Labor Economics Commons^™

The Effects Of Temporary Services And Contracting Out On Low-Skilled Workers: Evidence From Auto Suppliers, Hospitals, And Public Schools, George A. Erickcek, Susan N. Houseman, Arne L. Kalleberg

Upjohn Institute Working Papers

We examine why employers use temporary agency and contract company workers and the implications of these practices for the wages, benefits, and working conditions of workers in low-skilled labor markets. Through intensive case studies in manufacturing (automotive supply), services (hospitals), and public sector (primary and secondary schools) industries, we define the circumstances under which these workers are likely to be adversely affected, minimally affected, or even benefited by such outsourcing. Adverse effects on compensation are clearest when companies substitute agency temporaries or contract company workers for regular employees on a long-term basis because low-skilled workers within the organization receive relatively …