By most recent count, the Great Recession has resulted in a loss of more than 1.4 million payroll jobs in California. Beyond the job losses, though, the Great Recession also has brought changes in the structure of work in California. It will be some time before we recognize the full extent of these changes. But one is likely to be the continued weakening of the employer-employee structure that characterized work in California for more than four decades after World War II.
The employer-employee structure was rooted in the post World War II California economy, whose tone was set by large private companies in aerospace, heavy manufacturing, finance, insurance, and banking. From its founding as a state, California has had a strong entrepreneurial ethos, which has served it well; and after World War II, entrepreneurism continued widespread. But most workers were in an employer-employee relation (as the smiling Lockheed workers in Burbank, 1950, below receiving 5-year awards), that offered regular pay, benefits, and at least the promise of stable employment.
This relation began to change in California in the late 1970s for a variety of cultural and economic reasons; and the change has picked up steam since. In place of the employer-employee relation arose forms of contingent employment: independent contractors, self-employment (incorporated and unincorporated), temporary staffing companies, and by the 1990s, professional employer organizations.
The federal Bureau of Labor Statistics (BLS) responded to the rise of contingent employment by creating a new measurement category. In 1995, BLS initiated a supplement to its worker survey to measure contingent employment, which it defined broadly as a job or self-employment lacking expectation of continued or steady work.
The chart below, provided by economist Paul Wessen of EDD’s Labor Market Information Division, draws on the BLS data for contingent workers in California. In 2005, more than 1 million workers in California, around 6% of the workforce, were characterized as contingent workers.
In a research presentation, economist Wessen elaborated on the characteristics of this 1 million contingent workforce, based on further examination of BLS data. Some of the main characteristics: (1) The contingent workforce was overrepresented among lower income workers in California, but also included a good number of workers with college degrees and in the professional and business services sector, (2) the contingent workforce was spread among all races and ethnic groups, roughly in relation to population, (3) contingent workers worked an average of 27.6 hours a week, and (4) nearly two-thirds of contingent workers said they would prefer a permanent job.
The BLS data are not yet available for contingent employment for the current Recession. But there are many reasons to think that contingent employment will rise in years ahead. The Great Recession has left employers so far very reluctant to make new full-time hires. As Wessen notes, it has brought a greater increase in staffing jobs than in other sectors. It has hastened the introduction of certain technologies to replace workers. It has heightened the job volatility that was growing even before the Great Recession.
Michael Bernick is a former director of the state Employment Development Department and a fellow with the Milken Institute. This piece was originally published by Fox and Hounds Daily.