Contingent and Alternative Employment Arrangements Technical Note

Technical Note

   The data presented in this news release were collected through a supplement to the May 2017
Current Population Survey (CPS), a monthly survey of about 60,000 eligible households
that provides data on employment and unemployment for the nation. The CPS is conducted
by the U.S. Census Bureau for the U.S. Bureau of Labor Statistics (BLS).

   The May 2017 supplement obtained information from workers on whether they held contingent
jobs--jobs that are expected to last only a limited period of time--and whether they had
alternative employment arrangements, such as working as independent contractors, as
on-call workers, through temporary help agencies, or through contract firms. Contingent
work and alternative employment arrangements are measured separately. A person in an
alternative employment arrangement may or may not be a contingent worker. Likewise, a
contingent worker may or may not be in an alternative employment arrangement.

   Supplement questions were asked of all employed people except unpaid family workers.
For people holding more than one job, the questions referred to the characteristics
of their main job--the job in which they worked the most hours. The collection of
these data was sponsored by the U.S. Department of Labor's Chief Evaluation Office.
Additional information, including articles and archived news releases, is available online at
www.bls.gov/cps/lfcharacteristics.htm#contingent. Answers to frequently asked questions
are available online at www.bls.gov/cps/contingent-and-alternative-arrangements-faqs.htm.

   Four new questions were added to the May 2017 supplement. These questions were designed
to identify individuals who found short tasks or jobs through a mobile app or website and
were paid through the same app or website. Data from these new questions are not
included in this news release. For information about these questions, see
www.bls.gov/cps/electronically-mediated-employment.htm.

   Information in this news release will be made available to sensory impaired individuals upon
request. Voice phone: (202) 691-5200; Federal Relay Service: (800) 877-8339.

Concepts and definitions

   Information about general employment and earnings concepts in the CPS is available on
the BLS website at www.bls.gov/opub/hom/cps/concepts.htm.

   Defining and estimating the contingent workforce. Contingent workers are those who do
not have an explicit or implicit contract for continuing employment. Several questions
are asked in the supplement to determine whether a worker's job is contingent. These
include whether the job is temporary or not expected to continue, how long the worker
expects to be able to hold the job, and how long the worker has held the job.

   The key factor used to determine if workers fit the conceptual definition of contingent
is whether their job is temporary or not expected to continue. The first questions of
the supplement are:

   1. Some people are in temporary jobs that last for a limited time or until the
      completion of a project. Is your job temporary?

   2. Provided the economy does not change and your job performance is adequate, can
      you continue to work for your current employer as long as you wish?

   Workers who answered either "yes" to the first question or "no" to the second are then
asked a series of questions to distinguish workers who are in temporary jobs from those
who, for personal reasons, are temporarily holding jobs that offer the opportunity of
ongoing employment. A job is defined as being short term or temporary if the person
holding it is working only until the completion of a specific project, temporarily
replacing another worker, being hired for a fixed time period, filling a seasonal job
that is available only during certain times of the year, or if other business conditions
dictate that the job is short term.

   For example, a person hired for 6 months to replace a teacher on paternity leave and a
person hired to work in a company's shipping department for the holiday season would
both be considered contingent workers. In contrast, students holding jobs at fast-food
restaurants while in school might view their jobs as temporary if they intend to leave
them at the end of the school year. The jobs themselves, however, would be filled by
other workers once the students leave, and thus, the students are not contingent
workers.

   Workers also are asked how long they expect to stay in their current job and how long
they have been with their current employer. Workers are asked how long they expect to
remain in their current job because being able to hold a job for a year or more could
demonstrate at least an implicit contract for ongoing employment. In other words, the
employer's need for the worker's services is not likely to end tomorrow. Similarly, the
information on how long a worker has been with their employer shows whether a job has
been ongoing. Having remained with an employer for more than a year may demonstrate
that, at least in the past, there was an explicit or implicit contract for continuing
employment.

