Does Taking a Temp Job Hurt Your Future Earnings?

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If you’re out of work and your savings are bleeding away, taking a temporary gig may seem like a financial reprieve and a good first step towards getting your mojo back. But that temp job might also have unexpected repercussions. While many might not be in a financial position to take heed, a study out of MIT suggests taking a temporary position may take a bite out of your long-term earnings, Time’s Curious Capitalist blog reports.

The researchers looked at 37,000 people who participated in a welfare to work program from 1999 to 2003. Some were randomly given temporary placements and others permanent jobs, but the two groups didn’t fare equally well in the long-term:

People who got full-time jobs increased their earnings by about $2,000 a year (compared to their previous income), but that those who started out with temporary positions saw their earnings drop by about $1,000 per year.

Why the discrepancy in future earnings? Study co-author, economist David Autor, explains:

Holding the temp job has two consequences: First of all, it’s very difficult to search for a job while you’re working. Second, when you’re connected to a temp agency, you may have the illusion a job is about to show up. They say, ��We’ll call you when we have something.’ I wouldn’t call it ��complacency,’ but it may create the sense that you’re doing something when you’re not.

Of course welfare to work participants are hardly a representative slice of the workforce as a whole, and temporary placements for those in more skilled professions may offer benefits, such as networking opportunities, that they do not offer to the less skilled. Still, the idea of temp positions having high opportunity costs applies across the board, and the research serves as a reminder to consider what you’re giving up before you take a temporary gig (if you can afford to, that is).