Temporary employment is booming

temporary help services, TEMPHELPS, divided by total nonfarm payroll, PAYEMS, measured monthly in thousands of persons, 2003 to 2013

Lots of happy news in the US media recently about unemployment, specifically the continuing improvement in jobless claims.

Its probably best to look at the composition of the new jobs rather than then absolute number itself; the chart above shows. Specifically, two series – temporary help services (TEMPHELPS) is divided by total nonfarm payroll (PAYEMS), with each measured monthly in thousands of persons . In other words, this chart presents the percentage of the total labour force employed as temporary help.

Temporary employment is clearly booming, far exceeding increases last seen in 2006 to 2007. Generally we see a boom in temporary employment near the top of an economic expansion, as employers, scrambling to fill orders and having exhausted traditional sources of staff, move to short term contracts to get workers on whatever terms possible. As I’ve written before, the US is clearly not near the top of a “traditional” economic expansion, anything but. So I suspect what’s going on now is employers, lack necessary confidence in the economy to make a commitment to staff. In other words, temporary help is just that – temporary. If employers really believed in the so-called “economic recovery” they’d seek to acquire then lock in permanent staff. Another factor to keep in mind: every month there are between 125K to 150K new entrants to the labour force. In other words, even as the total labour force increases so does the percentage of staff who are working temporary contracts. These jobs generally lack benefits and, of course, the security of long term contracts. Not good for anyone involved I’d suggest.

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