May 19, 2014

AP’s Raum: Almost 700 Words on Historic Growth in Temps and Contract Workers, Not a Word on Obamacare

In July 2013, the Associated Press’s Christopher Rugaber finally noticed the meteoric rise in the number of temporary help service and other non-payroll personnel working at U.S. employers — a trend which at the time was about 2-1/2 years old. Rugaber noted that “temps and to a much larger universe of freelancers, contract workers and consultants … number nearly 17 million people who have only tenuous ties to the companies that pay them – about 12 percent of everyone with a job.” He also cited two likely contributors to that growth. First, “Some employers have also sought to sidestep the new health care law’s rule that they provide medical coverage for permanent workers. Second, “companies want to avoid having too many employees during a downturn.”

This morning, the AP’s Tom Raum did another report on the situation. Somehow, his count of the number of such workers fell to about 3 million, or “2.3 percent” of all employment. Additionally, Raum did not identify The Affordable Care Act as a relevant factor. Finally, instead of citing the potential for a downturn — a not inconsequential possibility, given that most forecasters now believe that first-quarter growth this year, originally reported as an annualized 0.1 percent, will go negative in future revisions — merely noted in his final sentence that “the shadow of the December 2007-June 2009 recession still looms over today’s labor market.” Excerpts follow the jump (bolds and numbered tags are mine):



While the U.S. economy has improved since the Great Recession ended five years ago, part-time and “contract” workers are filling many of the new jobs. [1]

Contract workers made up less than half of one percent of all U.S. employment in the 1980s but now account for 2.3 percent. [2] Economists predict contract workers will play a larger role in the years ahead.

They are a diverse army of laborers, ranging from janitors, security officers, home-care and food service-workers to computer programmers, freelance photographers and illustrators. Many are involved in manufacturing. Many others are self-employed, working under contracts that lay out specific responsibilities and deadlines.

Labor leaders and many economists worry. Contract workers have less job security and don’t contribute to the economy through spending as much as permanent, full-time workers. Nor do they have the same job protections. Few are union members.

Part-time and contract jobs in the past tended to rise during recessions and recede during recoveries. But maybe no longer: Part-time workers have accounted for more than 10 percent of U.S. job growth in the years since the recession officially ended in June 2009. [3]

… Businesses often hire contract workers or freelancers because it is less expensive than hiring full-time workers.

“Workers increasingly serve businesses that do not officially `employ’ the worker – a distinction that hampers organizing, erodes labor standards and dilutes accountability,” [4] said Catherine Ruckelshaus, general counsel for the National Employment Law Project, which advocates on behalf of low-wage workers. [5]

… “Some people don’t want to be a full-time employee. They want contract work,” said Bruce Josten, executive vice president of the U.S. Chamber of Commerce. Still, Josten recognizes some of them “are hoping the contract work will ultimately lead them into a full-time position.”

… For the first time since World War II, the U.S. economy did not have more payroll jobs at the end of a decade than at the beginning. [6] And the shadow of the December 2007-June 2009 recession still looms over today’s labor market.


[1] — The problem, of course, is that the economy hasn’t improved by enough to create a seller’s market for labor. Employers are also constantly concerned about the possibility of a downturn; recall that the economy contracted by an annualized 1.3 percent during the first quarter of 2011. Taking on temps and contract workers is a way of hedging against quarters like that and the one we just endured.

[2] — “2.3 percent” is roughly the number of temporary agency employees per the Bureau of Labor Statistics divided by total employment per BLS’s Household Survey. It most certainly does not include the “much larger universe of freelancers, contract workers and consultants” to which Rugaber referred last year. In other words, Raum is vastly understating the extent of contract employment in the economy.

[3] — Imagine that. Here we have an admission, after years of denials in the press and on the left, that the trend in the use of part-time vs. full-time workers in this economy is different that it has been in the past. What’s different now? Two things: a weak recovery (see item [1]) and Obamacare.

[4] — The growth in contract and temporary work does ”hamper organizing,” but there isn’t much evidence that it “erodes labor standards” or “reduces accountability.” As to labor standards, temp firms still have to pay worker’s comp and unemployment insurance, and are usually required by their client companies to drug-test their applicants and certify that they have the necessary degree of safety training a new payroll hire would have. As to “accountability,” if a temp screws up, a company simply tells the agency not to send that person back. That’s a lot easier and less expensive than firing a payroll employee who deserves it.

[5] — NELP may “advocate on behalf of low-wage workers,” but their “solutions” are of the type the Obama administration has been trying for over five years. Those “solutions” have led to the very low-wage recovery NELP decried in a recent report. NELP also supports President Obama’s drive for a $10.10 minimum wage — a measure guaranteed to either reduce payroll employment or slow down its growth.

[6] — That’s because for the first time since World War II, a presidential administration and a Democrat-dominated Congress tried to “solve” problems brought about by a recession by engaging in Keynesianism on steroids. It hasn’t worked, but the administration refuses to change direction. This should lead reasonable people to believe that despite its protestations, Team Obama is satisfied with the current economy’s mediocre growth and labor market malaise.

The AP’s Christopher Rugaber is primarily an economics reporter. Though his July 2013 report on the the contract labor situation had its flaws, he least got the facts right and wasn’t self-evidently agenda-driven.

Tom Raum, on the other hand, is primarily a political reporter who has been steadfast in his defense of the Obama administration and indifferent or hostile to arguments advanced by Republicans and conservatives. It shouldn’t be at all surprising that he got his numbers wrong, ignored the Obamacare and mediocre economic elephants in the room, and (in unexcerpted material) gave the Obama administration free PR for its desired minimum-wage hike.

Cross-posted at


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