Economic News Release

Contingent and Alternative Employment Arrangements, February 2005



Technical information:  (202) 691-6378        USDL 05-1433
               http://www.bls.gov/cps/
                                              For release:  10:00 A.M. EDT
Media contact:                691-5902        Wednesday, July 27, 2005
                                     
                                                                          
     CONTINGENT AND ALTERNATIVE EMPLOYMENT ARRANGEMENTS, FEBRUARY 2005

   The proportion of U.S. workers holding contingent jobs was little
different in February 2005 than in February 2001, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today.  Contingent
workers are persons who do not expect their jobs to last or who reported
that their jobs are temporary.  Using three alternative measures, contin-
gent workers accounted for 1.8 to 4.1 percent of total employment in
February 2005.  (See table A.)  In February 2001, the last time the survey
was conducted, they ranged from 1.7 to 4.0 percent.  The first time the
survey was conducted, in February 1995, the estimates ranged from 2.2 to
4.9 percent.
   
   The analysis in this release focuses on the broadest estimate of con-
tingent workers--all those who do not expect their current job to last.
   
   In addition to contingent workers, the survey also identified those
workers who have alternative work arrangements.  In February 2005, there
were 10.3 million independent contractors (7.4 percent of total employment),
2.5 million on-call workers (1.8 percent of total employment), 1.2 million
temporary help agency workers (0.9 percent of total employment), and 813,000
workers provided by contract firms (0.6 percent of total employment).  (See
table 8.)  The proportion of the total employed who were independent contrac-
tors increased from 6.4 percent in February 2001.  The proportions for the
other three alternative work arrangements showed little or no change from
February 2001.
   
   An employment arrangement may be defined as both contingent and alterna-
tive, but this is not automatically the case because contingency is defined
separately from the four alternative work arrangements.  In February 2005,
the proportion of workers employed in alternative arrangements who also were
classified as contingent workers ranged from 3 percent of independent con-
tractors to 61 percent of temporary help agency workers.  (See table 12.)
   
   Data on contingent and alternative employment arrangements have been
collected periodically in supplements to the Current Population Survey (CPS)
since February 1995.  The CPS is a monthly nationwide survey of about 60,000
households that obtains information on employment, unemployment, earnings,
demographics, and other characteristics of the civilian noninstitutionalized
population age 16 and over.  A description of the concepts and definitions
used in the supplement is included in the Technical Note that follows this
analysis.  Some highlights from the February 2005 survey follow:

                                  - 2 -
        
Table A.  Contingent workers and workers in alternative arrangements as a
percent of total employment, February 2005
----------------------------------------------------------------------------
                                                                 | Percent 
   Definition and alternative estimates of contingent workers    | of total
                                                                 | employed
-----------------------------------------------------------------|----------
   Contingent workers are those who do not have an implicit or   |
explicit contract for ongoing employment.  Persons who do not    |
expect to continue in their jobs for personal reasons such as    |
retirement or returning to school are not considered contingent  |
workers, provided that they would have the option of continuing  |
in the job were it not for these reasons.                        |     
                                                                 |
Estimate 1                                                       |
Wage and salary workers who expect their jobs will last for an   |
additional year or less and who had worked at their jobs for 1   |
year or less.  Self-employed workers and independent contractors |
are excluded from the estimates.  For temporary help and contract|
workers, contingency is based on the expected duration and tenure|
of their employment with the temporary help or contract firm, not|
with the specific client to whom they were assigned.             |     1.8
                                                                 |
Estimate 2                                                       |
Workers including the self-employed and independent contractors  |
who expect their employment to last for an additional year or    |
less and who had worked at their jobs (or been self-employed)    |
for 1 year or less.  For temporary help and contract workers,    |
contingency is determined on the basis of the expected duration  |
and tenure with  the client to whom they have been assigned,     |
instead of their tenure with the temporary help or contract firm.|     2.3                   
                                                                 |
Estimate 3                                                       |
Workers who do not expect their jobs to last.  Wage and salary   |
workers are included even if they already have held the job for  |
more than 1 year and expect to hold the job for at least an addi-|
tional year.  The self-employed and independent contractors are  |
included if they expect their employment to last for an addi-    |
tional year or less and they had been self-employed or independ- |
ent contractors for 1 year or less.                              |     4.1
-----------------------------------------------------------------|-------------
                   Type of alternative arrangement               |
-----------------------------------------------------------------|-------------                                             
Independent contractors                                          |
Workers who were identified as independent contractors, independ-|
ent consultants, or freelance workers, whether they were self-   |
employed or wage and salary workers.                             |     7.4
                                                                 |
On-call workers                                                  |
Workers who are called to work only as needed, although they can |     
be scheduled to work for several days or weeks in a row.         |     1.8
                                                                 |
Temporary help agency workers                                    |
Workers who were paid by a temporary help agency, whether or not |
their job was temporary.                                         |      .9
                                                                 |
Workers provided by contract firms                               |
Workers who are employed by a company that provides them or      |
their services to others under contract and who are usually      |
assigned to only one customer and usually work at the customer's |
worksite.                                                        |      .6
-------------------------------------------------------------------------------

                                  - 3 -

  --Under the broadest measure of contingency, there were 5.7 million
    contingent workers in February 2005, accounting for about 4 percent
    of total employment.

