Some trends within sub-baccalaureate labor markets are clearly apparent, including the shift to new forms of work organization with wider ranges of responsibility and the adoption of new technologies, including more computer-based processes. However, other changes that emerged in our interviews are more speculative because it is impossible to estimate their magnitude. With this important caveat, we describe several of these potential trends because they may affect the way sub-baccalaureate labor markets operate. Several of them are worrisome because they are detrimental to the individuals trying to gain access to this particular segment of employment, and they suggest the need for intervention into the ways employment is structured.
Many firms are making greater use of temporary help agencies.[99] Several general respondents commented on this trend, especially in Palmdale where the use of temporary workers is especially high.[100] Temporary workers are used as business ebbs and flows and to cover vacations, medical leaves, and other temporary shortages--what one temporary agency described as the "ideal, true users of temporary services"--but they are increasingly used in other ways. As mentioned above, some firms use temporary agencies to hire probationary workers; and some use temp agencies to perform their recruitment and initial screening so that their personnel departments are not "burdened" with such routine work. In a few cases, employers report that they hire "temporary" workers for relatively long periods of time: A drafting instructor in Rosefield reported a firm hiring drafters on a "temporary" basis for five to six years.
Some firms hire substantial fractions of their employees as temporary workers. One high-tech manufacturer in the Palmdale area typically has about ten percent of its employees in a "flexible workforce," hired through temporary employment agencies and limited in the hours they can work; another, a firm of about two-thousand employees, reported that about one third of their labor force was hired from a temporary agency for "direct labor" like operatives and assemblers.[101] In still another case, again in Palmdale, a representative of a local temporary agency maintains an office full-time at the headquarters of a high-tech company as an "on-site coordinator" in charge of hiring all hourly employees who are hired through the temporary agency and not through the firm itself. All hourly workers then remain employees of the temporary agency:
They don't sign any contract; they keep working here as long as [the firm] needs them. They could be here for three years and are still our [the temporary agency's] employees; they don't have to be [the firm's employees] to work here.
In this case, the temporary agency has taken over all personnel functions for the firm, at least for particular kinds of workers, including electronics assemblers and secretarial and clerical occupations.
Not only do firms use temporary help as moderately skilled workers such as retail workers, operatives in light industry, and secretaries and clerical workers, but there is a trend to hire more highly skilled workers in this way. One temporary help agency in Palmdale specializes in providing drafters, as does an agency in Rosefield (a "temp agency for technical people"). In another case, an employer laid off a number of engineers who then organized into a firm which does a large amount of consulting with the original employer--in effect converting permanent employees into temporary workers. The practice of hiring temporary workers at lower levels of the occupational structure and the practice of using consultants at the upper levels appear quite similar despite the difference in the status of consultants.
The use of such temporary workers has several advantages to the firm. Most obviously, it reduces the benefits employers must pay. It also allows the firm to fire individuals if they either demand contracts or prove incompetent--without risking a lawsuit or suffering damage to unemployment insurance ratings; and it eliminates any pretense that the firm might be responsible for the individual's professional development through on-the-job training, promotional opportunities, and the like. A few personnel managers claimed that temporary arrangements allow employers to hire outside of affirmative action regulations, since employees brought into a firm as temporary workers can be hired for permanent positions without being counted in affirmative action reviews. The use of temporary workers also fragments a firm's labor force by creating a pool of employees with rights and benefits and another pool of "temporaries" without that status; to the extent that such divisions help employers avoid unionization or deflect criticism, greater use of "temporary" workers may help employers manage discontent.
Unfortunately, there are negative effects for the employees involved. Obviously, they lack the employment stability permanent employees have and they may find it difficult to accumulate the kind of experience that employers value. Temporary employees also seem to lack the same legal protections that permanent employees have, making them more vulnerable to violations of health and safety standards and procedural safeguards.[102] The use of large numbers of temporary workers, particularly at low occupational levels, operates to make entry into the firm more difficult since less skilled entry-level positions are filled by temps with no chance of being permanently hired. For the same reason, the greater use of temps shortens the job ladders within firms.
A labor market in which an increasing fraction of workers are hired from temporary agencies is one in which employment is more likely to be fragmented and intermittent, in which there will be widening inequalities of earnings between permanent and temporary workers, in which fewer workers enjoy legal safeguards, and in which career ladders are shorter. None of these trends bodes well for individuals in the sub-baccalaureate labor market.
