Trend loses influence
2/17/2010WASHINGTON - It's not the signal it used to be.
When employers hire temporary staff after a recession, it's long been seen as a sign they will soon hire permanent workers.
Not these days.
Companies have hired more temps for four straight months. Yet they remain reluctant to make permanent hires because of doubts about the recovery's durability.
Even companies that are boosting production seem inclined to get by with their existing workers, plus temporary staff if necessary.
"I think temporary hiring is less useful a signal than it used to be," said John Silvia, chief economist at Wells Fargo. "Companies aren't testing the waters by turning to temporary firms. They just want part-time workers."
The reasons vary. But economists and business people say the main obstacle is that employers lack confidence that the economic rebound has staying power. Many fear their sales and the overall economy will remain weak or even falter as consumers spend cautiously.
Companies also worry about higher costs related to taxes or health-care measures being weighed by Congress and statehouses. That's what Chris DeCapua, owner of the employment firm Dawson Careers in Columbus, Ohio, is hearing from clients. He said corporate demand for temporary workers has surged. That is especially true for manufacturing-related jobs involving driving forklifts, assembling products, packing merchandise, and loading trucks.
Yet that demand has not spilled over into a demand for permanent workers.
"There is so much uncertainty, and when there is uncertainty, people and companies hold onto their checkbooks," he said.
For years, economists have regarded increased hiring of temp workers as a bridge between no hiring and healthy job creation. It meant employers would soon expand permanent payrolls to keep up with rising customer demand.
After the 1990-1991 recession, for instance, gains in temporary hiring starting in August, 1991, led almost immediately to stepped-up permanent hiring. And after the 2001 recession, temporary hiring rose for three straight months in the summer of 2003. By September, employers were adding permanent jobs each month.
Because this recovery seems more tepid and fragile than previous rebounds, temporary hiring may have lost its predictive power, economists say. Employers added a net 52,000 temp jobs in January, a fourth consecutive month of gains. Over that time, total U.S. jobs shrank by 106,000.