In a Discouraging Unemployment Report, a Rise in Temporary Positions
The U.S. unemployment rate surged to 10.2% in October, according to the Labor Department. Another interesting data point in today's report: "Temporary help services added 44,000 jobs since July, including 34,000 in October. From January 2008 through July 2009, temporary help services had lost an average of 44,000 jobs per month."
Are employers using temporary workers as a hedge against taking on permanent employees in this early stage of a recovery? Perhaps, says Wharton management professor Matthew Bidwell. He notes that temporary employment "tends to be rather cyclical. These people are often the first to be laid off in a downturn, but they can also be the first to be hired as the economy recovers."
According Bidwell, not all temporary employees are included in the Labor Department's monthly unemployment reports, which count workers specifically employed by temporary help agencies. In addition, there are contractual workers, such as consultants and freelancers, who take on short-term assignments for companies. They are counted in the bi-annual population survey conducted by the Census Department. Employers will often "try to game the system" by treating such workers as permanent employees in all but name so that they don't have to provide them with health benefits or deal with payroll taxes.
"It is very hard to legally define who is a contractor and who is a regular employee," says Bidwell. "There is some suspicion that those problems might affect the census figures, so it is possible [the census] might undercount contractors. I have heard that argument used to explain why those numbers are stable while temporary employment has grown."