Particularly in large firms, there appears to be a tendency for "entry-level" positions at the sub-baccalaureate level to require higher qualifications, both in education and experience. The tendency to require experience even for relatively unskilled positions like accounting clerks and clerical workers or to require substantial experience among beginning machinists and technicians are examples. As a staff member for the Frankton city economic development agency--an individual well-placed to observe the developments in the local labor market--commented,
We've got to get employers to hire more people with truly entry-level skills. That's sometimes very difficult to do. They say, "I have an entry-level job, but I want them to do--" By the time you get done, this is not an entry-level position. They require more than entry level. I've gone out to a metal fabrication shop and they say, "I want a welder that can weld to the code and a fabricator that knows how to do this and this." They say, "This is an entry-level job." I say, " No, this is not an entry-level job. An entry-level job is where people don't have this expertise already but may have done some welding." I think it goes across industries. You could take it from accounting or anything else, and they really want them to have a greater level of experience or expertise than what they were willing to pay for.
One consequence for individuals trying to enter sub-baccalaureate positions is simply that it is more difficult to qualify for entry-level positions; individuals need more education and, in particular, more experience--returning to the dilemma of how to accumulate experience because most employers (at least the more desirable employers) demand experience as a prerequisite.
The inflation of entry-level requirements is linked in part to the greater use of temporary workers at lower levels, which allows employers to reserve "permanent" employment for higher-skill positions. It may also be a consequence of the 1990-1992 recession, which allowed large firms in particular to have greater choice among applicants--in which case this problem might fade with a period of expansion. However, this phenomenon is linked to educational inflation over the long run, and we therefore suspect it will not abate with an economic recovery.
Another discernible trend is the tendency for job ladders--the sequence of jobs of increasing responsibility, possibilities for on-the-job learning and higher earnings--to become shorter. One cause is the flattening of hierarchies within many firms, including the elimination of layers of supervisory workers that previously represented jobs into which production workers might be promoted. The tendency to fragment employment into lower-level, temporary employees and more skilled permanent employees with higher prerequisites for hiring (and fewer supervisory jobs to be promoted into) also contributes to shorter job ladders.
Within the sub-baccalaureate labor market and for those students with sub-baccalaureate credentials like certificates and associate degrees, job ladders are crucial because movement up such ladders is the dominant way of increasing earnings over time and realizing a benefit to postsecondary education (see also the statistical analyses in Grubb, 1992b, forthcoming-b). Shorter job ladders within specific firms therefore imply that upward mobility and earnings increases are limited or that they require a shift to another firm--either one that is larger and has more senior-level positions or one that is more sophisticated in its technology and organization and has greater use for highly experienced or highly skilled workers. But mobility among firms is not necessarily easy, especially given the highly local nature of the sub-baccalaureate labor market and the tendency for firms to promote from within. A labor market with shorter job ladders is one in which upward mobility and earnings increases are likely to be more and more limited.
It is extraordinarily difficult to know whether there are significant trends in the length of job ladders. While some supervisors and personnel managers have a sense of the common patterns of mobility within their firm, their memory is likely to be selective and it is difficult for them to know what dynamic patterns are without analysis of employment records--something employers rarely do. We were unable to interview individual employees who might have been able to give us better information about patterns of mobility,[103] and there has so far been little dynamic analysis of existing longitudinal data sets.[104] However, the available circumstantial evidence suggests that job ladders have been getting shorter, leading to a concern that in the future individuals in the sub-baccalaureate labor market will have fewer opportunities for advancement and earnings gains.
The inflation of educational requirements for occupations has been going on for some time (Archer, 1982). A staple of the literature on the irrationality of educational requirements is the showing that the educational qualifications of individuals in specific occupations have consistently been higher than the educational requirements--a situation of "over-education" that results in higher educational requirements than necessary and in declining marginal returns from formal schooling (Rawlins & Ulman, 1974; Rumberger, 1981). The evidence from our interviews suggests that this process is continuing to take place in the sub-baccalaureate labor market, particularly as some jobs come to require baccalaureate degrees and become out of reach of those with a high school diploma and perhaps some postsecondary education. For example, positions as computer programmers--as distinct from positions entering data and using applications like spreadsheets--now require B.A. preparation; most firms require baccalaureate degrees for their managers; and positions that were once filled by electronics technicians now require B.A.-level engineers. The result is that some community college programs are simply being bypassed. As the director of human resources for a semi-conductor manufacturer in Palmdale explained it,
I can remember hiring people out of [a local community college] twenty years ago and hanging out at the job placement center doing interviews because that was the only place to get [electronics technicians]. Now we're going to Palmdale State College to get the engineers because that is what it takes to keep things going because the sophistication of the equipment has gotten so hot, it takes an engineer to keep it mothered. And the electronics technicians, if they haven't kept up, they just can't compete.