  --Contingent workers were twice as likely as noncontingent workers to
    be under age 25.  Contingent workers were less likely to be white than
    noncontingent workers.

  --Young contingent workers (16- to 24-year olds) were more likely than
    their noncontingent counterparts to be enrolled in school.
  
  --More than half of contingent workers (55 percent) would have preferred
    a permanent job.

  --The demographic characteristics of workers in alternative employment
    arrangements varied widely between the four arrangements.  For example,
    independent contractors were more likely than workers in traditional
    arrangements to be older, male, and white.  Temporary help agency workers
    were more likely to be young, female, and black or Hispanic or Latino.

  --The majority of independent contractors (82 percent) preferred their
    work arrangement to a traditional job, while only 32 percent of tem-
    porary help agency workers preferred their current arrangement.
                          
Demographic Characteristics of Contingent Workers

   Using the broadest estimate of contingency, 5.7 million workers were
classified as contingent in February 2005.  Contingent workers were twice
as likely as noncontingent workers to be under 25 years old (27 versus
13 percent).  Of these young workers, nearly three-fifths of contingent
workers were enrolled in school, compared with about two-fifths of youth
with noncontingent jobs.  Contingent workers age 25 to 64 were found at
both ends of the educational attainment spectrum.  Compared with noncon-
tingent workers, contingent workers were more likely to have less than a
high school diploma (16 percent compared with 9 percent) and more likely
to hold at least a bachelor's degree (37 percent compared with 33 percent).
(See tables 1, 2, and 3.)
   
   A slightly larger proportion of contingent workers than noncontingent
workers were women (49 versus 47 percent).  Contingent workers were slightly
less likely to be white (79 percent compared with 83 percent) and much more
likely to be Hispanic or Latino (21 percent compared with 13 percent) than
their noncontingent counterparts.
   
   Part-time workers--individuals who usually work less than 35 hours a
week--made up two-fifths of contingent workers, compared with less than
one- fifth of noncontingent workers.  However, the vast majority of part-
time workers (91 percent) were not employed in contingent arrangements.
(See tables 1 and 2.)

                                   - 4 -
   
Occupation and Industry of Contingent Workers
   
   As in previous surveys, contingent workers were distributed throughout
the major occupational groups.  Compared with noncontingent workers, con-
tingent workers were more likely to work in professional and related oc-
cupations and construction and extraction occupations.  With regard to
industries, contingent workers were more likely to hold jobs in the pro-
fessional and business services, education and health services, and
construction industries.  (See table 4.)                                

Job Preferences of Contingent Workers
   
   The majority of contingent workers (55 percent) would have preferred a
job that was permanent.  However, more than 1 in every 3 said they preferred
their current arrangement.  (The remainder expressed no clear preference.)
(See table 10.)  By comparison, the proportion was 40 percent in February 2001.

Compensation of Contingent Workers
   
   Full-time contingent wage and salary workers had median weekly earnings
of $488 in February 2005.  (See table 13.)  (Beginning with the February
2001 survey, information on the earnings of noncontingent workers is not
available because it is no longer collected.)
   
   Contingent workers continued to be much less likely to have employer-
provided health insurance.  Less than one-fifth of contingent workers
(18 percent) were covered by health insurance provided by their employer,
compared with slightly more than half of noncontingent workers (52 percent).
Although four-fifths of contingent workers did not receive health insurance
from their employer, nearly three-fifths (59 percent) did have health in-
surance from some source.  (See table 9.)
   
   Contingent workers also were much less likely to be eligible for employer-
provided pension plans.  Half of noncontingent workers were eligible for such
plans, while only about 1 in every 5 contingent workers was eligible.  Among
those who were eligible, contingent workers also were much less likely to parti-
cipate in such plans.  (See table 9.)
   
Independent Contractors
   
   Independent contractors were the largest of the four alternative work
arrangements.  In February 2005, there were about 10.3 million independent
contractors, accounting for 7.4 percent of the employed.  These workers
were more likely than workers in traditional arrangements to be age 35
and over (81 versus 64 percent), male (65 versus 52 percent), and white
(89 versus 82 percent).  Thirty-six percent of independent contractors
had at least a bachelor's degree in February 2005, compared with 33 per-
cent of workers with traditional arrangements.  (See tables 5, 6, and 7.)
   
   Independent contractors were more likely than those with traditional
arrangements to be in management, business, and financial operations
occupations; sales and related occupations; and construction and extrac-
tion occupations.  In terms of industry, independent contractors were more
likely than traditional workers to be employed in construction, financial
activities, and professional and business services.  Fewer than 1 in 10
independent contractors said they would prefer a traditional work arrange-
ment.  (See tables 8 and 11.)

