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May 1998, Vol. 121, No. 5
The long-term consequences of nontraditional employment
Marianne A. Ferber and Jane Waldfogel
October 1996 special issue of the Monthly Labor Review profiled
workers in nontraditional work arrangements and analyzed
their reasons for entering such employment.1 Several articles in the same issue of the Review
reported on the earnings and benefits of nonstandard
workers: Steven Hipple and Jay Stewart found that
contingent workers tend to earn less, and are less likely
to have health insurance and pension benefits, than
noncontingent workers, and that some alternative workers,
such as self-employed men, earn more than traditional or
standard workers, but are less likely to have health
insurance and pension coverage;2 and Donna Rothstein, using longitudinal data
from the National Longitudinal Survey of Youth (NLSY), compared earnings
on the current job with earnings on the previous job, for
a select sample of workers who had been on their current
job for no more than 3 years.3 Interestingly, she found that, for the typical
contingent worker in her sample, the current job
represented a step down from the previous job,
whereas for full-time, standard workers, the current job
tended to represent a step up from the previous
- These results, as well as some from
earlier research,4 raise a host of questions about the longer term
consequences of nontraditional employment. For example,
because workers engaged in such employment not only have
shorter job tenures,5 but also
are more likely to be assigned to routine jobs, to
receive less training (particularly important for workers
without a college education) and fewer promotions, and to
be laid off,6 they may receive lower wages and benefits in
the long run. Thus, to the extent that the problems
associated with nontraditional work turn out to be more
serious in the long run than in the short run, and to the
extent that individuals are unaware that this is the case
or have a short planning horizon, it may be that many of
those who choose this type of employment voluntarily will
eventually suffer serious deprivation as a result.7 With the exception of a
handful of studies on the wage growth of part-time
workers,8 there has been no
research to date on these long-term effects. This article
seeks to fill that gap.
- The research to be presented uses the NLSY
to investigate the long-term consequences of three types
of nontraditional employment on individuals
subsequent earnings and benefits.9 Building on what is
already known about the contingent labor force, we
investigate the following questions, which have not been
addressed in the research to date: First, how does
nontraditional employment (that is, ones ever
having had a nontraditional job) affect subsequent
earnings and benefits? Second, are the returns to
nontraditional work experience (that is, the length of
time one spends in nontraditional jobs) different from
the returns to traditional work experience? And third, to
what extent are estimates of the effects of
nontraditional employment and nontraditional work
experience biased by unobserved heterogeneity among
workers? The results suggest that nontraditional
employment does have long-term effects on these outcomes,
at least insofar as we are able to observe this in a
sample of young workers followed over 15 years in the NLSY. Moreover, most of
the long-term effects of nontraditional employment and
nontraditional work experience persist even after
controlling for potential heterogeneity bias.
This excerpt is from an article published in
the May 1998 issue of the Monthly Labor Review. The full
text of the article is available in Adobe Acrobat's Portable
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1 For profiles of these workers, see Anne E. Polivka,
"Contingent and alternative work arrangements,
defined," pp. 39, and "A profile of contingent
workers," pp. 1021; and Sharon R. Cohany,
"Workers in alternative employment arrangements," pp.
3145. For analyses of their reasons for entering into such
arrangements, see Polivka, "Into contingent and alternative
employment: by choice?" pp. 5574; and Donna S.
Rothstein, "Entry into and consequences of nonstandard work
arrangements," pp. 7582.
2 Steven Hipple and Jay Stewart, "Earnings and
benefits of contingent and noncontingent workers," pp.
2230; and Hipple and Stewart, "Earnings and benefits
of workers in alternative work arrangements," pp.
3 Rothstein, "Nonstandard work arrangements."
4 See, for example, Rebecca M. Blank, "Contingent
Work in a Changing Labor Market," in Richard Freeman and
Peter Gottschalk, eds., Generating Jobs (New York, Russell
Sage Foundation, 1998), pp. 25894.
5 Rothstein, "Nonstandard work arrangements."
6 See Kathleen Barker, "Changing Assumptions and
Contingent Solutions: The Costs and Benefits of Women Working
Full- and Part-Time," Sex Roles, January 1993, pp.
4771; and Chris Tilly, Half a Job: Bad and Good
Part-Time Jobs in a Changing Labor Market (Philadelphia,
Temple University Press, 1996).
7 For instance, young people in alternative work
arrangements may not be unduly concerned about their wages rising
less in later years or that they are less likely to have health
insurance or pension benefits. Nor will many of them look ahead
to the time when they may have greater problems finding new jobs
when they are older, not only because of age discrimination in
hiring, but because their discontinuous employment history is
likely to be viewed unfavorably by potential employers.
Similarly, single heads of families often have to take
nonstandard jobs when they have young children, but will find it
very difficult to manage with low earnings and meager benefits
when they are faced with education expenses, occasional medical
emergencies, and, finally, retirement without adequate provisions
for any of these eventualities.
8 Rebecca M. Blank, "Introduction," in Rebecca
M. Blank, ed., Social Protection versus Economic Flexibility
(Chicago, University of Chicago Press), 1994, pp. 119; and
Jerry A. Jacobs and Zhenchao Qian, "The Duration of
Employment in Part-Time Jobs," unpublished paper, University
of Pennsylvania, May 1994, explored dynamic labor supply choices
between part-time and full-time work. Ethel Jones and James Long,
"Part-Week Work and Human Capital Investment by Married
Women," Journal of Human Resources, vol. 14, no. 4,
1979, pp. 56378; and Mary Corcoran, Greg Duncan, and
Michael Ponza, "A Longitudinal Analysis of White
Womens Wages," Journal of Human Resources,
winter 1983, pp. 497520, showed that, at least in the short
run, part-time work is related to lower wage growth.
9 We use the term nontraditional here to avoid
confusion, because the workers we are looking at differ somewhat
from the workers included in the BLS definition of nonstandard
Related BLS programs
National Longitudinal Survey
Labor Force Statistics from the Current
- Related Monthly
Labor Review articles
Contingent and alternative work arrangements. A
special issue. October 1996.
- Contingent and
alternative work arrangements, defined.
- A profile of
- Earnings and
benefits of contingent and noncontingent workers.
- Workers in
alternative employment arrangements.
- Earnings and
benefits of workers in alternative work arrangements.
- Into contingent
and alternative employment: by choice.
- Entry into and
consequences of nonstandard work arrangements.
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