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Temporary Help Service Firms\u27 Use of Employer Tax Credits: Implications for Disadvantaged Workers\u27 Labor Market Outcomes

Temporary help services (THS) firms are increasing their hiring of disadvantaged individuals and claiming more subsidies for doing so. Do these subsidies-the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtW)-create incentives that improve employment outcomes for THS workers? We examine the distinct effects of THS employment and WOTC/WtW subsidies using administrative and survey data. Results indicate that WOTC/WtW-certified THS workers have higher earnings than WOTC-eligible but uncertified THS workers. However, these workers have shorter job tenure and lower earnings than WOTC/WtW-certified workers in non-THS industries. Panel estimates suggest that these effects do not persist over time

Temporary help work: Compensating differentials and multiple job-holding

Temporary Help Services (THS) employment has been growing in size, particularly among disadvantaged workers, and in importance in balancing cyclical fluctuations in labor demand. Does THS employment provide some benefits to disadvantaged workers, or divert them from better jobs? We investigate whether THS jobs pay a compensating differential, as would be expected for relatively undesirable jobs. We also address multiple job-holding, exploring whether workers get stuck in THS jobs. We find lower quarterly earnings at THS jobs relative to others, but a $1 per hour wage premium. We reconcile these findings by examining hours worked at THS and traditional jobs