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Robert Trigaux

As economic uncertainty lingers, talk of more workers becoming temporary



Wake up and good morning. So we know that companies, even those bloated with cash, remain wary of hiring and are using more temps to fill their expansion needs. But now comes greater concern that the temp binge -- seen originally as a stepping stone  back to full-time hiring -- may become a long-term trend. Why? Because companies so badly burned by this nasty downturn are convinced that there is, and will be, far too much uncertainty ahead in the economy and in the political world we live in to justify any significant shifts from using temps to adding FT jobs.

"It hints at a structural change," Allen L. Sinai, chief global economist at the consulting firm Decision Economics, told the New York Times. Temp workers "are becoming an ever more important part of what is going on."

That same New York Times story, published Sunday, points out some convincing arguments on this temp trend:

1. "This year, companies have hired temporary workers in significant numbers. In November, they accounted for 80 percent of the 50,000 jobs added by private sector employers, according to the Labor Department. Since the beginning of the year, employers have added a net 307,000 temporary workers, more than a quarter of the 1.17 million private sector jobs added in total."

2. "This year, 26.2 percent of all jobs added by private sector employers were temporary positions. In the comparable period after the recession of the early 1990s, only 10.9 percent of the private sector jobs added were temporary, and after the downturn earlier this decade, just 7.1 percent were temporary."

3. "Flexibility is another factor. Corporate executives, stung by the depth of the recent downturn, are looking to make it easier to hire and fire workers. And with the cost of health and retirement benefits running high, many companies are looking to reduce that burden. In some cases, companies wrongly classify regular employees as temporary or contract workers in order to save on benefit costs and taxes."

Read the entire New York Times story here.

According to a Bloomberg News story today, U.S. hiring by private companies last month was the weakest since January at 50,000. But the staffing industry is experiencing a boom in demand as employers retool their workforces to be more flexible and reduce expenses. That’s helped stocks of these businesses outperform the broader market.

The story (read it here) quotes Wells Fargo Securities chief economist John Silvia, who suggests there is a "fundamental change" under way in the hiring habits of companies unsure about the strength of final demand and the strength of the economy. Silvia predicts the national unemployment rate will reach 10 percent early next year compared with 9.8 percent in November -- remember that Florida's unemployment rate just shot up to 12 percent from 11.9 percent -- even as he has raised his forecast for fourth-quarter growth to 3.5 percent from 2.6 percent. "This certainly suggests more caution," he says.

The story notes that revenue in the third quarter from permanent job placements rose 61 percent at Tampa-based Kforce, 50 percent at SFN Group Inc. in Fort Lauderdale and 33 percent at Menlo Park, California-based Robert Half.

--Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, December 21, 2010 7:57am]


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