With temporary employment a bellwether in economic recoveries, businesses are hoping a prolonged rebound in the temp-help market is not just temporary as the economy gathers steam, despite significant uncertainties remaining.
Demand for temporary and contract staffing continued to increase steadily between November and December, according to the American Staffing Association, which maintains a monthly index on the sector.
In a separate report, the U.S. Bureau of Labor Statistics reported that more temporary jobs were created in December than in any comparable period over the past 20 years.
The sector has been on a roll since July 2009, with ASA”™s index up 23 percent since then, though it remains 13 percent lower than in June 2006 when the economy was at full bore. The Alexandria, Va.-based group compiles the index nine days after each workweek, and says it represents an accurate picture of the current state of the industry.
“Businesses are reluctant to hire new employees until they are more confident in the economic recovery, instead preferring the work force flexibility offered by staffing firms,” Richard Wahlquist, CEO of ASA, said in a statement. “Because staffing employment is a leading employment indicator, the consistent trend of temporary help job growth bodes well for overall job growth in the near future.”
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If so, that bodes well for employment growth locally. According to the Federal Reserve Bank of New York, a major New York City employment agency specializing in office jobs reports that hiring activity has picked up a bit ”“ primarily from the city”™s financial industry ”“ during what is usually a slow season.
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Westport-based Compass Diversified Holdings Inc. (CODI) has the largest temporary employment agency of any business based in Fairfield County, holding a controlling stake in Staffmark. For the quarter ending last June, Staffmark revenue was down 37 percent from a year earlier, which CODI attributed squarely to the recession”™s impact on Staffmark”™s business customers.
“We expect Staffmark and the entire staffing industry to continue to be the leading indicators of the economy and expect performance of the company to strengthen substantially as the economy improves,” said Jim Bottiglieri, chief financial officer of CODI, in a conference call with investment analysts last year.
Even as temporary jobs pick up in the office sector, some note an increasing reliance on variable employment contracts by businesses as they attempt to become more flexible with their staffing needs. The term variable employment is used to describe the practice of hiring to accomplish a specific project goal, with the employment ending with the task”™s completion. Common in fields such as high tech and civil engineering, observers say the practice is spreading to other sectors as well.
“We hear anecdotally this is happening ”¦ but we hear a lot of things anecdotally,” said Rae Rosen, economist and assistant vice president with the Federal Reserve Bank of New York, speaking in Stamford this month to members of the Business Council of Fairfield County. “But it definitely is occurring, yes.”
CODI CEO Joe Massoud said that contract labor represents about 3 percent of the total U.S. work force today.
“Coming out of downturns, employment managers have been cautious or nervous or, quite honestly, relieved to be able to manage their work force in a more lean way,” Massoud said. “We never know until it plays out, but my view is that the shift towards contract labor will bode very well for this entire industry not just for Staffmark ”“ notwithstanding any potential kind of overall loss of jobs due to productivity gains during this downturn as a result of layoffs.”
