Author: Steven Pennington
As mentioned in a previous LEAD Feed article on the increased prevalence of nonstandard work schedules, one highly visible change to emerge over the past few decades has been the upward trend in contract employment. Contract employment has received a lot of attention during the past few years as the importance of contract workers in the United States’ economic recovery becomes better understood. Some of that attention has focused on issues including temp workers in manufacturing, temp employee wages and worker compensation, and the impacts (and vulnerabilities) of contracted employees during the holidays. Bureau of Labor Statistics data show that at the national level, temporary contract employment led overall private sector job decline and recovery during the recent recessionary period. So let’s consider what’s happened to contract employment in North Carolina. We’ll look at jobs within two particular industries that play important roles in this part of the economy:
- Temporary Help Services industry (NAICS 561320) – These jobs belong to people who work in a wide variety of industries, but are employed by temp agencies.
- Professional Employment Organizations (PEO) industry (NAICS 561330) – These jobs belong to people who work for companies that are contracted to fulfill particular functions within other businesses, like HR functions.
In 2013, the Temporary Help and PEO industries combined to make up 3.3 percent of the total private industry jobs in North Carolina. That percentage fluctuated somewhat over the past decade, but has shown consistent growth since 2009 when contract jobs made up only 2.4 percent of total private industry jobs in our state.
In North Carolina, both the Temporary Help and PEO industries led overall private sector job decline and recovery during the recent recessionary period. As shown in the following chart, the state’s Temporary Help and PEO jobs led and grew faster than the statewide private sector in periods of statewide job growth since 2001. Conversely, in times of statewide job losses, Temporary Help and PEO jobs fell earlier and faster than the statewide private sector pace.
The growing prominence of contracted employment over the past few years leads to questions about the wages of these positions. Since 2001, North Carolina jobs in both the Temporary Help and PEO industries have offered lower average annual pay than jobs in the private sector overall. However, the gap in pay between contracted work and North Carolina’s total private sector is becoming less significant as nominal wages increase for both groups. To some extent, this trend could be driven by increased contracting out of high skill, higher wage employment.
These trends create some concern about possible structural shifts in North Carolina’s (and the nation’s) economy toward heavier reliance on contracted employment. If private industry continues to shift to contract jobs, we may expect to see downward pressure on wages, particularly in those industries most likely to use contracted employment.