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'Contingency Employment': Fad or Trend? - 2002-07-02

Is the traditional semi-permanent relationship between employers and employees disappearing in the United States? Work patterns at many high-tech companies have observers wondering whether jobs in the nation's "new economy" are changing national work habits. Struggling to recover from the economic downturn, Hewlett Packard, Sun Microsystems and a host of smaller firms in California's Silicon Valley are telling their workers to take time off without pay to help cut costs. Such an order would not have been permitted under the labor-management contracts negotiated in the United States decades ago.

But, Michigan State University labor economist David Neumark says, it is typical of the new style of flexible employment in what he calls high tech's "new economy." "These are jobs which, for whatever reason, are essentially being arranged differently," he said. "There's a ton of freelance work. Programmers go from company to company to company. We are observing different types of employment relationships."

These observations are verified by statistics. David Neumark and Deborah Reed of the Public Policy Institute of California, studied employment relationships in ten U.S. cities with a high percentage of high tech companies.

Deborah Reed says they found the cities had far more contingent and alternative jobs than the rest of the country. "'Contingent' workers are hired to work on a specific project for a specific amount of pay," she explained. "At the end of that project, they have no anticipation of continuing employment with that employer. 'Alternative' work is often temporary, in the sense that you've been employed for a specific amount of time."

Hiring on a project or time basis enables employers to hire in good times, cut overhead in bad. But is the insecurity of on and off again employment fair to workers?

"Those who say: 'Oh, these are lousy jobs' are not really taking into account the fact that if workers didn't really like those kinds of jobs, firms would find they had to pay an awful lot to get people to take those kinds of jobs," Mr. Neumark said. "People are taking them and the evidence, I think, is very mixed as to whether people are worse off in these jobs."

Deborah Reed says educated, high-salaried tech workers may enjoy the flexibility of "new economy" jobs, but she worries the trend may spread to low wage earners. "As these growing industries continue to grow, we could see more contingent and alternative work in the future," she said.

Is that good or bad? It is a question labor economists are pondering.