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The Economist: Temporary Workers




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The author of this entry is responsible for this content, which is not edited by the Wilson County News or wilsoncountynews.com.
Dr. M. Ray Perryman
July 11, 2013 | 1498 views | Post a comment

Temporary employees (temps) are a large and growing segment of the American workforce. While temp arrangements have been around a long time, they are now more common than ever. Also, temporary employees are used in a variety of industries, whereas they were once primarily office workers. There is some debate as to whether this rise in the temporary workforce is good, bad, or indifferent. However, there is reason to believe that the pattern is here to stay.

The number of temporary workers now exceeds the level before the national downturn, and these job gains comprise a significant portion of all jobs added by the US economy over the recovery period. The largest percentage of spending on temps in 2012 was within the manufacturing and warehousing industry group, followed by information technology, and office/clerical. There are pros and cons to temporary workers, both from an individual and a corporate perspective.

For individuals, the biggest downside of temporary work is usually the level of pay and benefits (or lack thereof). Hourly pay rates can be significantly lower than those of regular employees, and benefits are rarely offered. In addition, there is the obvious lack of job security and the stress associated with uncertainty and frequent job changes. Temps are often offered the least desirable jobs and the worst shifts.

However, there are some good things about being a temporary worker. It can open a lot more doors to the workplace, and can certainly be better than no job at all. It also allows workers to sample different corporate environments with little or no consequence if things don’t work out. There are also people for whom assignments of a limited duration are perfect, generating a little extra cash but not lasting forever. For regular workers, the presence of temporaries can help level off workloads, improve schedules, and otherwise make life better.

From a corporate perspective, there are many reasons to utilize temporary workers. It can be far more efficient to hire the numbers you need precisely when you need them, rather than staffing up for the busy times and having excess workers without enough to do. Decades ago, “just-in-time” inventory management techniques changed the way manufacturing operations worked.

The idea was to only buy and keep on hand the input parts needed right away, rather than spending money to purchase and store vast stockpiles of materials. Temp workers are a similar concept, which some people are calling a “just-in-time workforce.” Improving corporate efficiency is a good thing, enhancing competitiveness in world markets and ensuring long-term viability.

Moreover, hiring is a big commitment of resources, and it is prudent to (1) try to extract more productivity from existing employees, (2) consider temporary or part-time workers to fill gaps or get through busy times, and then finally (3) add full-time staff. Given current uncertainties with regard to the Affordable Care Act and the still-sluggish recovery, companies are being even more careful. The ability to see if a potential hire is a good fit thus makes sense. (From my own experience as CEO of a small firm, using temporary office help during an unbelievably busy time paid off big in that it allowed me the pleasure of working with an excellent individual who has now been a colleague for decades; I’m sure many of you have similar stories.)

Viewing the growth in temp workers as an economic signal can be tricky. Some pundits are pointing to this data as a sign that companies are feeling very unsure about their ability to generate sales and profits in the future and are, therefore, unwilling to take on employees. While this may be true to some extent, the number of temp workers has only recently recovered to pre-downturn levels, and it’s unclear how much further that aspect of the labor force can grow before full-time hiring accelerates. Therefore, the high numbers of temp workers can be a sign that the US economy is on the cusp of significant job growth.

Looking ahead, I tend to see the large number of temp workers as a natural evolution. The days when people worked for a single employer for decades on end are largely gone, and the connection between worker and company has weakened. A just-in-time workforce makes more sense in this context. It is also inappropriate to assume that all temp workers are unhappy with their situations. Many of them are highly skilled, working in occupations ranging from drafting to marketing to writing software and much more and picking assignments as they choose.

With more confidence in economic recovery, firms may begin to make more offers, shifting more new jobs from temporary to regular. At the same time, structural changes in the way corporations think about employees are clearly underway, and the role of the temporary workforce may well grow even more important in the decades to come.

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.
 
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