<<Wow, I never thought of it that way. If that was the reason, then how sad that it has gotten to the point where that has to happen nowadays. >>
It IS sad, no doubt about it. I've seen it up close and personal in Silicon Valley in California, since it is very much a part of the computer industry. There are rules about how long a temp can work at a particular job without becoming a permanent employee with full benefits. Some companies get around it by having the temp work someplace else for 6 months, and then re-hiring them, still on a temp basis, for another 12-18 months. The thing is, when the line blurs, people tend to get massivly PO'd that they're doing all the work of the perm employees, with none of the bennies, and yet not 'worthy' of permanent hire. In some cases, the temp pay is higher, but because the benefits are so much fewer, the overall pay rate is lower. I think Microsoft lost a massive lawsuit regarding that a few years ago.
Companies are not supposed to keep contractors around for years on end, denying them permanent hire due to lack of permanent jobs, and yet hiring others for permanet jobs... It can get very ugly, and do lousy things to morale.