January, 2002, Vol. 125, No. 1
Précis
Why be flexible?
Forecasting worker quality
New economy, new workforce
About one in every ten or eleven workers reports participating in an alternative-to-regular-employee work arrangements and almost one in five works part time. While the concept of "regular employee" may be hard to define, as Charles Muhl points out in this issue, and alternative arrangements and part-time work are intertwined in complex ways, as pointed out by Marisa DiNatale last March, more flexible approaches to organizing work seem to be increasingly important.
Susan Houseman’s article, "Why Employers Use Flexible Staffing Arrangements: Evidence From an Establishment Survey," in the October 2001 Industrial and Labor Relations Review brings us new, survey-based evidence on the demand for flexible workers. Houseman found that seven out of ten employers reported using part-time workers and almost four out of five used at least one form of flexible arrangement other than part time.
The most common reasons employers gave for using alternative arrangements pertained to specific staffing needs such as unexpected fluctuations in workload, seasonal demands, or the need to cover for vacations or other absences of regular employees. Among those using part-time workers, the most common reasons reported were to cover either peak-load hours or to extend the establishment’s hours beyond those covered by full-time shifts.
On the contentious issue of cost savings, Houseman noted that, "Although few employers said they used workers in flexible staffing arrangements in order to save on wage and benefit costs, employers typically do save, primarily on benefit costs, by using these arrangements."
Improvements in the quality of the workforce have been among the forces boosting labor productivity in the past couple of decades. In fact, BLS figures show that in the first half of the 1990s, about one-fourth of labor productivity growth in private nonfarm business was due to increases in labor quality, where quality is measured using education and work experience. This dropped by half between 1995 and 1999, to about one-eighth of labor productivity growth. (See "Multifactor productivity trends, 1999," USDL news release 01–125 at http://www.bls.gov/news.release/prod3.nr0.htm for further details.)
Among the causes of gains in labor quality are rising levels of educational attainment among workers and increases in work experience that are associated with higher productivity. The movement of baby-boomers towards their peak earnings years has been a factor in increasing experience levels and increasing labor quality in recent years.
What can we project the contribution of worker quality to productivity growth (and hence output growth) to be in the coming years? Daniel Aaronson and Daniel Sullivan of the Federal Reserve Bank of Chicago tackle this question and others in "Growth in Worker Quality," Economic Perspectives (fourth quarter 2001). Among their data sources is the March Current Population Survey (CPS), from which they analyze data on earnings, weeks worked, and usual hours worked per week.
Other researchers who have studied U.S. labor quality have also used the CPS as a data source—among them are Mun Ho and Dale Jorgenson and the BLS Office of Productivity and Technology. The methodology used by Aaronson and Sullivan resembles those of these other researchers in some ways, with certain differences.
Aaronson and Sullivan report that their findings about past labor quality growth are "broadly similar" to those of Ho and Jorgenson and those of BLS. Like BLS findings, Aaronson and Sullivan’s results show a decline in the contribution of labor quality to productivity growth in the 1990s.
Turning to the future, Aaronson and Sullivan forecast a continued decline in the contribution of labor quality to productivity and output growth as we move towards 2010. According to their forecast, improvements in worker skills will account for only about 0.05 percentage point of labor productivity growth and output growth in 2010, down from their estimated contribution in the late 1980s and early 1990s of about 0.40 percentage point.
"A century ago, the overwhelming majority of people in developed countries worked with their hands," wrote Peter Drucker in a recent Economist magazine survey. Today, in contrast, the fast-growing group is the "knowledge workers" in jobs that require formal, advanced schooling. His analysis of these trends closely parallels that of BLS projections we have published in the Review.
Drucker further divides knowledge workers into the traditional professions and a new class of "knowledge technologists" such as computer programmers, manufacturing technicians, medical technologists, and paralegals. What makes these jobs different is that despite time often spent on routine duties, what identifies the work is the part that applies formal learning to the work situation.
These workers, according to Drucker, will need both the formal education that starts their careers in knowledge-based work and continuing education as "knowledge" becomes obsolete more quickly than "skill." Drucker believes that a larger measure of potential upward mobility marks the knowledge workforce. He also warns, however, that that mobility comes at a high price in terms of competitive pressure.
We are interested in your feedback on this column. Please let us know what you have found most interesting and what essential reading we may have missed. Write to: Executive Editor, Monthly Labor Review, Bureau of Labor Statistics, Washington, DC. 20212, or e-mail MLR@bls.gov |
Within Monthly Labor Review Online:
Welcome | Current
Issue | Index | Subscribe
| Archives
Exit Monthly Labor Review Online:
BLS Home | Publications & Research
Papers