                                  - 5-
   
On-call Workers
   
   The second largest group of workers employed in alternative arrangements
was on-call workers.  Nearly 2.5 million workers (1.8 percent of total em-
ployed persons) were on-call workers in February 2005.  The characteristics
of on-call workers were similar to workers with traditional arrangements, ex-
cept that on-call workers were more likely to be young and to have less than
a high school diploma.  Twenty percent of on-call workers were 16- to 24-year
olds, compared with 14 percent of traditional workers.  Among on-call workers
age 25 to 64, 14 percent did not have a high school diploma, compared with
9 percent of workers in traditional arrangements.  (See tables 5, 6, and 7.)
   
   On-call workers were much more likely than traditional workers to hold
jobs in professional, service, and construction and extraction occupations.
By industry, on-call workers were overrepresented, compared with traditional
workers, in construction and education and health services.  About 44 percent
of on-call workers usually worked part time, a much higher proportion than
either traditional workers or workers in other alternative arrangements.  On-
call workers were about equally likely to prefer a traditional arrangement to
their alternative arrangement.  (See tables 6, 8, and 11.)

Temporary Help Agency Workers
   
   In February 2005, there were about 1.2 million temporary help agency
workers, accounting for 0.9 percent of all employment.  These workers were
more likely than traditional workers to be women and young.  Fifty-three
percent of temporary help agency workers were women, compared with about
48 percent of traditional workers.  Nearly half of temporary help agency
workers were under the age of 35 compared with only 36 percent of workers
in traditional arrangements.  Temporary help agency employees were much
more likely than workers with traditional arrangements to be black (23
versus 11 percent) and Hispanic or Latino (21 versus 13 percent).  Seven-
teen percent of temporary help agency workers ages 25 to 64 years old had
less than a high school diploma, compared with 9 percent of workers in tra-
ditional arrangements.  (See tables 5, 6, and 7.)
   
   In terms of occupation, temporary help agency workers were more likely
than traditional workers to hold office and administrative support and
production, transportation, and material moving jobs.  Compared with
traditional workers, temporary help agency workers were more frequently
employed in the manufacturing and professional and business services
industries.  (See table 8.)
   
   Among workers employed in alternative arrangements, those employed
by temporary help agencies were the least likely to prefer their current
arrangement (32 percent).  About 56 percent said they would prefer a
traditional arrangement.  (See table 11.)
   
Workers Provided by Contract Companies
   
   The smallest of the four alternative arrangements was contract company
employment, with 813,000 workers or 0.6 percent of total employment.  These
are individuals who were identified as working for a contract company and
who usually worked at the customer's worksite.  Nearly 70 percent of contract
company workers were men, compared with 52 percent of traditional workers.
Compared with traditional workers, employees of contract companies were more
likely to be black and Hispanic or Latino.  Among 25-to 64-year olds, those
employed by contract companies were more likely than traditional workers to
have less than a high school diploma (13 versus 9 percent); however, the
group also had a higher proportion of college graduates (37 versus 33 per-
cent).  (See tables 5, 6, and 7.)

                                  - 6 -
   
   Contract company employees were much more likely than workers with
traditional arrangements to hold jobs in professional, service, and
construction and extraction occupations.  Compared with traditional
workers, contract company workers were more frequently employed in
the construction industry and public administration.  (See table 8.)                                   
   
Compensation of Workers in Alternative Arrangements
   
   Median usual weekly earnings varied widely among full-time wage and
salary workers in the four alternative employment arrangements.  Contract
company workers ($756) and independent contractors ($716) earned signific-
antly more than on-call workers ($519) and temporary help agency workers
($414).  (See table 13.)                               

   The differences in earnings between the four alternative work arrange-
ments reflect in part the demographic and occupational concentration of
each arrangement.  For example, independent contractors tend to be older,
highly educated individuals who work in relatively high-paying management,
business, and financial operations occupations.  In contrast, temporary
help agency workers tend to be younger, less-educated persons who hold
relatively low-paying office and administrative support jobs.  (See
tables 5, 6, and 7.)
   
   Compared with workers in traditional arrangements, workers in alter-
native arrangements (except those employed by contract companies) were
much less likely to be covered by health insurance from any source than
workers in traditional arrangements.  Workers in all alternative work
arrangements were less likely than workers in traditional arrangements to
have health insurance provided by their employer.  At 49 percent, workers
provided by contract firms were the most likely to have health insurance
coverage from their employer, while employees of temporary help agencies
(8 percent) had the lowest rate of coverage.  Fifty-six percent of workers
with traditional arrangements had employer-provided health insurance
coverage.  (See table 9.)
   
   Workers in alternative arrangements were also less likely than those in
traditional arrangements to be eligible for employer-provided pension
plans.  As with health insurance coverage, there was considerable variation
between the four groups.  For example, contract company employees were the
most likely to be eligible at 43 percent, while only about 9 percent of
workers in temporary help agencies were eligible.  In contrast, 53 percent
of employees with traditional work arrangements were eligible for employer-
provided pension plans.  (See table 9.)
   
   



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Last Modified Date: July 27, 2005
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