   To assess the impact of altering some of the defining factors on the estimated size of
the contingent workforce, three measures of contingent employment were developed, as
follows:

   Estimate 1 is the narrowest definition of contingent work. Under Estimate 1, contingent
workers are wage and salary workers who expect to work in their current job for 1 year
or less and who have worked for their current employer for 1 year or less. All self-
employed workers--both incorporated and unincorporated--and independent contractors are
excluded from the count of contingent workers under Estimate 1. Although they may face
financial risks, people who work for themselves, by definition, have ongoing employment
arrangements. Individuals who work for temporary help agencies or contracting companies
are considered contingent under Estimate 1 if they expect their employment arrangement
with the temporary help or contracting company to last for 1 year or less and they have
worked for that company for 1 year or less.

   Estimate 2 expands the definition of contingent work by including the self-employed--both
the incorporated and the unincorporated--and independent contractors who expect to be,
and have been, in such employment arrangements for 1 year or less. (The questions asked
of the self-employed are different from those asked of wage and salary workers.) In
addition, temporary help and contract company workers are classified as contingent under
Estimate 2 if they have worked and expect to work for the customers to whom they are
assigned for 1 year or less. For example, a "temp" secretary who is sent to a different
customer each week but has worked for the same temporary help agency for more than 1 year
and expects to be able to continue with that agency indefinitely is contingent under
Estimate 2, but not under Estimate 1. In contrast, a "temp" who has been assigned to a
single client for more than a year and expects to be able to stay with that client for
more than a year is not counted as contingent under either estimate.

   Estimate 3 is the broadest definition of contingent work--people who do not expect their
jobs to last--and the focus of the analysis in this news release. Estimate 3 expands the
definition of contingent work further by removing the 1-year requirement on both expected
duration of the job and current tenure for wage and salary workers. The estimate includes
all wage and salary workers who do not expect their employment to last, except for those
who, for personal reasons, expect to leave jobs that they would otherwise be able to
keep. Thus, a worker who has held a job for 5 years could be considered contingent if he
or she now views the job as temporary. The 1-year requirement on expected and current
tenure is retained for the self-employed and independent contractors.

   Defining alternative employment arrangements. Alternative employment arrangements are
determined by the workers' relationship to their employer. To provide estimates of the
number of workers in alternative employment arrangements, the supplement includes
questions about whether individuals are paid by a temporary help agency or contract
company, or whether they are on-call workers or independent contractors. (The survey
also includes questions about day laborers. Estimates for day laborers are not presented
as a separate category of alternative arrangements in this news release because the group is
very small. They are included in estimates of total employment.) 

   Contingent work, which is determined by expectations about the duration of a person's
job, is a separate concept from alternative employment arrangements. Some workers are
both contingent and working in an alternative arrangement, but this is not automatically
the case.

   Definitions of the four main alternative employment arrangements follow, as well as the
key questions used to identify workers in each category:

   Independent contractors are those who are identified as independent contractors,
consultants, or freelance workers in the supplement, regardless of whether they are
identified as wage and salary workers or self-employed in the basic CPS labor force
status questions. To distinguish independent contractors from business operators such
as a restaurant owner, the supplement includes a question for workers who identified as
self-employed (incorporated and unincorporated) in the basic CPS that asks, "Are you
self-employed as an independent contractor, independent consultant, freelance worker, or
something else (such as a shop or restaurant owner)?" Those identified as wage and salary
workers in the basic CPS are asked, "Last week, were you working as an independent contractor,
an independent consultant, or a freelance worker? That is, someone who obtains customers
on their own to provide a product or service." Nearly 9 in 10 independent contractors are 
self-employed. Conversely, 3 in every 5 self-employed workers are independent contractors.

