Temporary Agency Employment as a Way Out of Poverty?

Authors

David H. Autor, Massachusetts Institute of Technology
Susan N. Houseman, W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0003-2657-8479

Publication Date

11-2005

Series

National Bureau of Economic Research Working Paper 11742

Abstract

The high incidence of temporary agency employment among participants in government employment programs has catalyzed debate about whether these jobs help the poor transition into stable employment and out of poverty. We provide direct evidence on this question through analysis of a Michigan welfare-to-work program in which program participants were randomly allocated across service providers ('contractors') with different job placement practices. We draw on a telephone survey of contractors and on administrative program data linked with wage records data on all participants entering the program over a three-and-a half-year period. Our survey evidence documents a consensus among contractors that temporary help jobs are generally easier for those with weak skills and experience to obtain, but no consensus on whether temporary help jobs confer long-term benefits to participants. Our analysis of the quasi-experimental data introduced in Autor and Houseman (2005) shows that placing participants in either temporary or direct-hire jobs improves their odds of leaving welfare and escaping poverty in the short term. However, we find that only direct-hire placements help reduce welfare dependency over longer time horizons. Our findings raise questions about the incentive structure of many government employment programs that emphasize rapid placement of program participants into jobs and that may inadvertently encourage high placement rates with temporary help agencies.

Publisher

National Bureau of Economic Research

DOI

10.3386/w11742

Issue Date

November 2005

Sponsorship

The Russell Sage Foundation and the Rockefeller Foundation provided support for this research.

Subject Areas

LABOR MARKET ISSUES; Employment relationships; Temporary employment; UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Poverty and income support; Income support programs; Low wage labor markets; WORKFORCE DEVELOPMENT; Public training programs; Welfare to work