Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers?

Discussion Paper

David H. Autor and Susan N. Houseman

July 2010

Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown as to whether they foster longer term employment.

David H. Autor and Susan N. Houseman employ the unique structure of Detroit’s welfare-to-work program to identify the effect of temporary-help jobs on labor market advancement.  They find that while temporary-help job placements do not improve and may diminish subsequent earnings and employment outcomes among participants, job placements with direct-hire employers substantially raise earnings and employment.

Temporary-help firms employ a disproportionate share of low-skilled and Minority US workers. Within the low-wage population, employment in temporary help is especially prevalent among participants in public employment and training programs.  Although the temporary-help industry accounts for less than 3 percent of average daily employment in the United States, state administrative data show that 15 to 40 percent of former welfare recipients who obtained employment in the years following the 1996 US welfare reform took jobs in the temporary-help sector.  The concentration of low-skilled workers in the temporary-help sector and the high incidence of temporary-help employment among participants in government employment programs have catalyzed a debate as to whether temporary-help jobs facilitate or hinder labor market advancement. Lack of employment stability is the principle obstacle to economic self-sufficiency among the low-skilled population, and thus a main goal of welfare-to-work and other employment programs targeting low-skilled workers is to help participants find stable employment.