Stock prices, housing starts and possibly even sunspots are leading economic indicators. But some analysts suggest watching the temporary-services industry to get an even better jump on the news.
Trends in the employment of temporary workers presage shifts in general employment. Temporaries are the first to go in an economic contraction as workloads dwindle.
"Then, if the work activity continues to drop, layoffs of permanent employees start," said Bruce Steinberg, spokesman for the National Association of Temporary Services, a 1,000-member industry group. When work begins to pick up, many companies test the waters with temporaries before plunging into permanent hires.
If that pattern is valid, good times may soon be here again. According to the association, the temporary-help industry began turning around in the fourth quarter of 1991, after falling into a slump in 1989. The association said 13 percent more people were employed as temporaries in the fourth quarter of 1991 than at the beginning of the year.
Although an overall decline will be posted for 1991, the fourth-quarter upturn is significant, since the end of the year traditionally shows a decline.
"The demand by firms like small-item manufacturers just mushroomed after the summer of 1991 -- I mean in excess of 20 percent over the prior year," said Mitchell Fromstein, chief executive of Manpower Inc. in Milwaukee, the largest company in the temporary-help business.
The South and Midwest have been making the strongest comebacks. In New York City, where the big temp users are financial companies and law firms, the phones started ringing again a few months later than elsewhere.
"It's been since December that we felt sure about a pickup," says Stephanie Messina, a branch manager in New York of Solo Word Processing, a temporary-help company in New York. "I'm sending out temps now who hadn't worked for me in two or three years."
At the Goldman Sachs investment firm, increased use of clerical temps has paralleled the fall and rise of business activity. "Since 1987, our usage of temporaries decreased approximately 10 percent a year," said Donna Cappella, vice president of personnel. "At the end of 1990, it started creeping back up again, and now I'd say we're almost where we were in 1987."
The temporary services industry supplies such workers as typists, word processors or light-industry assemblers to companies on a short-term basis, often at a moment's notice, to handle special projects, work overload and worker absences.
It is dominated by a trio of large companies with widely varying business operations. Manpower is not only the biggest but also the most international. It had revenues of $3.5 billion last year, about half of that coming from abroad. Manpower has both company-owned and franchised offices in the United States
Kelly Services Inc., the No. 2, company, had sales last year of $1.4 billion, all from company-owned offices, predominantly in the United States. The Olsten Corp., No. 3, had $838 million in sales last year from a mix of company-owned and franchised offices in the United States and Canada. These companies compete with hundreds of mom-and-pop operations around the country.
Last year, about 6 million people worked as temps, with about 1 million employed at any one time. Temporary workers earned about $10 billion in the United States, according to Mr. Steinberg of the temporary-services association.
Highly skilled workers, like computer programmers, can do quite well. They are paid an average of $23.40 an hour, according to the association. Word processors earn about $10.55 while unskilled workers, like security guards, are paid about $6.05 an hour.
Generally, temps are not covered by company health plans or by unemployment insurance. On top of the temps' hourly pay, a client must pay a markup of 25 percent to 35 percent as a fee for the service.
At temporary-services companies, the atmosphere before the recession had been like that for a taxi dispatcher on a rainy night: All the phones were ringing.
Then came the big slowdown in work orders.
Even as available work was dwindling, more people were applying to become temps.
"Many more people now are temporaries not by choice, but because they can't find another job." said Ms. Messina. "They never thought they'd be a temp in their whole life."