U.S. Workforce Losing Job Security as Permanent Full-Time Jobs Become Scarcer

Once upon a time, it wasn’t uncommon for American workers to take a job straight out of school, work for the same company for 45 years, and retire from that organization. Most people can name a grandparent or a great-grandparent who did just that. It seems like a quaint model to us nowadays: Americans are more mobile than ever, and change jobs at a faster pace than ever before. The new, highly changeable employment market isn’t only because of job-hopping workers, however. The current economic and business climate has companies seeking as few ties as possible to full-time, permanent workers.

Whether it’s hiring part-time or temporary workers, using contractors or freelancers, sending jobs to third-party outsourcing firms or using foreign labor markets, companies today simply aren’t so keen on providing “forever homes” for their workers. By using alternate arrangements, companies can avoid having to provide workers with a full complement of benefits.

According to a Government Accountability Office (GAO) report highlighted recently in the Wall Street Journal, found the trend is rising with staggering speed.

“The GAO found that contingent workers, broadly defined, comprised 40.4 percent of the workforce in 2010, up from 35.3 percent in 2006,” wrote the WSJ’s Lauren Weber. “Most of that growth came not from typical freelancers or temp workers but from an increase in permanent part-timers, a category that grew as employers cut hours and hired fewer full-time workers during the recession.”

Some workers prefer part-time, contract or freelance arrangements because it provides them with more flexibility to work the hours that suit their families and their lifestyles. But there’s no doubt that the lion’s share of the benefits are being gained by companies. Contingent workers are younger and less educated, and therefore paid less, both in salary and benefits. These workers also have little by way of job security, according to the GAO report, and earn 10.6 percent less, on average, than full-time permanent workers.

“The GAO also came up with a measure of what it calls the ‘core contingent workforce’—workers who lack job security and workers whose job schedules are variable, unpredictable or both,” wrote Weber. “It estimated that 7.9 percent of the U.S. labor force, up from 7.1 percent in 2006, falls into the category. The data source for both analyses was the 2010 General Social Survey, a survey conducted by NORC, an independent research organization at the University of Chicago.”

This isn’t good news for the still-struggling American employment sector. Workers without job security cannot buy homes or automobiles, struggle to pay for rent and food, rely more heavily on state and federal aid and consume no luxuries. Essentially, American workers become less able to buy the products and services their employers’ sell. With the idea of “a living wage” on the lips of many policymakers and politicians, data such as this will add ammunition to the arsenals of those who wish to see more stringent labor regulations, according to the WSJ.

“The findings may add some texture to policy debates about labor regulations and incentives for employers,” wrote Weber. “For example, if contingent workers rely on programs such as food stamps and Medicaid in higher numbers than standard workers—and they do, according to the data—then the government and taxpayers have an interest in promoting traditional employment arrangements.”

Edited by Stefania Viscusi