Economic News Release

Contingent and Alternative Employment Arrangements, February 2005 Technical Note



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Technical Note
   
Source of data

   The data presented in this release were collected through a supplement
to the February 2005 Current Population Survey (CPS), a monthly survey of
about 60,000 households that provides data on employment and unemployment
for the nation.  The CPS is conducted by the U.S. Census Bureau for the
Bureau of Labor Statistics (BLS).  The purpose of this supplement was to
obtain information from workers on whether they held contingent jobs, that
is, jobs which are expected to last only a limited period of time.  In
addition, information was collected on several alternative employment
arrangements, namely working as independent contractors and on call, as
well as working through temporary help agencies or contract firms.
   
   Several major changes introduced into the CPS in 2003 affect the data
that are presented in this release.  These include the introduction of
Census 2000 population controls, the use of new questions about race and
Hispanic or Latino ethnicity, the presentation of data for Asians, and the
introduction of new industry and occupational classification systems.  For
a detailed discussion of these changes and their impact on CPS data, see
"Revisions to the Current Population Survey Effective in January 2003" in
the February 2003 issue of Employment and Earnings and available at
http://www.bls.gov/cps/rvcps03.pdf on the BLS Web site.
   
   All employed persons except unpaid family workers were included in the
supplement.  For persons holding more than one job, the questions referred
to the characteristics of their main job--the job in which they worked the
most hours.  Similar surveys were conducted in February of 1995, 1997,
1999, and 2001.
   
Reliability of the estimates
   
   Statistics based on the CPS are subject to both sampling and nonsampling
error.  When a sample, rather than the entire population, is surveyed,
there is a chance that the sample estimates may differ from the "true"
population values they represent.  The exact difference, or sampling error,
varies depending on the particular sample selected, and this variability is
measured by the standard error of the estimate.  There is about a 90-
percent chance, or level of confidence, that an estimate based on a sample
will differ by no more than 1.6 standard errors from the "true" population
value because of sampling error.  BLS analyses are generally conducted at
the 90-percent level of confidence.
   
   The CPS data also are affected by nonsampling error.  Nonsampling error
can occur for many reasons, including the failure to sample a segment of
the population, inability to obtain information for all respondents in the
sample, inability or unwillingness of respondents to provide the correct
information, and errors made in the collection or processing of data.
   
   For a full discussion of the reliability of data from the CPS and
information on estimating standard errors, see the "Explanatory Notes and
Estimates of Error" section of Employment and Earnings.

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Concepts and definitions
   
   Defining and estimating the contingent workforce.  Contingent workers
are defined as those who do not have an explicit or implicit contract for
long-term employment.  Several pieces of information are collected in the
supplement from which the existence of a contingent employment arrangement
can be discerned.  These include: whether the job is temporary or not
expected to continue, how long the worker expects to be able to hold the
job, and how long the worker has held the job.  For workers who have a job
with an intermediary, namely a temporary help agency or a contract company,
information is collected about their employment at the place they are
assigned to work by the intermediary as well as their employment with the
intermediary itself.
   
   The key factor used to determine if a worker's job fits the conceptual
definition of contingent is whether the job is temporary or not expected to
continue.  The first questions of the supplement are:
   1. Some people are in temporary jobs that last only for a limited time
or until the completion of a project.  Is your job temporary?
   2. Provided the economy does not change and your job performance is
adequate, can you continue to work for your current employer as long as you
wish?
   
   Respondents who answer "yes" to the first question or "no" to the second
are then asked a series of questions to distinguish persons who are in
temporary jobs from those who, for personal reasons, are temporarily
holding jobs that offer the opportunity of ongoing employment.  For
example, students holding part-time jobs in fast-food restaurants while in
school might view those jobs as temporary if they intend to leave them at
the end of the school year.  The jobs themselves, however, would be filled
by other workers once the students leave.
   
   A job is defined as being short term or temporary if the person holding
it is working only until the completion of a specific project, temporarily
replacing another worker, being hired for a fixed time period, filling a
seasonal job that is available only during certain times of the year, or if
other business conditions dictated that the job is short term.
   
   Workers also are asked how long they expect to stay in their current job
and how long they have been with their current employer.  The rationale for
asking how long an individual expects to remain in his or her current job
is that being able to hold a job for a year or more could be taken as
evidence of at least an implicit contract for ongoing employment.  In other
words, the employer's need for the worker's services is not likely to
evaporate tomorrow.  By the same token, the information on how long a
worker has been with the employer shows whether a job has been ongoing.
Having remained with an employer for more than a year may be taken as
evidence that, at least in the past, there was an explicit or implicit
contract for continuing employment.

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   To assess the impact of altering some of the defining factors on the
estimated size of the contingent workforce, three measures of contingent
employment were developed, as follows:
   
   Under estimate 1, which is the narrowest, contingent workers are wage
and salary workers who indicate that they expect to work in their current
job for 1 year or less and who have worked for their current employer for 1
year or less.  Self-employed workers, both incorporated and unincorporated,
and independent contractors are excluded from the count of contingent
workers under estimate 1; the rationale is that people who work for
themselves, by definition, have ongoing employment arrangements, although
they may face financial risks.  Individuals who work for temporary help
agencies or contract companies are considered contingent under estimate 1
only if they expect their employment arrangement with the temporary help or
contract company to last for 1 year or less and they have worked for that
company for 1 year or less.
   
