Temporary Employees in the Market Today

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Abstract
The United States unemployment rate is currently at 8.9%, down from 9.4% in December 2010. However, as the labor market improves, employers are still skeptical about hiring permanent employees and are increasingly turning to temporary agencies to fill job vacancies to avoid costly benefits, training, certain taxes and payroll costs that accompany permanent employment. Past recessions and recoveries have usually indicated that the market is improving when temporary hiring increases, stabilizes and finally, permanent hiring increases. This recovery is different in that, while temp hiring is increasing, the usual trend of permanent hiring to follow is not happening. Temporary staffing companies and short-term, cost-conscious employers are optimistic that this new, post-recession hiring trend of short-term workers is more of a permanent way for companies to fulfill their staffing needs, rather than simply a trend. If the US workforce accepts constant uncertainty, low wages, and no benefits as the only means to earn a paycheck, productivity is sure to be affected. This in turn, raises the question of why employers don’t take into account the “hidden costs” of hiring temporary workers. These costs include high turnover, absenteeism, higher learning curves, lack of commitment and loyalty among temporary employees. The temporary worker has a definite role in a company’s cost-control during the recovery phase. However, this phase should be one that is short-lived and not permanent, as is happening today.

Exercise 1
During previous economic recoveries, the hiring of temporary workers has been a leading indicator of improvement in the job market. Shortly after this increase in temp hiring, an increase in permanent employee hiring would result. The 2010 recovery has been different in that the increase in temporary worker hiring continued to grow without any end in sight. At the same time, permanent employee hiring has been stagnant. It appears as if the jobs that have been lost in the recession are gone forever and that the staffing needs of companies are being contracted out to staffing agencies where temporary workers will come in and complete “projects” that last several months or even years. The forecast for the next five to ten years is the same and permanent jobs will become a thing of the past and most employees will be temporary (Coy, et al. (2010)). The U.S. may acquire a new nickname this decade: Freelance Nation. Though it is tempting to hope for a quick rebound in jobs in 2011, recent history suggests job recovery is getting increasingly slower and less robust with each passing decade. The reason: The U.S. economy is undergoing deeply structural changes. (Smith) This deep structural change is due to the fact that hiring is slowing with every economic recovery and the abundance of low cost workers in India and China are not helping the situation for Americans. In addition, jobs are being lost due to technological advancement. For example, hardware is so much cheaper to replace today than to get repaired, consequently outdating a computer technician’s skills and job.

In addition to these structural trends, there is another reason some jobs won't be coming

back: They were the product of the bubble in credit and housing. Fueled by super-low

interest rates, exotic mortgages and risky derivatives, growth from the 2001 recession

greatly expanded the number of jobs in the financial and construction industries. The

housing bust and the global financial meltdown mean the number of jobs in those fields

will be much lower than in the boom years. That expansion was a once-in-a-generation

speculative frenzy that virtually no one expects to reflate to its 2006 levels. (Smith)

Not only are many of the jobs that have been lost unlikely to come back, but those that do are increasingly likely to be freelance, temporary or contract positions rather than...
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