Temporary jobs becoming a permanent fixture in US

Hiring is exploding in the one corner of the U.S. economy where few want to be hired: Temporary work.
Associated Press
Jul 8, 2013

From Wal-Mart to General Motors to PepsiCo, companies are increasingly turning to temps and to a much larger universe of freelancers, contract workers and consultants. Combined, these workers number nearly 17 million people who have only tenuous ties to the companies that pay them — about 12 percent of everyone with a job.

Hiring is always healthy for an economy. Yet the rise in temp and contract work shows that many employers aren't willing to hire for the long run.

The number of temps has jumped more than 50 percent since the recession ended four years ago to nearly 2.7 million — the most on government records dating to 1990. In no other sector has hiring come close.

Driving the trend are lingering uncertainty about the economy and employers' desire for more flexibility in matching their payrolls to their revenue. Some employers have also sought to sidestep the new health care law's rule that they provide medical coverage for permanent workers. Last week, though, the Obama administration delayed that provision of the law for a year.

The use of temps has extended into sectors that seldom used them in the past — professional services, for example, which include lawyers, doctors and information technology specialists.

Temps typically receive low pay, few benefits and scant job security. That makes them less likely to spend freely, so temp jobs don't tend to boost the economy the way permanent jobs do. More temps and contract workers also help explain why pay has barely outpaced inflation since the recession ended.

Beyond economic uncertainty, Ethan Harris, global economist at Bank of America Merrill Lynch, thinks more lasting changes are taking root.

"There's been a generational shift toward a less committed relationship between the firm and the worker," Harris said.

An Associated Press survey of 37 economists in May found that three-quarters thought the increased use of temps and contract workers represented a long-standing trend.

Typical of that trend is Latrese Carr, who was hired by a Wal-Mart in Glenwood, Ill., two months ago on a 90-day contract. She works 10 p.m. to 7 a.m., helping unload trucks and restocking shelves. Her pay is $9.45 an hour. There's no health insurance or other benefits.

Carr, 20, didn't particularly want the overnight shift.

"I needed a job," she said.

The store managers have said some temps will be kept on permanently, Carr said, depending on their performance.

Carr isn't counting on it.

The trend toward contract workers was intensified by the depth of the recession and the tepid pace of the recovery. A heavy investment in long-term employment isn't a cost all companies want to bear anymore.

"There's much more appreciation of the importance of having flexibility in the workforce," said Barry Asin of Staffing Industry Analysts, a consulting firm.

Susan Houseman, an economist at the Upjohn Institute of Employment Research, said companies want to avoid having too many employees during a downturn, just as manufacturers want to avoid having too much inventory if demand slows.

"You have your just-in-time workforce," Houseman said. "You only pay them when you need them."

This marks a shift from what economists used to call "labor hoarding": Companies typically retained most of their staff throughout recessions, hoping to ride out the downturn.

"We clearly don't have that anymore," said Sylvia Allegretto, an economist at the University of California, Berkeley.

The result is that temps and contract workers have become fixtures at large companies. Business executives said they help their companies stay competitive. They also argue that temp work can provide valuable experience.

"It opens more doors for people to enter the labor market," said Jeff Joerres, CEO of ManpowerGroup, a workplace staffing firm.

But Houseman's research has found that even when jobs are classified as "temp to permanent," only 27 percent of such assignments lead to permanent positions.

About one-third of temporary workers work in manufacturing. Temps can be found on production lines, repairing machinery and stocking goods in warehouses. About a fifth are administrative.

Shortages of doctors and nurses have led some hospitals to turn to temp agencies. Staffing Industry Analysts forecasts that spending on temporary doctors will grow 10 percent this year and next.

Some school districts now turn to temp firms for substitute teachers. This lets them avoid providing retirement benefits, which union contracts might otherwise require.

Manufacturing unions have pushed back against the trend, with limited success.

