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Giving Temps A Break

But are many of these temporary hirings pre-planned to be merely temporary, e.g., retailers needing more sales people for the holiday season?

Combination thanks to Tom (But Then What) and Jake (Econompic Data). – Ilene

Temporary Help as a Predictor of Broader Hiring

Courtesy of Jake at Econompic Data

Bloomberg reported:

The worst U.S. employment slump in the post-World War II era may be about to end as companies hasten to hire temporary workers and boost hours, according to economists such as John Ryding and Zach Pandl.

Employers took on 52,000 temporary workers in November, the largest increase since October 2004 and the fourth consecutive gain, the Labor Department said today. The average workweek climbed by 12 minutes, the most since March 2003.

“It is beginning to look like December could be the first month to show a positive payroll print,” Ryding, chief economist at RDQ Economics LLC in New York, said in a telephone interview. “Companies are running out of labor.”

Jumps in temporary help and working hours often presage the addition of permanent, full-time staff as companies grow more confident sales will be sustained. Job growth would help lift consumer spending, the biggest part of the economy, and aid the recovery from the worst recession since the 1930s.

[click on graph for larger image]

This cycle may be slightly different as employers delay the full-time hiring due to uncertainty and quite frankly an ability to get top talent "on the cheap" on a temporary basis. Still, a nice sign on the margin.

Source: BLS

Giving Temps A Break

Courtesy of Tom Lindmark at But Then What

Jake has a nice post on the relationship between temporary hiring and its relationship to payrolls. Here is his graph (above).

And he comments:

This cycle may be slightly different as employers delay the full-time hiring due to uncertainty and quite frankly an ability to get top talent “on the cheap” on a temporary basis. Still, a nice sign on the margin.

No disagreement here that it is a positive sign and I agree that employers are likely to use temporary workers as a cheap way of adding employees. Should they be allowed to do that?

Right now is probably not the right time to be doing anything that would discourage business owners from adding employees so let’s stipulate up front that I don’t think the practice of ramping up employment via temporary workers ought to be meddled with right now. Longer term though, it deserves a closer look.

The use of temps and contract workers by American business has been an expanding practice for the better part of the last decade. Under euphemisms like right sizing companies have been laying off workers and then rehiring them as temps, consultants and contract workers. Often those rehired go right back to the same jobs they held before while the employer is freed of niggling details like providing benefits and paying its half of the payroll tax.

Oh, and one other detail that the recession has brought home to many. Generally, as a temp or contract worker you are not entitled to unemployment benefits. There is no safety net under these workers.

To be sure the classification of employees in this manner is not overtly evil, not is it always and everywhere an attempt to disenfranchise workers. It does beneficially afford employers the flexibility to quickly adjust to changing economic circumstances which has positive benefits to the larger economy.

The problem is that it is open to substantial abuse. When discharged employees are brought back and in some cases retained for years as temps doing identical jobs or employers classify the bulk of their workforce as contract laborers then a line has been crossed between legitimate staffing and sham job classifications in order to evade legitimate employment expenses. The net result is that the economy, particularly those parts of it that depend upon employer contributions for solvency, are short-changed and we are all worse off.

As I said, now is not the time for a full scale assault on the practice. Jobs of any sort are a precious commodity right now but at some point in time reform would seem to be required. At the very least, anyone employed in a temp position should have access to unemployment benefits and employers should be required to fund their share of such benefits based on their total work force, not just their permanent workers. It goes without saying that state and federal officials should pay more attention to the abuses that have arisen in this arena and more aggressively audit firms who appear to make excessive use of temporary workers.

 


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