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Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers?  Evidence from “Work First”

Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers?

Income Distribution, July 2010

Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown as to whether they foster longer term employment.  David H. Autor and Susan N. Houseman employ the unique structure of Detroit’s welfare-to-work program to identify the effect of temporary-help jobs on labor market advancement.  They find that while temporary-help job placements do not improve and may diminish subsequent earnings and employment outcomes among participants, job placements with direct-hire employers substantially raise earnings and employment.

Temporary-help firms employ a dis­pro­por­tion­ate share of low-skilled and Minority US work­ers. Within the low-wage pop­u­la­tion, employ­ment in tem­po­rary help is espe­cial­ly preva­lent among par­tic­i­pants in pub­lic employ­ment and train­ing pro­grams.  Although the tem­po­rary-help indus­try accounts for less than 3 per­cent of aver­age dai­ly employ­ment in the United States, state admin­is­tra­tive data show that 15 to 40 per­cent of for­mer wel­fare recip­i­ents who obtained employ­ment in the years fol­low­ing the 1996 US wel­fare reform took jobs in the tem­po­rary-help sec­tor.  The con­cen­tra­tion of low-skilled work­ers in the tem­po­rary-help sec­tor and the high inci­dence of tem­po­rary-help employ­ment among par­tic­i­pants in gov­ern­ment employ­ment pro­grams have cat­alyzed a debate as to whether tem­po­rary-help jobs facil­i­tate or hin­der labor mar­ket advance­ment. Lack of employ­ment sta­bil­i­ty is the prin­ci­ple obsta­cle to eco­nom­ic self-suf­fi­cien­cy among the low-skilled pop­u­la­tion, and thus a main goal of wel­fare-to-work and oth­er employ­ment pro­grams tar­get­ing low-skilled work­ers is to help par­tic­i­pants find sta­ble employ­ment.