"We run into this across all the various industries where we represent people," said Tony Montana, a spokesman for the USW, which represents workers in the steel, paper, and energy industries.

Todd Miller, CEO of software company Gwabbit in Carmel Valley, Calif., said about a third of his 20 employees are temporary. An additional one-third are contractors.

He said he's had no trouble filling such positions. People are "willing to entertain employment possibilities that they would not have six or seven years ago," Miller says.

If the economy were to accelerate, Miller said he might hire more permanent staff. But "I don't have tremendous confidence in this economy."

Only the health care and leisure and hospitality sectors have added more jobs during the recovery. But each is about five times as large as the temp industry. The proportion of all jobs in the temp industry is about 2 percent, just below a record set in 2000.

Temp hiring has accelerated even though the economy has 2.4 million fewer jobs than it did five years ago. Temp jobs made up about 10 percent of jobs lost to the recession. Yet they've made up nearly 20 percent of the jobs gained since the recession ended.

A survey of companies with more than 1,000 employees by Staffing Industry Analysts found they expect 18 percent of their workforces to be made up of temps, freelancers or contract workers this year, up from 16 percent in 2012.

Shane Watson, who in November lost a job providing tech support for Blackberry maker Research In Motion, said contract work has helped him recover. He's on his third such position. Still, Watson, 36, misses the security of a permanent job.

Wal-Mart said it's been hiring disproportionately more temporary workers. "Flexible associates," it calls them. Spokesman Dave Tovar said temps allow store managers to provide permanent workers with more reliable schedules.

Online competitors are seeking to upend the temp industry just as Amazon and eBay disrupted retail. Employers spent $1 billion last year hiring workers for short-term projects through online labor exchanges, such as oDesk and Elance, according to Staffing Industry Analysts. That's 67 percent more than in the previous year.

Freelancers in the online exchanges can be evaluated by employers, post portfolios and take online tests to demonstrate their abilities.

Gary Swart, CEO of oDesk, said his clients are mainly small or startup companies. But giants like AOL and Unilever are using the service, too.

When Hans Hess of Arlington, Va., was seeking a lawyer to do a trademark search for his Elevation Burger chain, he turned to Elance. He found a lawyer to do it for under $500.

"When I was using a big law firm, it could cost me $5,000 to get to the point of just filing a trademark," Hess said.

Gigwalk recruits temps for brief projects in retail, merchandising and marketing. Anyone who downloads Gigwalk's app can see pinpoints on a map signifying available jobs nearby.

Frito-Lay, a division of PepsiCo, used Gigwalk this year to hire workers to check in-store displays of its products to ensure that a seasonal promotion was being handled properly.

"You can hire 10,000 people for 10 to 15 minutes," said Gigwalk CEO Bob Bahramipour. "When they're done, those 10,000 people just melt away."

 

Comments

Unassumer

Pretty much the jobs temp services offer, no one really wants to do. Some are better paying than others and okay for short term but people need jobs that last and can pay their bills, not bandaids. Employers want to save money and temp services want to make money. Employees are shortchanged.

registerer

Obamacare looms. Less than 30 hours per week is considered part time and does not count towards the dictators mandate.

Contango

The U-6 number rose in June to 14.3% from May's 13.8%.

That includes those who quit looking, ran out of unemployment benefits and took part-time jobs because no full-time jobs were available.

Many view U-6 as the TRUE unemployment number.

http://www.bls.gov/news.release/...

The U.S. worker participation rate remains near thirty yr. lows:

June 1983 - 64.3%
June 2013 - 64.5%

http://data.bls.gov/timeseries/L...

Without the Fed. Resv's QE, this economy would be flat on it's back.

registerer

Oh now come on you are just a downer!(sarcasim) Bernake is going to slow down QE as evidenced by increasing interest rates. Could spell trouble.

reporter54

Is it sarcastic to mention that you misspelled sarcasm? Or is it sardonic? Oh yeah. Same thing. And isn't it Ben Bernanke?

