Rise in temp workers a sure, if slow, sign of recovery

February 10, 2010|By Jay Hancock

I can't promise that Maryland unemployment will sink below 7 percent this year, or that the state's economy will even add jobs. But items keep crossing my desk suggesting that the economy continues to heal and that employers might start hiring by spring or summer.

Last week's jobs report from the Labor Department, while showing a slight decline in overall U.S. unemployment, indicated that companies are hiring temporary workers. That could be a good sign. In recent years, economists say, putting temps on the books has preceded a wider and stronger pickup in business.

Employment at Manpower, Kelly Services and other temp agencies hit a low in September, according to the Labor Department. But they've added a quarter-million jobs since then across the country, including 52,000 last month.

Temporary jobs aren't the solution to the economic disaster. By definition, they're short-term. They often lack benefits. No matter what happens, this recovery figures to be long and painful - worse than the "jobless" recovery after the 1991 recession, probably.

But you'd rather see a pickup in temporary hiring than a continued crash in employment of almost every type.

"We forecast a slight uptick at the end of the year, and I think we're meeting those expectations to a degree," said Tim Namie, managing director for Manpower Professional in the Baltimore- Washington corridor. "Toward the end of this quarter and into the beginning of the second quarter, we expect to see an increase again."

Information from the Baltimore branch of the Federal Reserve Bank of Richmond reinforces that idea. Every month, Fed economist R. Andrew Bauer surveys dozens of Maryland businesses about economic conditions. In recent months, the readings on expectations for six months from now have been at or near their highest levels since Bauer started the survey in 2007.

"A lot of people are pretty optimistic about what's going to happen this spring and fall," said Bauer. "People understand that the economy is slowly strengthening, that the labor market is beginning to perhaps hit a bottom and is beginning to work its way back up."

Area temp agencies see decent demand from hospitals and other health care providers, whose product is resistant to recession and who have helped buoy the metro-Baltimore economy. Government agencies also are needing temps, which again is nothing unusual.

At the same time, however, temp companies are hearing more from financial and law firms, light manufacturers and even a few employers with real-estate connections. That's something new. Some existing clients are even increasing requests for workers.

"One of my officers right there in Baltimore, she's seeing whole new job orders for the first time," said Kim LaPaglia, territory leader for the Baltimore-Washington offices of Kelly Services. "If we had staffed a particular department, all of the sudden we're getting calls from another group" in the same company, she said.

Meeting the need for new workers through temp agencies has been typical in recent years for employers, who have been very conservative in hiring. For bosses, temps are a risk-free bet on the economy. If what looks like a business uptick fails to sustain itself, they can decline to renew a temp contract.

That's another reason for cautioning against too much optimism over demand for temps. Even so, many of these jobs will turn into permanent positions if the economy keeps recovering.

"If those consultants and temporaries stay strong and fulfill their duties, and the business is there, I think we'll see a lot of these people transitioning over to our clients' payroll in the second and third quarter of this year," said Namie.

As indicated by its unemployment rate of 7.5 percent, which is far lower than national joblessness of 9.7 percent, Maryland has a job market that is performing better than that of the nation. More evidence comes from Juju.com, whose latest Job Search Difficulty Index puts Baltimore and Washington in the top three best markets for finding employment.

But Maryland has been in recession, make no mistake. For the state and the country, it'll take hiring to really turn the economy around. The recent huge increases in productivity and gross domestic product don't put food on the table.

If the hiring of temporary workers is the first sign of a jobs turnaround in the worst downturn in more than half a century, we'll take it. If it's a harbinger of better things to come, so much the better.

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