Reading the Future of Hiring in Temp Worker Data

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In the surprisingly positive (or at least less negative than expected) unemployment numbers last month, the category that showed the highest growth was "temporary workers."  As Louis Uchitelle reports in the New York Times, 52,000 temporary workers were hired last month.  The hiring of temp workers has, in the past two recessions, signaled a turnaround in unemployment and the economy.  Uchitelle:

As demand rose after the last two recessions, in the early 1990s and in 2001, employers moved more quickly. They added temps for only two or three months before stepping up the hiring of permanent workers. Now temp hiring has risen for four months, the economy is growing, and still corporate managers have been reluctant to shift to hiring permanent workers, relying instead on temps and other casual labor easily shed if demand slows again.

So is the fourth quarter surge in temp hiring a sign of a faster, and not-so-jobless recovery?  Bill McBride of Calculated Risk isn't so sure, and he points us to an article by the San Francisco Chronicle's Tom Abate, in which one Bureau of Labor Statistics economist suggests that we probably have to wait several months to start to see real job growth:

BLS economist Amar Mann said an analysis by the San Francisco office suggests that employers are getting more sophisticated about using temp hiring as a clutch to downshift into recessions and upshift into recoveries.

Mann said temp jobs started down a month after overall employment dropped during the 1990-91 recession. But by the 2001 downturn, employers started cutting temps about five months before they started issuing pink slips to the general workforce.

In the current recession, he said, companies began shedding temps 12 months before they started cutting permanent payrolls.

A similar pattern prevailed in the two prior recoveries, Mann said. Temp jobs came back at the same time as overall employment after the 1991 recovery. Temporary employment rebounded five months before the general job market turned positive following the 2001 dip.

If that pattern holds, it could be next summer before general payrolls start to grow.

Read In economic woes, firms count on temp workers here.


Posted 12-22-2009 2:37 PM by Graham Griffith
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