Temporary employment on rise in U.S.

By Adam Geller
Associated Press

NEW YORK — Conventional wisdom says that once companies begin hiring temporary workers, a turnaround in the job market must be close behind.

But nearly 2 1/2 years after the economy officially began its recovery, old assumptions about new jobs are providing more confusion than comfort.

A report released by the government Friday showed temporary employment increased once again in February — by 32,000 jobs — just as it has been doing for the better part of a year.

But the permanent hiring that was supposed to flow from the temp jobs is not materializing. The economy as a whole added a scant 21,000 jobs last month, far below the 125,000 that analysts had forecast. That has economists, and even temporary staffing businesses, scratching their heads.

"It's not like the old days," said John Silvia, chief economist with Wachovia Corp.

What is it? And what to make of the strong evidence — including a sustained slowdown in layoffs, and the upturn in temp positions — that the job market is improving?

For companies that provide employers with temporary workers, the past year has seen business pick up dramatically, with employment swelling nearly 10 percent, said Steve Berchem, vice president of the American Staffing Association.

The figures kept by the government vary slightly from those of the temp industry but show an almost identical rise. Since April 2003, temporary employment has increased by about 215,000 to 2.37 million, according to the Bureau of Labor Statistics.

That is good news for temp staffing companies, which increasingly also provide the permanent workers employers hire as recoveries solidify — usually six to nine months later. But the lack of follow-through by employers is hard to figure, some temporary firms say.

"This whole recovery has been unlike anything this industry has seen," Berchem said.

Owners of staffing companies say the change has been obvious in their own relationships with employers.

At JFC Staffing Associates in Camp Hill, Pa., about 500 temporary workers have been hired for permanent jobs in the past year, company President Linda Carchidi said. But many employers still appear reluctant to hire, and some talk of waiting until after the presidential election before making significant additions to their payrolls, she said.

Another staffing agency owner, Kathy Rogers, said her company's revenue grew 25 percent last year and permanent hiring has picked up in the past three months, particularly for engineering jobs. But employers are still holding back, said Rogers, president of Fort Wayne, Ind.-based Time Services Inc.

"A lot of companies went through tough times and had to lay off people and I think people remember that very vividly, so they would be very reluctant before bringing people back on to their payrolls," she said.

At the same time, companies are continuing to squeeze productivity gains out of existing workers, in part by harnessing technology. In addition, many employers have added jobs, but have done so overseas.

The economy as a whole continued to shed jobs through August. But while economists kept predicting a turnaround, growth in total employment since then has been minimal — up just 364,000 in six months.

That has led some economists to re-examine the idea that the recovery is merely slow to take hold and considering whether it has already arrived — characterized by solid growth, but minimal job creation.

Figuring out the answer is made more difficult when you consider all the difficulties faced by the economy in the past few years — terrorism, the war in Iraq, corporate scandals.

What is likely to be different, even after the economy picks up, is the type of jobs that are created, Silvia said. "This is much more about (economic) restructuring than it is about the business cycle," he said.

That is obvious in Friday's report, which shows that the unemployment rate for people with less than a high-school diploma is now 8.5 percent. For factory workers, the rate is 8.2 percent. The jobless rate for people with a college undergraduate degree is 2.9 percent.