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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.