Contingent and Alternative Employment Arrangements, February 2005 Technical Note
- 7 - Technical Note Source of data The data presented in this release were collected through a supplement to the February 2005 Current Population Survey (CPS), a monthly survey of about 60,000 households that provides data on employment and unemployment for the nation. The CPS is conducted by the U.S. Census Bureau for the Bureau of Labor Statistics (BLS). The purpose of this supplement was to obtain information from workers on whether they held contingent jobs, that is, jobs which are expected to last only a limited period of time. In addition, information was collected on several alternative employment arrangements, namely working as independent contractors and on call, as well as working through temporary help agencies or contract firms. Several major changes introduced into the CPS in 2003 affect the data that are presented in this release. These include the introduction of Census 2000 population controls, the use of new questions about race and Hispanic or Latino ethnicity, the presentation of data for Asians, and the introduction of new industry and occupational classification systems. For a detailed discussion of these changes and their impact on CPS data, see "Revisions to the Current Population Survey Effective in January 2003" in the February 2003 issue of Employment and Earnings and available at http://www.bls.gov/cps/rvcps03.pdf on the BLS Web site. All employed persons except unpaid family workers were included in the supplement. For persons holding more than one job, the questions referred to the characteristics of their main job--the job in which they worked the most hours. Similar surveys were conducted in February of 1995, 1997, 1999, and 2001. Reliability of the estimates Statistics based on the CPS are subject to both sampling and nonsampling error. When a sample, rather than the entire population, is surveyed, there is a chance that the sample estimates may differ from the "true" population values they represent. The exact difference, or sampling error, varies depending on the particular sample selected, and this variability is measured by the standard error of the estimate. There is about a 90- percent chance, or level of confidence, that an estimate based on a sample will differ by no more than 1.6 standard errors from the "true" population value because of sampling error. BLS analyses are generally conducted at the 90-percent level of confidence. The CPS data also are affected by nonsampling error. Nonsampling error can occur for many reasons, including the failure to sample a segment of the population, inability to obtain information for all respondents in the sample, inability or unwillingness of respondents to provide the correct information, and errors made in the collection or processing of data. For a full discussion of the reliability of data from the CPS and information on estimating standard errors, see the "Explanatory Notes and Estimates of Error" section of Employment and Earnings. - 8 - Concepts and definitions Defining and estimating the contingent workforce. Contingent workers are defined as those who do not have an explicit or implicit contract for long-term employment. Several pieces of information are collected in the supplement from which the existence of a contingent employment arrangement can be discerned. These include: whether the job is temporary or not expected to continue, how long the worker expects to be able to hold the job, and how long the worker has held the job. For workers who have a job with an intermediary, namely a temporary help agency or a contract company, information is collected about their employment at the place they are assigned to work by the intermediary as well as their employment with the intermediary itself. The key factor used to determine if a worker's job fits the conceptual definition of contingent is whether the job is temporary or not expected to continue. The first questions of the supplement are: 1. Some people are in temporary jobs that last only for a limited time or until the completion of a project. Is your job temporary? 2. Provided the economy does not change and your job performance is adequate, can you continue to work for your current employer as long as you wish? Respondents who answer "yes" to the first question or "no" to the second are then asked a series of questions to distinguish persons who are in temporary jobs from those who, for personal reasons, are temporarily holding jobs that offer the opportunity of ongoing employment. For example, students holding part-time jobs in fast-food restaurants while in school might view those jobs as temporary if they intend to leave them at the end of the school year. The jobs themselves, however, would be filled by other workers once the students leave. A job is defined as being short term or temporary if the person holding it is working only until the completion of a specific project, temporarily replacing another worker, being hired for a fixed time period, filling a seasonal job that is available only during certain times of the year, or if other business conditions dictated that the job is short term. Workers also are asked how long they expect to stay in their current job and how long they have been with their current employer. The rationale for asking how long an individual expects to remain in his or her current job is that being able to hold a job for a year or more could be taken as evidence of at least an implicit contract for ongoing employment. In other words, the employer's need for the worker's services is not likely to evaporate tomorrow. By the same token, the information on how long a worker has been with the employer shows whether a job has been ongoing. Having remained with an employer for more than a year may be taken as evidence that, at least in the past, there was an explicit or implicit contract for continuing employment. - 9 - To assess the impact of altering some of the defining factors on the estimated size of the contingent workforce, three measures of contingent employment were developed, as follows: Under estimate 1, which is the narrowest, contingent workers are wage and salary workers who indicate that they expect to work in their current job for 1 year or less and who have worked for their current employer for 1 year or less. Self-employed workers, both incorporated and unincorporated, and independent contractors are excluded from the count of contingent workers under estimate 1; the rationale is that people who work for themselves, by definition, have ongoing employment arrangements, although they may face financial risks. Individuals who