Manufacturing Plants’ Use of Temporary Workers: An Analysis Using Census Micro Data (REVISED, February 2010)
Using plant-level data from the Plant Capacity Utilization (PCU) Survey, we examine how a
manufacturing plant’s use of temporary workers is associated with the nature of its output
fluctuations. Our empirical evidence suggests that plants choose temps over perms when they
expect output to fall, which allows them to avoid costs associated with laying off permanent
employees. We also found that plants whose output levels are associated with greater levels of
uncertainty use more temps. The effects of other variables are also tested in order to examine the
validity of various views about why firms use temporary workers. The variables we look at
include wage and benefit levels for permanent workers, unionization rates, turnover rates,
seasonal factors, and plant size and age.