This does not mean that the sub-baccalaureate labor market is shrinking as some jobs come to require baccalaureate degrees; indeed, the evidence--presented in the introduction--is that this segment is expanding substantially. Rather, the problem is that the best jobs in the sub-baccalaureate labor market are coming to require baccalaureate degrees and are being replaced by lower-quality jobs that previously required only a high school diploma--for example, positions as secretaries, clerical workers, and accounting clerks for which employers now give some preference to postsecondary education.
Thus, educational inflation takes place in the following way: As educational requirements in general increase, the highest education levels have larger fractions of employees in them, while the lowest levels (e.g., employment for high school dropouts) have smaller fractions in them. In between--in the sub-baccalaureate labor market--there is a constant process of shifting the best occupations to individuals with baccalaureate degrees and replenishing them with lower-quality jobs even though the size of this segment may be increasing. This process is an unavoidable consequence of being betwixt the highly skilled labor market and the unskilled market occupied by high school dropouts.
These changes may be taking place not as a result of "over-education"--educational qualifications outpacing educational requirements--but as a result of changes in work organization and technology requiring more of workers. However, from the viewpoint of individuals--and particularly the "nontraditional" students (including those in need of retraining) who may find their way into community colleges but not four-year colleges--it matters little why educational requirements are escalating. It matters only that the better-quality occupations are increasingly difficult to enter as educational inflation continues to take place.
There is little doubt that customized training (or contract education) in the sub-baccalaureate labor market has expanded substantially in the past decade. Virtually every community college now offers customized training, and some institutions have substantial enrollments and derive considerable unrestricted funds from providing customized training (Lynch et al., 1991; on the expansion of formal firm-sponsored training, see Bowers & Swain, 1992). In some communities--especially Rosefield and Frankton--much of the positive image of community colleges among employers has been generated by contract education.
Contract education is a response to several trends that have been widely noted: the increasing skills needed in some occupations, the need for cross-training as work is reorganized, and the need in many cases for remedial education or ESL. It also fits the desire of employers to promote from within and provides an opportunity for training specifically tailored to the conditions of a particular firm. From the perspective of educational institutions, contract education provides another way in which community colleges can serve their communities and build relations with employers, so it appears to have advantages for all participants.
However, the dark side of customized training is that it may reinforce a two-track system of work-related education and training in which contract education programs thrive while "regular" vocational programs suffer from relatively distant relations with employers and low placement rates and in which those already employed have access to further training while individuals in initial training and retraining programs have a harder time breaking into the sub-baccalaureate labor market. The possibility of such a division provides yet more reasons for educational institutions to be concerned about their connection to employers--a subject to which we will return in the final section.
[99] For statistical evidence of this trend see Abraham (1990). Her explanations for this increase are roughly consistent with ours; there is, however, no firm evidence about which of several possible causes are responsible. For a collection of preliminary papers on what the U.S. Department of Labor (1988) calls "contingent work."
[100] One possible reason is that the Palmdale area has been subjected to especially sharp variation in employment over the past few years and instability in demand may have driven more firms to use temporary employees.
[101] The employment agency through which this firm hired its temporary workers received a state economic development grant to provide about forty hours of training for these "temporary" employees--a situation which the personnel manager described as "a way that we could get compensated for the training that essentially we were doing anyway." The socialization of training costs is especially peculiar in this case because the fact that the employees were temporary workers meant that they had no job protection or long-term guarantees.
[102] The legal rights of temporary workers are apparently a murky area in employment law. If a firm hires a temporary worker for a relatively long period, then courts have sometimes construed this to be a permanent employment relationship with all the usual legal rights; but this is now being decided on a case by case basis (Oral communication, Erica Grubb, Esq., August 1992).
[103] Even this may not be true. In another set of interviews of community college entrants and dropouts, we have attempted to collect information on the sequences of jobs and education since high school graduation. This has proved impossible to do in a majority of cases simply because these individuals' recall is limited. This implies that the only way to collect information about a sequence of events is through periodic interviews--as has happened with several longitudinal data sets, notably the National Longitudinal Study of the Class of 1972 (NLS72) and the National Longitudinal Survey of Youth (NLS-Youth).
[104] However, see Klerman and Karoly (1992). Norton Grubb and Jacob Klerman plan to begin a longitudinal analyses of the NLS72 and the NLS-Youth data in order to investigate the dynamic patterns that have so far eluded analysis.