Why Temporary Work is Great For the Economy

New figures suggest that temporary work is on the rise.

This should concern us, according to New York Times writer Eric Hatton, who worries about the quality and types of jobs people can have. Temp workers look at jobs through the wrong lens: Jobs are an end to a means, and if we are going to increase the quality jobs we need to let the market work. Like many other unintended consequences, the temp worker is hindered by traditional employment regulation and in temp work finds a way to subvert it.

Temporary workers realize that with the current labor laws, the companies for which they'd like to work cannot hire them. Take a gander at the DOL website and notice how many laws and regulations there are on labor. For every new hire through traditional means, there is barrage of increased risk and cost any company must take on. Employers have to higher statisticians, lawyers, legal consultants, and human resource departments just to make sure that they do not get fined, let alone have to pay employees some obscure federally mandated benefit. Even the DOL hires temporary workers to avoid having to pay pesky federal mandated benefits they enforce.

A look at statistics offered by the American Staffing Institute reveals that 66% said that they were looking for work with the flexibility of temp work and almost a quarter say they had no interest in permanent work. It goes on to say that “79% of staffing employees work full-time, virtually the same as the rest of the work force.”

Any argument that temp work is somehow unfulfilling or not as good as traditional employment fails to see that this is the kind of work these people want. The average salary is $12 an hour but some temporary hires actually make more than at their career alternatives. While many firms use temp workers as way of screening applicants with less risk, 80% of companies who use temp staff see it as good way to find permanent hires and 53% took permenant jobs after their temporary jobs.

Is temp work perfect? No, like all other markets trying to subvert government meddling there are some unintended consequences. Temporary work is cyclical with booms and bust. Temp work is the first to go in bust and first to recover. The government has consistently been inflating new bubbles that eventually burst, with cheap credit and government-mandated securities. Temp workers should be the most worried about government intervening in the market place as well as regulating the temp economy.

Certainly, there are people who are looking for more permanent work but are forced into temporary contractual work just to avoid having to pay the increasing cost due to regulation. Yes, workers pay for the brunt of mandate regulations and benefits, not employers. Since employers and residual claimants they are trying to maximize their profits, in the same way that workers are trying to maximize their time between leisure and income, they will reduce employment, increase investment into labor saving technology and lower wages to offset the cost of regulation.

In a free market system, we would see probably fewer benefits and more mobility in the jobs market. Sounds worse but in reality it is not. Federally mandated benefits are a one size fits all contract. Not every job is the same. For example, if I work a desk job, I am willing to take lower disability insurance, if any at all, since the risk is low and the future cost is low since it is very likely I could still work my desk job.

It would allow a worker to get more of their pay check and let them choose what to spend their money on: health insurance, healthier food, gym membership, trainer, etc.  It would allow individuals to make these choices rather than some federal agency that knows absolutely nothing about what is optimal for you or me. 

The temp economy is something we should be both excited and worried about. We should be worried since it means we live in a more volatile time than ever before, but we should be happy that the market is developing ways to stay solvent even when government makes it difficult. Although I am not excited to join the job market as it is, without the temp economy it would be very unlikely to have a job at all.