In making products or providing services for their customers, businesses have always contracted out some of the work to other businesses or independent contractors. Even so, evidence points to considerable growth in outsourcing in recent decades. Today, companies routinely outsource ancillary functions such as cleaning, accounting, human resources, and transportation and logistics that used to be done in-house. Some even contract out work in their core business. Manufacturers, for example, heavily use temporary-help agencies to staff assembly lines.
Major U.S. companies are among the leaders in outsourcing practices. Walmart staffs its warehouses with contract workers. Amazon uses independent contractors to deliver its goods. And contractors reportedly account for more than half of Google’s workforce. This trend marks a movement away from vertically integrated firms, which dominated for most of the twentieth century, and toward what Brandeis University professor David Weil has termed the "fissuring" of firms. Although this change in the way firms organize work potentially has important implications for workers, we know relatively little about contract labor.
The COVID-19 pandemic, which has led to the highest levels of unemployment since the Great Depression of the 1930s, has highlighted the vulnerabilities of workers in contract arrangements, many of whom lack not only the basic protections afforded them from social insurance but also access to benefits such as health insurance. Additionally, for many who have retained their jobs, the structure of work has changed. For example, reflecting the need to socially distance from fellow citizens during the pandemic, a record number of Americans are working remotely. This and other economic and logistical disruptions caused by the COVID-19 pandemic could permanently alter the way businesses organize work in the future. While it is unclear whether firms’ experiences during the pandemic will accelerate the growth in contract labor once the pandemic ends, recent developments underscore the urgent need to better understand the prevalence and trends in contracting out work—and their implications for workers.
To help fill in this knowledge gap and encourage more research and collaboration on domestic contracting issues, the Upjohn Institute, with funding from the Alfred P. Sloan Foundation, has formed the Research Network on Outsourcing. The Network supports convenings of scholars to discuss cutting-edge research on the subject. It also supports this web portal, which reviews the current state of knowledge on outsourcing in the United States. We hope the content on the portal will become a valuable resource for scholars, policymakers, and the general public by
- Summarizing research on the prevalence of U.S. domestic outsourcing and its implications for workers, and providing links to the underlying studies;
- Highlighting new research initiatives on outsourcing and the researchers leading them; and
- Showcasing the latest findings, including those presented at Network workshops.
We gratefully acknowledge contributions of several individuals in helping build this web portal: Benjamin Kreider, a Ph.D. recipient of Brandeis University’s Heller School for Social Policy and Management, and Matt Unrath, now an economist with the U.S. Census Bureau, for compiling the initial literature review and drafting topical summaries; Dakota McCracken of the Upjohn Institute, for additional literature review; and Justin Carinci, Sarah Micheli and Jason Preuss of the Upjohn Institute for the design and creation of the portal.