Saturday, March 7, 2009

Temporary help is getting pummeled

I was quite busy at work yesterday and wasn't able to post about the employment report. Here's my take on the report: the labor market continues to hemorrhage jobs.

Behind the BLS headlines - 8.1% unemployment rate, nonfarm payroll fell another 651,000 for 2.6 million jobs lost since October - is a nasty number: another 77,700 temporary jobs were slashed. This is bad news, as temporary help tends to be a leading indicator of employment decisions.

The chart illustrates the monthly percentage change in total nonfarm payroll and temporary employment (part of the establishment survey, Table B-1 here) since 1990, when the temporary series was first measured. I include the 3-moving average of temporary employment changes (red line) because the series tends to be very volatile, even on a seasonally adjusted basis. The 3-moving average fell another 3.7% - the trend is down. And furthermore, the downward trend is far worse than during the last two recessions.

Since its peak, December 2007, the temporary workforce has been cut almost 27% for a total of 685,600 jobs lost. This is a massive cut in employment; for comparison, total payroll has fallen a little more than 3% over the same period.

Temporary workers can collect unemployment insurance (at least in MA), but likely have negligible employer-sponsored benefits (retirement, health insurance, etc.). Firms tend to layoff temporary help first, and later the full-timers. Therefore, the ongoing slash in temporary help (probably) signals that the job destruction is not over.

Rebecca Wilder


  1. Thanks, Rebecca, for the take on the temp employment. Had not really given it a thought. In fact, I was assuming employers would fire full-timers and get temps as needed.
    One thought occurs. When employment resumes something of an upward trend, aren't a lot of the lost jobs not going to be created again? I can't see so many home construction jobs ever (10-20yrs out) being created since the boom was just that. it would be interesting to postulate on what sectors (new and old) will be growing. Medical seems to be one but, even with the stimulus construction, those jobs are finite.

  2. Hi Janie,

    Thanks for your comment! It is unlikely that firms universally fire temporary workers first, but the opposite is easier to assume: firms hire temporary help first when the economy starts to recover while they assess the demand for full-time employment.

    It will take a while to recover the job loss. And you are correct, the dispersion of jobs will not be the same across the industries.



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