Contango

Re: "Is it sarcastic to mention,"

Regardless; slowest post-war recovery on record.

Mr. Bernanke said last Aug. at Jackson Hole, that the Fed was responsible for the creation of 2M jobs and the incompetent in the WH was per usual happy to take credit.

http://www.federalreserve.gov/ne...

OMG.LOL.WT_

"perusal happy" Strange juxtaposition.

Contango

Thanks. Got anything germane to the topic to add?

coasterfan

Contango: For a true example of an incompetent president, please visit the years 2000-2008. At best, Bush was a figurehead, and Cheney & cronies actually ran the show. At worst, he caused more damage to America than any president in at least the last 100 years. Let's see, two unnecessary, unfunded wars, economic policies that caused the worst recession in 80 years, unfunded Medicare changes, ignored obvious Bin Laden warnings pre-9/11, and, oh yeah, he turned a budget surplus into a multi-trillion dollar deficit.

All that in just 8 years. Compared to that stunning, mind-boggling example of incompetence and cluelessness, I'll take Obama any day. Funny, it seems that a majority of voters have agreed with me. Twice.

Contango

Re: "For a true example of an incompetent president, please visit the years 2000-2008."

Please be advised: Pres. Clinton was POTUS from 1993-2001.

The Tech Wreck began in March 2000.

The Fed helped to fund govt. spending under Pres. Bush and it's funding it for Pres. Obama - no difference.

What the h*ll do you think QE is????

Ever heard of the business cycle? We're in a slow climb back.

The Big Dog's back

So the years of 2001-2009 were 1st Clinton's fault, then Obama's. Gotcha pooh.

The Big Dog's back

So the Dems are to slow recovering from the train wreck the Repubs created? Interesting pooh.

coasterfan

We can listen to cable network shoutfests, or we can listen to economists/experts. I prefer the latter. Nobel-prize winning economist Paul Krugman states that current conservative economic policies (lowering taxes) serves to keep unemployment high. In today's Op Ed article, he points out that current Republican strategy is to cut aid to the unemployed - both the amount they receive AND the length of time they receive it. Their party line is that the unemployed are lazy and don't want to work. The reality is that the average unemployed person receives $290 per week - before taxes.

And they STILL think their problem attracting voters is the messenger they chose, rather than the message.

registerer

It is also interesting that President Obama along with many of his followers who blog in here cries and whines about those who have investments in other countries therefore they are "scamming" others and our gov't of much needed tax money. If Obama was that concerned then he would not have recommended 3 individuals for positions in his cabinet. Penny Pritzker, Jack Lew & Michael Froman all have been nominated for some capacity and all have accounts in the Cayman Islands. President Obama, through his pension fund, also has investments in the Caymans. I guess it is okay for him and his band of merry men/women to do this but not those in the republican party!

Contango

Re: "investments in other countries,"

Let us also remember that public employee pension plans, like giants Calpers, Calstrs and Ohio ones like SERS combined, invest HUNDREDS OF BILLIONS of assets in foreign companies and foreign countries.

Why GASP, they also invest BILLIONS of dollars with PRIVATE EQUITY firms like Bain Capital!!!

Also, why are seven of the ten richest elected members of Congress Democrats???

Lastly, why is that crook MF Global crook Jon Corzine walking around free?

The only reason that NO ONE went to prison over the 2008 Financial Crisis is that the Dems AND the Repubs EACH were culpable.

The Big Dog's back

Why? Are they smarter than Repubs? Once again, why?

goofus

Once again where is the proof of the current republican strategy or is this another one of your mindless rambling.

Contango

Re: "Nobel-prize winning economist Paul Krugman states that current conservative economic policies (lowering taxes),"

Mr. Krugman is a bastardized-Keynesian nut job.

Pres. Obama LOCKED in 90-some percent of the Bush Era tax cuts with the Fiscal Cliff deal.

The Bush Tax cuts ARE the Obama tax cuts.

