Why Do Firms Use Temporary Workers?
The use of temporary workers enhances labor flexibility for firms. Compared with permanent (indefinite-term) employment arrangements, temporary (fixed-term) employment arrangements allow firms to use labor for a shorter period without being responsible for workers’ benefits or the costs associated with hiring or firing. Firms draw temporary labor from various channels—for instance, by hiring independent contractors and on-call workers and using workers from temporary help services (THS) agencies. The use of such temporary workers is growing rapidly. It has also spread across industries—from manufacturing to services—and occupations, including construction workers, registered nurses and information technology technicians.
