Posted on Tuesday, January 4, 2011
Temporary workers are starting to look, well, not so temporary.
Despite a surge this year in short-term hiring, many American businesses are still skittish about making those jobs permanent, raising concerns among workers and some labor experts that temporary employees will become a larger, more entrenched part of the work force.
This is bad news for the nation’s workers, who are already facing one of the bleakest labor markets in recent history. Temporary employees generally receive fewer benefits or none at all, and have virtually no job security. It is harder for them to save. And it is much more difficult for them to develop a career arc while hopping from boss to boss.
“We’re in a period where uncertainty seems to be going on forever,” said David Autor, an economist at the Massachusetts Institute of Technology. “So this period of temporary employment seems to be going on forever.”
This year, companies have hired temporary workers in significant numbers. In November, they accounted for 80 percent of the 50,000 jobs added by private sector employers, according to the Labor Department. Since the beginning of the year, employers have added a net 307,000 temporary workers, more than a quarter of the 1.17 million private sector jobs added in total.
One worker who has been forced to accept temporary jobs is Jeffrey Rodeo, 43, who was laid off 14 months ago from his job as an accounting manager at a produce company in Sacramento. He has applied for nearly 700 full-time positions since then, but has yet to receive an offer. Meanwhile, to stay afloat and keep his skills fresh, he has worked on short-term stints at four different employers.
Mr. Rodeo figures his peripatetic work life will last at least another year. “Companies are being more careful,” he said. “It just may take longer to secure a permanent position.”
To the more than 15 million people who are still out of work, those with temporary jobs are lucky. With concerns mounting that the long-term unemployed are becoming increasingly unemployable, those in temporary jobs are at least maintaining ties to the working world.
The competition for them can often be as fierce as for permanent openings, and there are still far too few of them to go around. Indeed, the relative strength in temporary hiring has done little to dent the stubbornly high unemployment rate, which rose to 9.8 percent in November.
“With business confidence, particularly in the small business sector, extremely low,” said Ian Shepherdson, chief United States economist at the High Frequency Economics research firm, “it’s not surprising that permanent hiring is lagging behind.”
The landscape two or three years from now might look quite different, of course. Many economists and executives at temporary agencies say there are signs that more robust permanent hiring is coming in the new year. Business confidence is up, and temporary agencies report that the percentage of interim workers who have been offered full-time jobs is also up from last year.
Nevertheless, there are signs that this time around, the economy could be moving toward a higher reliance on temporary workers over the long term.
This year, 26.2 percent of all jobs added by private sector employers were temporary positions. In the comparable period after the recession of the early 1990s, only 10.9 percent of the private sector jobs added were temporary, and after the downturn earlier this decade, just 7.1 percent were temporary.
Temporary employees still make up a small fraction of total employees, but that segment has been rising steeply over the past year. “It hints at a structural change,” said Allen L. Sinai, chief global economist at the consulting firm Decision Economics. Temp workers “are becoming an ever more important part of what is going on,” he said.
Several factors could be contributing to the trend. Many businesses now tend to organize around short- to medium-term projects that can be doled out to temporary or contract workers.
Donald Lane, chief executive of Makino, a manufacturer of machine tools near Cincinnati, said his company would increasingly outsource projects to contract firms that pull together temporary teams. When installing a large machine, for example, Mr. Lane said the company could appoint one full-time supervisor to oversee a number of less skilled short-term workers.
Mr. Lane said he hoped to raise Makino’s share of temporary employees from 10 to 15 percent now to about 25 percent in the future.
Flexibility is another factor. Corporate executives, stung by the depth of the recent downturn, are looking to make it easier to hire and fire workers. And with the cost of health and retirement benefits running high, many companies are looking to reduce that burden. In some cases, companies wrongly classify regular employees as temporary or contract workers in order to save on benefit costs and taxes.
Certainly, Americans who have never held anything but a full-time job have sought out temporary posts because they were the only jobs available. And even before the recession, workers were learning that lifelong employment was disappearing along with phone booths and Filofax organizers.
But people still tend to prefer jobs with some sense of permanence, and with full health benefits and some form of retirement contribution.
According to a survey by Staffing Industry Analysts, a Mountain View, Calif., research firm, 68 percent of all temporary workers are seeking permanent employment.
But the whole notion of what constitutes a permanent job may simply be changing. Workers “need to expect that their lives and jobs will change much more often than they have in the past,” said Jonas Prising, president of the Americas at Manpower.
Some people have discovered they prefer the freelance life. Antonia Musto lost her job as a staff accountant for a newspaper in Wilkes Barre, Pa., more than two years ago. She signed on with oDesk, a company that matches contract workers with employers online.
She has since worked for several different businesses and even turned down a full-time offer last November. “I just think I’ve gotten very accustomed to working very fast and working with many different people,” Ms. Musto, 38, said. She said she had fully replaced the income she was making at the newspaper and buys private health insurance.
Of course, businesses that can now hire talented workers for temporary jobs may find that when demand picks up, they will need to offer full-time positions with perks and benefits. But it could take a long time to reach that point.
That indefinite stretch worries workers who fear that future employers will look askance at a résumé filled with short-term engagements. Others worry that they will lose valuable years of saving for the future.
Mr. Rodeo, the Sacramento accounting manager, said he made anywhere from 10 to 50 percent less while working in temporary jobs than he did at the produce company. He has also been without health insurance all year. None of the interim employers or temporary agencies have contributed to a 401(k) plan, nor has he been able to save much on his own.
“That’s the scariest part,” said Mr. Rodeo.
He is confident he will eventually land a permanent post, but until then, he knows he is losing ground in planning for retirement. “Of course, for my generation, you can’t plan on Social Security,” he said. “Most likely, I will have to work longer.”
Others are starting to face the prospect that they could move among temporary assignments for the rest of their careers.
Jose Marin, 50, known as J. D., lost his technology job in Miami in February and moved to North Carolina to live with his sister. After months of looking for a permanent job, he signed on with Modis, a unit of Adecco, and in August began a temporary assignment for a financial services company in Cary, a town west of Raleigh.
While grateful for the job, he longs for a permanent position. “I’m still old-fashioned and I still want to work for a company where I make a difference and I’m going to be there to retire,” said Mr. Marin. “I know that’s wishful thinking.”
By MOTOKO RICH