Nonstandard employment arrangements: a proposed typology and policy planning framework.

There is widespread concern that laws and policies designed for the standard (e.g., full-time) employment model are inadequate in the face of nonstandard employment. Nonstandard employment includes "contingent employment," employment not anticipated to be of more than a year's duration, as well as the "alternative employment arrangements" of independent contracting, on-call work, temporary help agencies, and workers provided by contract firms. This article addresses the heterogeneity across nonstandard work and workers and develops a segmentation typology to highlight the different needs and expectations of nonstandard workers. The typology is used to examine the relative roles of public policy and social capital--the network of social relationships--in addressing the challenges of nonstandard employment. Public policy initiatives in the nonstandard employment arena must be tailored to employee and job characteristics.

There is growing concern that the policies and institutions that govern work have not kept pace with the realities of today's workplace, causing a "fundamental mismatch" between the two (Kochan, 2000). A particularly significant, frequently contentious, and often referenced manifestation of this mismatch is the rise in nonstandard employment arrangements (Carre & Joshi, 2001). Nonstandard employment includes both "alternative" and "contingent" employment relationships. In its supplement to the Current Population Survey (CPS), the U.S. Bureau of Labor Statistics (BLS) divides alternative employment arrangements into independent contractors, on-call workers, temporary help agency workers, and workers provided by contract firms (Cohany, 1998). BLS defines contingent employment broadly as all work that does not involve explicit or implicit contracts for long-term employment. The next section provides a detailed discussion and estimates of employees in each type of nonstandard employment arrangement.

There have been two significant foci in academic research dealing with these burgeoning nonstandard employment forms. One stream of research documents the unfavorable disparities in outcomes for employees in nonstandard versus standard employment arrangements (Nollen, 1996; Parker, 1994). These include the lack of an explicit or even implicit promise of continued employment, lower pay and benefits, and the unequal protection accorded the two groups under the law. An understandable outgrowth of this work is the call from scholars and practitioners urging the creation of public policies to better protect workers in nonstandard employment relationships (e.g., duRivage, et al., 1998).

A second stream of research has focused on documenting the composition of workers in nonstandard employment relationships, and, more recently, on the differences among these workers in terms of demographics, skills and abilities, and attitudes toward their non-regular status (Cohany, 1998; Hipple, 1998; Pink, 2001). Regrettably, there has been little attention to combining these two streams. Calls for public policy have been limited to a narrow emphasis on protection of worker rights and ignore the disparities among employees engaged in nonstandard work. Papers that do address differences across nonstandard employees seldom go beyond listing these. Consequently, important questions remain unaddressed: What are the most significant aspects of differences among employees from a policy intervention perspective? How do the varying needs and expectations among employees translate into targeted policy initiatives? Are there competing or complementary approaches to public policy that may be deployed for greatest eff iciency and effectiveness?

This article addresses these issues and is organized as follows: First, we discuss the trend toward nonstandard employment with a review of the benefits and drawbacks of such relationships for employees, employers, and for the broader social community. Next, we discuss the calls for public policy in this arena, categorizing the most common arguments proffered for such intervention. This is followed by a discussion of social capital theory, a private-initiative-based complement to public policy--introduced in the sociological literature and gaining prominence in managerial thought (e.g., Nahapiet & Ghoshal, 1998; Pennings, et al., 1998). A typology of nonstandard employment is presented to define distinct segments of nonstandard workers, to quantify segment sizes, and to derive appropriate policy and social capital initiatives. Implications and directions for future research conclude the article. (1)

Brief Review of Nonstandard Employment Relationships: Rationale and Concerns

A striking aspect of today's economy is the number, scope, and growth of nonstandard work arrangements, specifically, alternative and contingent employment. Nonstandard employment is estimated to be as high as 33 percent of all employment (Belous, 1989; Houseman & Polivka, 2000) and includes alternative and contingent work arrangements. (2) Alternative employment arrangements comprise independent contractors, on-call workers, temporary help agency workers, and workers provided by contract firms (Cohany, 1998). Independent contractors are defined as people who work for themselves. On-call workers are workers who are mobilized and used as needed. Temporary help agency workers are employees who are paid by a temporary help agency. Contract workers are employees who are paid by one company but carry out assignments for another. According to February 2001 current population survey data (most recent BLS data available), 12.5 million workers, or about one in 10 employees, fall into one of these four categories. This includes 8.6 million independent contractors, 2.1 million on-call workers, 1.2 million temporary help agency workers, and 633,000 workers provided by contract firms.

Another conceptualization of nonstandard employment is contingent work, defined as work without the expectation of continuity. Within this broad definition, finer distinctions have been attempted. For example, BLS data provide three successively broader estimates of contingency. Estimate 3, which measures contingency as the percentage of workers having worked or expecting to work in their current job for one year or less, puts the number of contingent workers at 5.4 million or 4 percent of employment. Several authors suggest, however, that the BLS data seriously underestimates the incidence of contingent employment, primarily because of definitional problems in enumerating contingency (Barker & Christensen, 1998). Available data reveal significant demographic differences. Contingent employees are more likely to be women than men, blacks and Hispanics than whites, and younger workers than older workers (Cohany, 1998). The likelihood of holding a contingent job is highest for workers in the construction and ser vice industries.

The breadth of activities performed by workers in nonstandard employment relationships seems to have changed most significantly during the 1990s. Nonstandard workers are no longer limited to low-skill, clerical positions and are just as likely among the professional and technical occupations (Hipple, 1998). The prevalence of nonstandard jobs among postsecondary teachers, workers with advanced degrees, and physicians as well as office clerks, data entry workers, and teachers' aides--occupations with varying skill levels--refutes the stereotype that these workers are primarily low-skilled (Ripple, 1998; Pink, 2001).

Rationale for Nonstandard Employment

The assumed principal benefit of a nonstandard workforce is the greater flexibility that it affords the organization. Because the firm has no long--term commitments to nonstandard workers, they can be deployed as market conditions warrant, providing considerable flexibility in the size of the employee pool (Belous, 1989)2 In highly cyclical or seasonal industries such as retailing, nonstandard workforce allows the firm to smooth out its staffing profile. (Caudron, 1994).

The nonstandard workforce can be hired as needed for specific skills or specialized know-how (Ettorre, 1994), without investing the time and resources required to develop employee skills for what may be a short-term project or a project deemed to be risky because technological advances may make the investment obsolete.

By hiring nonstandard workers for specific assignments, firms can avoid perceived wage inequity and its attendant problems (Frank, 1985). Frank (1985) offers the example of a high-paid consultant who receives continual assignments from a firm. Even when the workload justified it, the firm was reluctant to hire the consultant as a regular employee because other employees were apt to make pay comparisons when the consultant became an insider. The attendant equity perceptions associated with conversion of the consultant to full-time employee would have costly readjustments to the pay scale of all employees.

Finally, nonstandard employment arrangements may be conducive to greater strategic focus. A firm may retain standard, full-time employees only in those areas that it deems its core competencies (Prahalad, 1993). By using a nonstandard workforce in all other functions, it may achieve better returns because its resources are invested in its areas of distinctive competence (Huber, 1993).