Again: If you think that you can SPEND your way to prosperity, get out your credit cards and let's see ya do it.

Europe is fiscally and politically imploding over it's profligate spending, but the dumb *ss American Progressives think that they can succeed where the Europeans are failing - they can't!

The Big Dog's back

So when it's to your advantage you quote Krugman. Hypocrite.

Contango

"Why Underemployment May Be Worse Than It Looks":

http://www.cnbc.com/id/100870095

Darwin's choice
Contango

The Mkt. was up again today.

As a matter of fact, the S&P is up 15% for the yr.(YTD).

Thank you Mr. Bernanke for helping to boost asset prices.

rezzy

Ohio voted Obama in and now it is time to pay the price!!! He's doing awesome!!!

KURTje

I remember Paul Harvey crooning about how great Wal-Mart was.

The Hero Zone's picture
The Hero Zone

Can we please make Congressional seats temporary too with term limits so we can have a Congress that recognizes and responds to the culture and trends of THIS CENTURY?

On that note, the government has to rely upon an economy but not the other way around. Economies have existed since the dawn of mankind even when anarchy was the rule of law. I would presume America's black markets are larger than the GPD of several other countries combined. Water will always seek its own level.

When will the federal government get "too big to fail"? I can only wonder since we obviously can't have that happen in the private world. If only there was some kind of national income tax that intuitively fit into an economy that will always be around even if everything fell apart. Or if there was some kind of way to make "baby Bells" of the Federal government...but what kind of existing infrastructure could possible exist that can delegate responsibilities over a large region of cultural, geographical, and economic circumstances.

Hmmm, I dunno. That's a real head-scratcher. I guess we are actually at our climax and can never advance.

Contango

Re: "I would presume America's black markets are larger than the GPD of several other countries combined,"

Good assumption AND it's even WORSE than that!

http://www.freakonomics.com/2011...

The "essence" of Austrian Economics:

The daily marketplace is made up of the interactions and decisions of billions of people. For a centralized authority to believe that it can be tightly controlled and regulated is lunacy.

I read when Soviet Premier Gorbachev first came to NYC and saw the hustle and bustle of delivery trucks, etc., he remarked in amazement: Who controls all this?

The Big Dog's back

So which Congress person in our area doesn't recognize and doesn't respond to the culture and trends of this century brian, I mean hero?

The Hero Zone's picture
The Hero Zone

Well we only have two people in Congress that are supposed to represent us - Marcy Kaptur and Sherrod Brown. I have been successful in meeting with a representative of the Representative (who has ~750,000 people to which she is be open)to air my concerns and offer suggestions with a followup meeting for whenever I get an email back. I have contacted the Senator's (representing a bit under 6,000,000) office and got a canned letter in response.

In addition I visited the President's campaign office twice while he was running to express my concerns and frustrations and see what could be done in a mutual fashion to actually recognize and respond to the culture and trends of this century. So I am actually trying despite the literal odds to progressively move on/forward into making the city, state, and country a better place.

Also, I am not Brian but you may guess again. My identity isn't exactly a secret.

P.S. - For what it is worth I have not gotten any kind of response at all from Republican Party offices in the local area and/or state. So there's a feather for your hat. It's actually disappointed me for while I don't wholly align with the party's ideals I figured they would want a young, thoughtful guy to step up and offer ideas and even leadership.

On that note if any of you reading this are in such a position, look me up. Or heck, Democrats? You want a young and thoughtful guy who is thinking about the betterment of mankind? The race is on. Oh, also, Masons. I'm kind of fascinated with you. Hit me up.

KnuckleDragger

Here is yet another development in the Obama economy. Thanks BO!!!
http://www.cnsnews.com/news/arti...

More people on food stamps than working in full time private sector jobs, a statistic that Obama gets full credit for.

The Big Dog's back

Because the company isn't paying a decent wage because all the money goes to the top is Obama's fault? Oh, OK.

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