Llewellyn H. Rockwell, Jr.
most socialized part of our mixed economy is the labor market. Workers
can apply for any job they like, but employers are hamstrung. Any
employment decision hiring or not hiring, promoting or not
promoting, retaining or firing can result in a business,
breaking federal lawsuit. Thank goodness the temporary work industry
allows businesses to circumvent some of our labor socialism.
the temporary industry, agencies hire workers whom they then place
with third parties. As government has become more and more burdensome,
the average duration of temporary employment has lengthened. In
large cities, it is not uncommon to find people who have been temporaries
at one firm for two or three years.
American property owners had full freedom, there was no need for
temporary agencies of the present sort, although day-laborer pools
existed. But after the statism of the New Deal and World War II,
the first modern agency Kelley Girls was founded. Today, six
million people work as temps, with their numbers growing at 10%
annually. As a study by the Swiss-owned temporary agency Adia Services
shows, more than 90% of U.S. firms use temps today.
the beginning, temps served a relatively limited market. The agency's
phone rang when an employee got sick or an odd job needed to be
done. Today they serve as essential support staff because they help
avoid the costs imposed by government intervention. Even simple
interventions like overtime rules have fueled the market: for decades,
hiring temps has proven more effective than paying overtime to regular
a larger scale, temps cost much less than hiring a full-time employee,
even if the hourly pay is higher. In today's world, mandated benefits
are so high, and anti-discrimination laws, and other regulations
so fierce, that hiring is risky business.
evidence that the temp market is a response to government failure
is the diversity of the employees who can be hired. Temps were once
typists and clerks. Today, they range from mortgage bankers to physicians.
are most used at the beginning of a recession and at the beginning
of recovery, when the economic future is most uncertain. That's
when employers most need the flexibility that labor markets should
always provide. The temp agencies do the screening, and shield firms
from some of the costs of today's suit-happy victimology-ridden
agencies don't like to talk about how much they charge as versus
how much they pay, but it is usually related to the benefits provided.
For full health coverage and unemployment provision, the revenue
is split about in half. When the agency offers fewer benefits, the
employee can get up to 75% of the money.
the split, businesses pay more per hour for temps than for full
timers. In exchange, they get what ought to be normal practice:
the freedom to hire and fire.
this differential between agency and fees and temp pay is a useful
estimate of the costs of government intervention, and the U.S. Chamber
of Commerce estimates that 25% of the average salary represents
Europe, which socialized its labor markets before we did, has had
long experience with temps. Today, England and Germany, whose economies
are even more mixed than our own, have larger temp markets than
the U.S. And their temp markets are more regulated than ours for
example, all temps are forced to work through licensed agencies
that provide full benefits. In Greece, Italy, Spain, and Sweden
the temp market became so huge that government abolished it. Or
attempted to, for all of these countries have huge underground economies.
U.S. and European left-liberal academics hate the temp market. They
portray it as a remnant of the Industrial Revolution, when employees
were supposedly exploited. For example, A.S. Brownstein, writing
in the International Labor Review, denounces the temp market
and argues that "the permanent employment relationship remains the
ideal to which any socially advanced society should aspire."
is, of course, a higher value than permanency, as Soviet citizens
learned, and that is freedom the freedom to change jobs, and
to hire and fire. Just as these academics are wrong about the Industrial
Revolution, they are wrong about the temp market. Temps choose to
work as such, and might otherwise go without incomes.
we can expect the Clinton administration take the Swedish approach
against the temp market. Already, a little noticed provision in
the abominable 1990 "budget deal" required that all public employees,
of any duration, be covered either by a pension plan or Social Security.
It was an attack led by public employee unions on the agencies
that place temporary public employees. The rule affected millions
of state and local government temps, eliminating many positions.
This is the sort of approach the government will take in the private
sector as well.
future federal regulations to require that after a certain period
of time, probably 90 days, temps will be entitled to all the "benefits"
of full-time work. That includes collective bargaining, anti-discrimination
rules, affirmative action, and benefit plans. A war on temps will
be another war on employment, but when has that ever stopped Washington,