Out of work? A temp job might not be your best bet

While I was out of town I missed this new paper (PDF) from MIT economist David Autor, which shows that people who are out of work and take a temporary gig until a full-time position comes along might be doing damage to their long-term earnings power.

Autor and Susan Houseman of the W.E. Upjohn Institute for Employment Research studied a welfare-to-work program in Detroit that randomly assigned job seekers to either temporary or long-term positions. The researchers looked at 37,000 cases between 1999 and 2003, and calculated that people who got full-time jobs increased their earnings by about $2,000 a year (compared to their previous income), but that those who started out with temporary positions saw their earnings drop by about $1,000 per year.

Autor offers up the following explanation:

“Holding the temp job has two consequences: First of all, it’s very difficult to search for a job while you’re working. Second, when you’re connected to a temp agency, you may have the illusion a job is about to show up. They say, ‘We’ll call you when we have something.’ I wouldn’t call it ‘complacency,’ but it may create the sense that you’re doing something when you’re not.”

Now, these findings come from a fairly low-skill labor pool, and whether or not the same patterns would be observed among, say, college-educated professional workers, is far from clear. In fact, there may be reason to think the process would work in the opposite direction since networking seems to play a larger role in landing higher-skill jobs.

Still, I think there’s an important lesson here: a temporary position may provide a much-needed paycheck, but it also represents an opportunity cost. As Autor says:

“What I’d like [job seekers] to take from this is that although temporary work sometimes leads to a direct-hire position, that’s probably not the most fruitful way to get them, relative to the sort of painful work of a direct-hire search. Don’t view temp work as the on-ramp into the labor market.”

Of course, whether or not you’ll have much say in the matter is an entirely different problem.

Stocks Rally Further in Run-up to EU Summit

MOSCOW — Global stocks enjoyed one of their best days in weeks on Tuesday ahead of a summit of European leaders that’s expected to be dominated by calls to boost economic growth.

Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country’s membership of the euro as well as the future of the single currency zone.

deconstructiva

Barbara, thanks for this post and esp. the bizweek article on disposable workers. Yes, temp work just pays the bills and doesn’t help careers much unless directly tied to our fields.
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Not all companies are guilty, but I’m astonished at how many still keep kicking their staffs and then firing them. Happy workers make great customers too, not alienated ones. We’re people, not “human resources / capital”, overhead, or office furniture. Great leaders make great companies (Steve Jobs), ditto for workers (quality products and service).