TEMPORARY WORKERS BECOMING PERMANENT FIXTURE

U.S. companies increasingly turn to transient work force

Employers sidestep benefits, health-care coverage

7/9/2013
ASSOCIATED PRESS
Dave Morton, left, and Brian Goodman, who drive buses for a Kentucky school district, have taken temporary jobs at a high school to earn a little extra money during the summer.
Dave Morton, left, and Brian Goodman, who drive buses for a Kentucky school district, have taken temporary jobs at a high school to earn a little extra money during the summer.

WASHINGTON — Hiring is exploding in the one corner of the U.S. economy where few want to be hired: temporary work.

Wal-Mart, General Motors, and PepsiCo are among companies that are increasingly turning to temps and to a much larger universe of freelancers, contract workers, and consultants. Combined, these workers number nearly 17 million people who have only tenuous ties to the companies that pay them — about 12 percent of everyone with a job.

The rise in temp and contract work shows that many employers aren’t willing to hire for the long run.

The number of temps has jumped more than 50 percent since the recession ended four years ago to nearly 2.7 million — the most on government records dating to 1990. In no other sector has hiring come close.

Driving the trend are lingering uncertainty about the economy and employers’ desire for more flexibility in matching their payrolls to their revenue. Some employers also have sought to sidestep the new health-care law’s rule that they provide medical coverage for permanent workers. Last week, though, the Obama Administration delayed that provision of the law for a year.

The use of temps has extended into sectors that seldom used them in the past — professional services, for example, which include lawyers, doctors, and information technology specialists.

Temps typically receive low pay, few benefits, and scant job security. That makes them less likely to spend freely, so temp jobs tend not to boost the economy the way permanent jobs do. More temps and contract workers also help explain why pay barely has outpaced inflation since the recession ended.

Beyond economic uncertainty, Ethan Harris, global economist at Bank of America Merrill Lynch, thinks more lasting changes are taking root.

“There’s been a generational shift toward a less committed relationship between the firm and the worker,” Mr. Harris says.

An Associated Press survey of 37 economists in May found that three-quarters thought the increased use of temps and contract workers represented a long-standing trend.

Typical of that trend is Latrese Carr, who was hired by a Walmart in Glenwood, Ill., two months ago on a 90-day contract. She works 10 p.m. to 7 a.m., helping unload trucks and restocking shelves. Her pay is $9.45 an hour. There’s no health insurance or other benefits.

Companies such as Wal-Mart, General Motors, and PepsiCo are using temporary workers to avoid making a permanent investment in their work forces.
Companies such as Wal-Mart, General Motors, and PepsiCo are using temporary workers to avoid making a permanent investment in their work forces.

Ms. Carr, 20, didn’t particularly want the overnight shift.

“I needed a job,” she says.

The store managers have said some temps will be kept on permanently, Ms. Carr says, depending on their performance. But Ms. Carr isn’t counting on it.

The trend toward contract workers was intensified by the depth of the recession and the tepid pace of the recovery. A heavy investment in long-term employment isn’t a cost all companies want to bear anymore.

“There’s much more appreciation of the importance of having flexibility in the work force,” says Barry Asin of Staffing Industry Analysts, a consulting firm.

Business executives say temp work can provide valuable experience.

But research by Susan Houseman, an economist at the Upjohn Institute of Employment Research, has found that even when jobs are classified as “temp to permanent,” only 27 percent of such assignments lead to permanent positions.

Todd Miller, CEO of software company Gwabbit in Carmel Valley, Calif., says about a third of his 20 employees are temporary.

If the economy were to accelerate, Mr. Miller says he might hire more permanent staff. But “I don’t have tremendous confidence in this economy.”