Commentary | Jobs and Unemployment

Temp jobs are not the new norm

This piece originally appeared on U.S. News & World Report’s website

I keep getting asked about the growth in temporary help jobs in this recovery, and the people doing the asking seem to expect that I will be very concerned about it. I’m not.

The temporary help services industry has indeed seen relatively fast growth in this recovery, adding over 650,000 jobs since the end of the recession in the summer of 2009. However, temporary help services shed over 900,000 jobs between the summer of 2006 and the summer of 2009. When employers see demand for their goods and services fall and they need to cut back, the first workers they let go are workers from temporary help agencies. In the lead up to the Great Recession, employment in temporary help agencies started to decline in the fall of 2006, whereas overall employment didn’t start to fall until more than a year after that. The flip side of this coin is that following a recession, when employers begin to see a pickup in demand for their goods and services and need to hire, often they will first hire temporary workers to test the waters of a recovery. Employment in temporary help services began to grow in September 2009, whereas the broader labor market didn’t start adding jobs in this recovery until March 2010.

The figure below helps shed some light on this issue by presenting the share of overall employment that is in the temporary help services industry. In 2006, 1.9 percent of all jobs were in temporary help services. That dropped to 1.3 percent by the summer of 2009, as temporary help services saw much greater job loss during the downturn than the broader labor market. The temporary help services industry has seen faster job growth in the recovery than the broader labor market but, as I mentioned before, it had more to make up. Currently, 1.8 percent of all jobs are in temporary help services, still slightly below its prerecession level.

I am extremely concerned about many things in today’s labor market. The lack of broad-based robust jobs growth means more individuals and families will face lengthy employment and earnings instability. Furthermore, persistent high unemployment puts serious downward pressure on the wage growth of people with jobs, because employers don’t have to pay substantial wage increases to keep the workers they need when workers don’t have outside options (for more on this see this post). So I am indeed concerned that high unemployment is eroding worker bargaining power and job quality. At this point, however, I am not at all concerned that temporary help jobs are taking over; they currently comprise a smaller share of employment than they did before the recession started.

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