Temp Workers Make Huge Comeback

The temporary help industry is showing some of the strongest post-recession growth

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It's no secret that the recession hit different industries unevenly. Construction and manufacturing shed workers in droves, and even now, government employment continues to slide. Meanwhile, healthcare and education grew unabated, and retail is working its way back from the recessionary slump. One of the biggest comebacks, however, is in the industry where it may inspire the least relief: the temporary help industry.

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After hitting a peak of nearly 2.7 million workers in 2006, the temporary help industry lost more than one-third of its members during the downturn. Since then, it has regained a vast majority of the workers it lost—87 percent—and continues to add them steadily. Compare that to all private employers, which have only brought back just over half of their jobs.

"It's very significantly punching over its weight," says Patrick O'Keefe, director of economic research at accounting firm J.H. Cohn, of the industry's impressive recent growth.

Contrary to how depressing it may seem on the surface—a comeback in jobs that may only last a few months—a boost in temporary help can be a promising sign.

"What you generally see is that temporary help agency employment tends to grow as we head into a recession and as we head out of a recession," says Arne Kalleberg, a professor of sociology at University of North Carolina who studies the labor force.

New temp jobs can mean that employers have more work that needs to be done, and are willing to at least spend some money hiring workers to get the job done. That can presage a pickup in permanent hiring.

"There is a point where employers, because of the magnitude of increase in demand and that increase being sustained over a period of time, have historically shifted from reliance on temporary help to more permanent workers," says O'Keefe,

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Though that is historically true, and an uptick in permanent hiring could be on its way, the current economic situation is also one of unusual uncertainty. Temporary staffing may continue to see steady growth as employers put off hiring in the face of weak global demand and fiscal uncertainty at home.

"I don't see until the first quarter or the first half of next year any reduction of that uncertainty," says O'Keefe.

Even when the bumpy economy rights itself, however, the temp industry could easily remain strong. That's because temporary workers have become a significant part of the labor force. In 1983, temporary workers made up just over half a percent of all employment. Now, that figures stands at nearly 2.3 percent—a remarkable change, despite the small numbers.

"It's a structural transformation," says Kalleberg. From around 1945 to 1975, he says, the employment model of hiring people and keeping them on reigned. Now, a globalized and faster-paced economy has helped to shift employment paradigms.

"Just like subcontracting and outsourcing—doing these things to keep costs down—I can't see the end of it," he says.

That's not to say that the labor force will be taken over by temps. These workers have significant disadvantages: they are not as loyal as their permanent counterparts, points out Kalleberg, and they don't stick around and gain institutional knowledge.

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Still, global uncertainty and a quickening business environment could help to make the growth of short-term work a long-term trend.

"This is a worldwide phenomenon. The temporary help industry is growing all over the world," says Kalleberg.

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.