Measuring Temporary Labor Outsourcing in U.S. Manufacturing

摘要

Several analysts claim that firms have been using more flexible work arrangements211u001ein order to contain the costly adjustment of labor to changes in economic 211u001econditions. In particular, temporary help supply (THS) employment has increased 211u001edramatically in the last ten years. However, there is only scant evidence on the 211u001eindustries that are hiring this type of worker. In particular, some anecdotal 211u001eevidence points to the fact that manufacturing industries have substantially 211u001estepped up their demand for THS workers since the mid-1980s. If this is true, not 211u001eaccounting for this flow of workers from the service sector to manufacturing may 211u001elead to misleading conclusions about the cyclical and long-term path of 211u001emanufacturing employment and hours of work. We close this gap by providing 211u001eseveral estimates of the number of individuals employed by temporary help supply 211u001e(THS) firms who worked in the manufacturing sector from 1972 to 1997. One 211u001eestimate, in particular, is based on a new methodology that uses minimal 211u001eassumptions to put bounds on the probability that a manufacturing worker is 211u001eemployed by a THS firm. The bounds rely on readily available data on workers' 211u001eindividual characteristics observable in the CPS. We show that manufacturers have 211u001ebeen using THS workers more intensively in the 1990s. In addition, the apparent 211u001eflatness of manufacturing employment in the 1990s can be explained in part by 211u001ethis type of outsourcing from the service sector. Finally, not accounting for THS 211u001ehours overstated the increase in average annual manufacturing labor productivity 211u001eby 1/2 percentage point during the 1991-1997 period.