work for temporary help agencies or contract companies are considered contingent under estimate 1 only if they expect their employment arrangement with the temporary help or contract company to last for 1 year or less and they have worked for that company for 1 year or less. Estimate 2 expands the measure of the contingent work force by including the self-employed--both the incorporated and the unincorporated--and independent contractors who expect to be, and have been, in such employment arrangements for 1 year or less. (The questions asked of the self-employed are different from those asked of wage and salary workers.) In addition, temporary help and contract company workers are classified as contingent under estimate 2 if they have worked and expect to work for the customers to whom they are assigned for 1 year or less. For example, a "temp" secretary who is sent to a different customer each week but has worked for the same temporary help firm for more than 1 year and expects to be able to continue with that firm indefinitely is contingent under estimate 2, but not under estimate 1. In contrast, a "temp" who has been assigned to a single client for more than a year and expects to be able to stay with that client for more than a year is not counted as contingent under either estimate. Estimate 3 expands the count of contingency by removing the 1-year requirement on both expected duration of the job and current tenure for wage and salary workers. Thus, the estimate effectively includes all the wage and salary workers who do not expect their employment to last, except for those who, for personal reasons, expect to leave jobs that they would otherwise be able to keep. Thus, a worker who has held a job for 5 years could be considered contingent if he or she now views the job as temporary. These conditions on expected and current tenure are not relaxed for the self-employed and independent contractors because they are asked a different set of questions than wage and salary workers. Defining alternative employment arrangements. To provide estimates of the number of workers in alternative employment arrangements, the supplement includes questions about whether individuals are paid by a temporary help agency or contract company, or whether they are on-call workers or independent contractors. Definitions of each category, as well as the main questions used to identify workers in each category, follow. - 10 - Independent contractors are all those who are identified as independent contractors, consultants, and free-lance workers in the supplement, regardless of whether they are identified as wage and salary workers or self-employed in the responses to basic CPS labor force status questions. Workers identified as self-employed (incorporated and unincorporated) in the basic CPS are asked, "Are you self-employed as an independent contractor, independent consultant, or something else (such as a shop or restaurant owner)?" in order to distinguish those who consider themselves to be independent contractors, consultants, or free-lance workers from those who are business operators such as shop owners or restaurateurs. Those identified as wage and salary workers in the basic CPS are asked, "Last week, were you working as an independent contractor, an independent consultant, or a free-lance worker? That is, someone who obtains customers on their own to provide a product or service." Eighty-seven percent of independent contractors were identified as self-employed in the main questionnaire, while 13 percent were identified as wage and salary workers. Conversely, nearly 3 in every 5 of the self-employed were identified as independent contractors. On-call workers are persons who are called into work only when they are needed. This category includes workers who answer affirmatively to the question, "Some people are in a pool of workers who are ONLY called to work as needed, although they can be scheduled to work for several days or weeks in a row, for example, substitute teachers and construction workers supplied by a union hiring hall. These people are sometimes referred to as ON-CALL workers. Were you an ON-CALL worker last week?" Persons with regularly scheduled work which might include periods of being "on call" to perform work at unusual hours, such as medical residents, are not included in this category. Temporary help agency workers are all those who are paid by a temporary help agency. To the extent that permanent staff of temporary help agencies indicate that they are paid by their agencies, the estimate of the number of workers whose employment is mediated by temporary help agencies is overstated. This category includes workers who say their job is temporary and answer affirmatively to the question, "Are you paid by a temporary help agency?" Also included are workers who say their job is not temporary and answer affirmatively to the question, "Even though you told me your job is not temporary, are you paid by a temporary help agency?" Workers provided by contract firms are those individuals identified as working for a contract company, and who usually work for only one customer and usually work at the customer's worksite. The last two requirements are imposed to focus on workers whose employment appears to be very closely tied to the firm for which they are performing the work, rather than include all workers employed by firms that provide services. This category includes workers who answer affirmatively to the question, "Some companies provide employees or their services to others under contract. A few examples of services that can be contracted out include security, landscaping, or computer programming. Did you work for a company that contracts out you or your services last week?" These workers also have to respond negatively to the question, "Are you usually assigned to more than one customer?" In addition, these workers have to respond affirmatively to the question, "Do you usually work at the customer's worksite?" - 11 - Additional information Persons interested in additional information about this release or the February supplements should contact (202) 691-6378 (e-mail: CPSInfo@bls.gov). Further information on the concepts used in this release can be found in "Contingent and alternative work arrangements, defined" in the October 1996 issue of the Monthly Labor Review available on the Internet at http://www.bls.gov/opub/mlr/1996/10/art1full.pdf. Information in this release is made available to sensory impaired individuals upon request. Voice phone: (202) 691-5200; TDD message referral phone: 1-800-877-8339.
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Last Modified Date: July 27, 2005