   Estimate 2 expands the measure of the contingent work force by including
the self-employed--both the incorporated and the unincorporated--and
independent contractors who expect to be, and have been, in such employment
arrangements for 1 year or less.  (The questions asked of the self-employed
are different from those asked of wage and salary workers.)  In addition,
temporary help and contract company workers are classified as contingent
under estimate 2 if they have worked and expect to work for the customers
to whom they are assigned for 1 year or less.  For example, a "temp"
secretary who is sent to a different customer each week but has worked for
the same temporary help firm for more than 1 year and expects to be able to
continue with that firm indefinitely is contingent under estimate 2, but
not under estimate 1.  In contrast, a "temp" who has been assigned to a
single client for more than a year and expects to be able to stay with that
client for more than a year is not counted as contingent under either
estimate.
   
   Estimate 3 expands the count of contingency by removing the 1-year
requirement on both expected duration of the job and current tenure for
wage and salary workers.  Thus, the estimate effectively includes all the
wage and salary workers who do not expect their employment to last, except
for those who, for personal reasons, expect to leave jobs that they would
otherwise be able to keep.  Thus, a worker who has held a job for 5 years
could be considered contingent if he or she now views the job as temporary.
These conditions on expected and current tenure are not relaxed for the
self-employed and independent contractors because they are asked a
different set of questions than wage and salary workers.
   
   Defining alternative employment arrangements.  To provide estimates of
the number of workers in alternative employment arrangements, the
supplement includes questions about whether individuals are paid by a
temporary help agency or contract company, or whether they are on-call
workers or independent contractors.  Definitions of each category, as well
as the main questions used to identify workers in each category, follow.

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   Independent contractors are all those who are identified as independent
contractors, consultants, and free-lance workers in the supplement,
regardless of whether they are identified as wage and salary workers or
self-employed in the responses to basic CPS labor force status questions.
Workers identified as self-employed (incorporated and unincorporated) in
the basic CPS are asked, "Are you self-employed as an independent
contractor, independent consultant, or something else (such as a shop or
restaurant owner)?" in order to distinguish those who consider themselves
to be independent contractors, consultants, or free-lance workers from
those who are business operators such as shop owners or restaurateurs.
Those identified as wage and salary workers in the basic CPS are asked,
"Last week, were you working as an independent contractor, an independent
consultant, or a free-lance worker?  That is, someone who obtains customers
on their own to provide a product or service."  Eighty-seven percent of
independent contractors were identified as self-employed in the main
questionnaire, while 13 percent were identified as wage and salary workers.
Conversely, nearly 3 in every 5 of the self-employed were identified as
independent contractors.
   
   On-call workers are persons who are called into work only when they are
needed.  This category includes workers who answer affirmatively to the
question, "Some people are in a pool of workers who are ONLY called to work
as needed, although they can be scheduled to work for several days or weeks
in a row, for example, substitute teachers and construction workers
supplied by a union hiring hall.  These people are sometimes referred to as
ON-CALL workers.  Were you an ON-CALL worker last week?"  Persons with
regularly scheduled work which might include periods of being "on call" to
perform work at unusual hours, such as medical residents, are not included
in this category.
   
   Temporary help agency workers are all those who are paid by a temporary
help agency.  To the extent that permanent staff of temporary help agencies
indicate that they are paid by their agencies, the estimate of the number
of workers whose employment is mediated by temporary help agencies is
overstated.  This category includes workers who say their job is temporary
and answer affirmatively to the question, "Are you paid by a temporary help
agency?"  Also included are workers who say their job is not temporary and
answer affirmatively to the question, "Even though you told me your job is
not temporary, are you paid by a temporary help agency?"
   
   Workers provided by contract firms are those individuals identified as
working for a contract company, and who usually work for only one customer
and usually work at the customer's worksite.  The last two requirements are
imposed to focus on workers whose employment appears to be very closely
tied to the firm for which they are performing the work, rather than
include all workers employed by firms that provide services.  This category
includes workers who answer affirmatively to the question, "Some companies
provide employees or their services to others under contract.  A few
examples of services that can be contracted out include security,
landscaping, or computer programming.  Did you work for a company that
contracts out you or your services last week?"  These workers also have to
respond negatively to the question, "Are you usually assigned to more than
one customer?"  In addition, these workers have to respond affirmatively to
the question, "Do you usually work at the customer's worksite?"

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Additional information
   
   Persons interested in additional information about this release or the
February supplements should contact (202) 691-6378 (e-mail:
CPSInfo@bls.gov).  Further information on the concepts used in this release
can be found in "Contingent and alternative work arrangements, defined" in
the October 1996 issue of the Monthly Labor Review available on the
Internet at http://www.bls.gov/opub/mlr/1996/10/art1full.pdf.
   
   Information in this release is made available to sensory impaired
individuals upon request.  Voice phone:  (202) 691-5200; TDD message
referral phone:  1-800-877-8339.
   




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Last Modified Date: July 27, 2005
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