Why 'temp' jobs may be new norm

Temporary jobs always surge after recessions, until companies gain confidence and create permanent jobs. Is this time different?

By , Correspondent

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    In this photo taken Sept. 23, 2010, manager Neal Young, right, gives a man a hardhat, work gloves, and a safety vest with a referral ticket for a day's work – cleaning up a construction site – at the Labor Ready office, which provides people by the day or week for employers needing temporary workers, in Culver City, Calif. Last year, temp jobs accounted for 1 in 4 private-sector jobs created last year, a much higher percentage than in the previous two recoveries.
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When Vanessa Marlin resigned from her job of 11 years as a logistics analyst at Xerox in 2009, she spent five months looking for work, sent out "at least 100 résumés," then embarked on a string of temp positions, including working as a buyer for a local firm and as a census taker.

"I was unemployed for months and took positions in which I made considerably less," says Ms. Marlin. "But I kept my résumé updated and continued sending out résumés everywhere."

A few months ago Marlin approached a Rochester, N.Y., staffing agency, Burns Personnel, which placed her in a temp-to-hire position as a commodity specialist for a critical substances company, where she's been for the past four months.

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Temporary employment usually plays an important part in the jobs recovery after a recession, as temps are easier to hire and fire at a time when employers are skittish about the economy. After most recoveries, hiring returns to normal, but temp industry experts say this recovery could be different.

The severity of the recession, the protracted recuperation of the job market, and the cost implications of the new health-care law has some in the industry wondering if more temporary work is here to stay. What happens in 2011 may help predict whether employers will return to normal hiring patterns – or whether temp workers will become, well, permanent.

Any return to normal hiring certainly looks far more protracted this time.

"This recession is much, much longer," and it's much more difficult to forecast where we're going, says David Autor, an economist at the Massachusetts Institute of Technology in Cambridge. "That contributes to employers' reluctance to make direct-hire employment…. [Temp work] is definitely growing, a lot of recent employment growth has been in temp employment."

For such a tiny corner of the job market – less than 2 percent of total employment – the temporary-help sector has had a huge impact on America's labor recovery. Some 307,000 jobs, just over a quarter of all the private-sector positions added last year, were temporary positions, according to the Bureau of Labor Statistics (BLS). That surge, typical of economic recoveries, is more pronounced this time.

Temporary jobs only accounted for 10.9 percent of the jobs added after the recession of the early 1990s, according to the BLS. After the recession of the early 2000s, just 7.1 percent of jobs were temporary. To some, that's a sign that the temp industry is growing up. "It's a much broader industry with a much stronger foundation now," says Bruce Steinberg, an expert on the staffing industry in Alexandria, Va.

And for labor experts – not to mention temporary workers themselves – that's worrisome. Temp workers like Marlin typically don't get benefits like health care or retirement options, nor do they have job security. It's tougher for them to save, and virtually impossible to develop a cohesive career or climb the corporate ladder while shifting jobs every six or 12 months.

"It definitely concerns me," says Susan Hammond, of Rochester, who temped as an assembler at an electronics company before getting hired there full-time. "One day you are on the job and the next day they can call you and tell you the assignment there is done."

Several other factors suggest the labor market has fundamentally changed. Burgeoning health-care and retirement costs have companies looking for cost savings in the form of benefits-free temp labor. Also, in an environment where cost and speed are increasingly important, businesses tend to favor shorter-term projects that can be parceled out to contractors and temporary workers.

"A lot of work is project-based, especially in the IT area," says Jim Ellis, an area manager at Burns Personnel, which specializes in information technology jobs "[The economy] lends itself to temp employees. It gives companies the flexibility to ramp up quickly or down…. I think we're going see more companies following that model of having more temps on a more consistent basis going forward."

Professor Autor disagrees. This recession is no different from past ones in its reliance on temporary work, he says.

"Temp work has been an important part of the jobs landscape for a while," says Autor, noting that it took off in the 1980s and '90s. "It's always been the case that temp work tends to expand as recovery gets under way. "Employers want to hire in a noncommittal way, when things look robust, they tend to switch over."

Steinberg agrees: "It's a cycle and we're in a certain part of the cycle." Temp work peaked at 2 percent of jobs in 2000 before tailing off, he says. By January 2011, despite all the recent growth, it accounted for only 1.7 percent of those jobs.

Most important, predictions suggesting the temping of America aren't realistic because they ignore the human element of work. "It's not that simple to replace working relationships with an analogy of services you buy on tap," says Autor. "People are heterogeneous. Work occurs in relationships and teams…. People aren't commoditizable. Work is not a commodity; it's not like buying power or computing services."

Still, the recession has a message for workers, Steinberg says. "People have to realize they are responsible for managing their own career. You really have to depend upon yourself – you have to make a commitment to your own career first and your own skills."

Marlin, who resigned from Xerox to begin a long string of temporary assignments, has gained her own perspective. "It's OK, even necessary, to take calculated risks and make changes," she says.

It's paid off for her. Her company hired her full time in February.

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