"The authors use case study evidence from the hospital and auto parts manufacturing industries to investigate why employers used--and even increased their use of--temporary help agencies during a period of tight labor markets in the 1990s. In high-skill occupations, one apparent reason employers were willing to pay substantially more to agency help than to regular workers was to fill vacancies while they recruited workers for permanent positions. In low-skill occupations, temporary help agencies appear to have facilitated the use of more 'risky' workers by lowering their wages and benefits and the costs associated with turnover. The use of agency temporaries in both high- and low-skill occupations generated less pressure to raise regular workers' wages than companies probably would have felt had they screened and hired temporary workers themselves. The practice therefore may have contributed to both the stagnant wage growth and the low unemployment observed in the 1990s."

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