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Why has The U.S. labor market shifted toward a greater reliance on temporary workers?
What effect will this have on both the unemployment rate and the economy in general?
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2 Answers
The shift to hiring temporary workers is simply the practical outworking of the "no job for life" mantra that became popular in the 1980s-1990s. Although the phrase has fallen out of fashion, the reality has become fait accompli for nearly everyone who is "employed." It also reinforces my opinion that most people are self-employed, whether they think they are or not.
There's a lot of evidence for this. Let me give you just example. As recently as 25 years ago, workers could expect their contracts to be automatically renewed upon their expiration provided they hadn't engaged in any hanky-panky or embezzlement in their company. As long as they did good work, it was a foregone conclusion that their contracts would be renewed.
Today it makes no difference how good your work is. Your services may no longer be required. Not only that, but many workers have learned to use the period between when their contracts expire and when they get another one to take longer vacations, get some education or training, move house, etc. So not only are companies comfortable with workers having breaks in their job history; so are many of these workers themselves.
This simply wouldn't be the case if the US was relying on permanent works. I should mention, too, that the day of the temporary worker is her to stay. It will become true for more people as time goes along.
I think rising health care costs has a lot to do with this. In most states you need to work at least 30 hrs per week to be eligible for benefits. With Health Care costs rising between 15-30% each year, Health Care costs make hiring full time employees cost prohibitive. I believe rising Health Care costs have had a dramatic impact on job growth despite the fact we don't hear them discussed together in the press.
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