Temporary Employment: The New Permanent?

Uncertainties about future tax and health care costs could be inhibiting permanent job growth, shifting more of the labor force to temporary and part-time employment, say Pamela Villarreal, a senior fellow, and Peter Swanson, a Hatton W. Sumners Scholar, with the National Center for Policy Analysis.

• In 1956 there were only 20,000 temporary employees.
• By the early 1970s, there were 200,000 temporary employees, representing 0.3 percent of U.S. employment.
• In 1990, there were about 1 million temps, about 1 percent of employees.
• In 2000, 2.7 million temps accounted for 2 percent of employees.

Part-time employment has also grown in recent years:

• From 2005 to 2010, part-time employment doubled, from 4.3 million to 8.9 million jobs.
• Overall, since 2007 there has been a net loss of 9.8 million full-time jobs, but a gain of 2.3 million part-time jobs.

Beginning in 2014, the Affordable Care Act (ACA) requires employers with 50 or more employees to offer health insurance to employees who work 30 or more hours per week or pay a penalty.

Some employers will hire temporary or part-time workers to avoid the cost of providing health insurance.  However, the ACA limits the ability of employers to avoid paying penalties by hiring only part-time employees.  The ACA treats part-time employees as "full-time equivalents" by adding up the total number of hours per month worked by the part-timers and dividing by 120.  For example, if six part-time employees each work 25 hours per week, they would be the equivalent of five full-time employees.  Thus, these part-time employees would be counted toward determining whether or not the employer has 50 employees and is required to offer health insurance.  

If wages and salaries remain fairly constant, but the cost of health care and retirement benefits grows, employers will more likely use a temporary worker from a staffing agency, say Villarreal and Swanson.

Source: Pamela Villarreal and Peter Swanson, "Temporary Employment: The New Permanent?" National Center for Policy Analysis, October 7, 2011.