   On-call workers are called into work only when they are needed. This category includes
workers who answer "yes" to the question, "Some people are in a pool of workers who are
ONLY called to work as needed, although they can be scheduled to work for several days
or weeks in a row, for example, substitute teachers and construction workers supplied by
a union hiring hall. These people are sometimes referred to as ON-CALL workers. Were you
an ON-CALL worker last week?" Individuals with regularly scheduled work, which might include
periods of being "on call" to perform work at unusual hours, such as medical residents,
are not included in this category.

   Temporary help agency workers are those who are paid by a temporary help agency. This
category includes workers who say their job is temporary and answer "yes" to the question,
"Are you paid by a temporary help agency?" Also included are workers who say their job
is not temporary and answer affirmatively to the question, "Even though you told me your
job is not temporary, are you paid by a temporary help agency?" Temporary help agency
workers include both the permanent staff of the agencies and those who are placed with
other companies in temporary assignments.

   Workers provided by contract firms are those who work for a contract company, usually
work for only one customer, and usually work at the customer's worksite. This refers
to individuals who are employed by firms who contract out their workers or their workers'
services, rather than all workers employed by firms that provide services under contract,
such as advertising agencies and law firms. This category includes workers who answer
"yes" to the question, "Some companies provide employees or their services to others
under contract. A few examples of services that can be contracted out include security,
landscaping, or computer programming. Did you work for a company that contracts out you
or your services last week?" These workers also responded "no" to the question, "Are you
usually assigned to more than one customer?" Finally, these workers responded "yes" to
the question, "Do you usually work at the customer's worksite?"

Comparability of the estimates

   The concepts of contingent work and alternative employment arrangements used in the May
2017 survey are the same as those collected in the past. The questions used to identify
these workers were essentially unchanged from past surveys. However, there are a few issues
that could affect the comparability of these estimates with those from prior years. 
The prime concern is that the 2017 supplement was collected in May and earlier surveys were
conducted in February of 1995, 1997, 1999, 2001, and 2005. The seasonality of contingent
jobs and alternative employment arrangements is not known. However, any seasonality may affect
the size and composition of the contingent workforce and people working in alternative
employment arrangements. For example, a seasonal job that is only available at a certain
time each year counts as a contingent job. The number and types of these kinds of jobs
available in February and May might be different.

   Two tables in this news release present slightly different displays of data than prior
releases. Table 13 of this news release contains usual weekly earnings estimates for workers in
noncontingent and traditional arrangements, which were omitted from the February 2001 and
2005 news releases. Earnings for noncontingent and traditional workers were not collected in
February 2001 and 2005. Earnings for such workers had been published in earlier news releases.

   The estimates of workers eligible for employer-provided pension or retirement plans in
table 9 of this news release are not strictly comparable with those of earlier years because
the May 2017 estimates exclude all self-employed workers and independent contractors. In
previous years, some of these workers were included in the estimates.

   Other data presented in this news release are not strictly comparable with those for earlier
years due to several other methodological issues. Comparability of estimates over time
is affected by the introduction of population controls and changes in the classification
of industries and occupations. Additional information about comparability of data over
time is available at www.bls.gov/cps/documentation.htm.

Reliability of the estimates

   Statistics based on the CPS are subject to both sampling and nonsampling error. When a
sample, rather than the entire population, is surveyed, there is a chance that the sample
estimates may differ from the true population values they represent. The component of
this difference that occurs because samples differ by chance is known as sampling error,
and its variability is measured by the standard error of the estimate. There is about a
90-percent chance, or level of confidence, that an estimate based on a sample will differ
by no more than 1.6 standard errors from the true population value because of sampling
error. BLS analyses are generally conducted at the 90-percent level of confidence.

   The CPS data also are affected by nonsampling error. Nonsampling error can occur for many
reasons, including the failure to sample a segment of the population, inability to obtain
information for all respondents in the sample, inability or unwillingness of respondents
to provide correct information, and errors made in the collection or processing of the
data.

   Information about the reliability of data from the CPS and guidance on estimating standard
errors is available at www.bls.gov/cps/documentation.htm#reliability.



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Last Modified Date: June 07, 2018