Monday, July 11, 2011

USA Today: Fewer Temp Workers May Signal Dim Hiring Outlook

Remember all the pundits and economists who promised us that the uptick in temporary hires ALWAYS leads to a surge of hiring afterwards?  Meanwhile, some of us said 'this time it is different' and the U.S. is slowly moving to a disposable workforce (easy on, easy off) [Feb 16, 2010: USA Today - Use of Temps to Fill Jobs May No Longer Signal Permanent Hiring]

What I wrote in Feb 2010

The theme of this USA Today story is a concept I've been debating mentally the past few months; for many years in the manufacturing field there has been something called 'just in time' inventory to promote efficiency.  Now we might be moving to an era of 'just in time' labor - easily hired, easily fired.  Or in 1980s lingo - wax on, wax off!  The implications for the society are profound, but for economic reasons it might make one of the commonly used 'old school' barometers of economic recovery less useful - that is "temporary hiring surges before full time employment recovers".    Let's keep this in the back of our cranium as we watch the employment data over the next year.

With the United States being the only major Western country that requires its companies, large or small, to foot the bill for employee healthcare - my only surprise is that this trend has not happened earlier.  The longer healthcare costs go unchecked in this country, the higher the marginal cost will be to hire each employee - which will be a drag on full time employment.  Another conundrum for America. 

Lost in the discussion Friday in the horror filled employment data was the loss of 12,000 temporary jobs.  So if the bulls claim a spike in temporary hiring should be the precursor to great full time job gains (which never happened) while should they say about the fall in temporary hiring?

Via USA Today:

  • The total number of temporary employees placed by staffing agencies dipped by 12,000 last month and is down 19,000 the past three months, the Bureau of Labor Statistics reported Friday.  That doesn't bode well for a rapid turnaround in the broader job market because employers typically hire temporary workers to meet increased demand, then convert them to permanent positions when they're confident growth will be sustained.
  • Friday's job report wasn't heartening. The average workweek edged down to 34.3 hours from 34.4 hours in May. Employers typically increase the hours of existing employees before bringing on new workers.
  • Temporary workers, however, could be the most telling signal. The number of contingent workers started growing in fall 2009, about six months before the broader job market began to emerge from the recession. From September 2009 to March, employers added nearly 500,000 temporary workers.
  • Roy Krause, CEO of Spherion, a top staffing agency, says temporary placements for white-collar jobs in accounting, computers and legal remain strong. But those for lower-skilled light industrial, clerical and certain call-center jobs — which accounted for most of last year's growth — have slowed. "They tend to be more sensitive to economic conditions," he says.

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