that workers feelings about job security had increased over the prior two years. The contingency rates had declined over broad demographic groups, occupations, and industry groups. Other data within the survey suggests that the reason workers were in contingent jobs may be due to voluntary reasons. In 1995, 41 percent indicated that family obligations, flexibility of schedule, and being in school was the major reason they were in a contingent job. By 1997, this reason had increased to 48 percent. It would seem that workers in contingent jobs have increased their use of this type of work for personal and voluntary reasons. With the continued tight labor market situation this trend is likely to continue. Drawn from Thomas Nardone, Jonathan Veum, & Julie Yates, “Measuring Job Security”, Vol. 120, No. 6, June 1997, and Robert M. Devens, “Gains in Job Security” in Vol. 121, No. 3, March 1998. Both in Monthly Labor Review. Ron Shaffer Community Development Economist Issued in furtherance of Cooperative Extension work, Acts of May 8, and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Carl O‘Connor, Cooperative Extension, University of Wisconsin-Extension. University of Wisconsin-Extension, U.S. Department of Agriculture and Wisconsin counties cooperating. UW-Extension provides equal opportunities in employment and programming, including Title IX and ADA.