Labor market lessons from Georgia's temp workers

EconSouth, Summer, 2004

Table 2 also shows that while the earnings of temporary services workers were relatively low, they were higher on average than those for workers in retail trade. In addition, temporary workers who remained employed through the recession enjoyed an average 2.2 percent increase in real earnings. While this increase is considerably better than the average 2.2 percent decline in manufacturing workers' real earnings, it is considerably smaller than the real earnings gains by retail trade workers, at 6.9 percent, and other service workers, at 5.2 percent.

Temps fare better with new firms

The unique nature of the temporary help services industry is further illustrated in chart 2, which shows the percent change in earnings over the course of the recession experienced by workers who stayed employed by the same firm and by workers who changed employers. For each industry except temporary help services, workers fared better through the recession if they were able to remain employed by the same firm. Temporary workers, however, actually experienced earnings losses if they remained with the same firm. The 3.1 percent increase experienced by temp workers who changed employers may be a further indication that at least some temp workers were able to parlay their temporary positions into permanent ones, even during the recession.

Employment quality is important

Some have argued that policymakers are overly concerned by the growth in temporary help services employment--that a job is a job and that the United States should be just as happy about employment growth in temporary help services as in any other area of the labor market. Those who put this positive spin on the temporary help services phenomenon point out that the use of temporary workers results in a more flexible labor market that is able to more quickly and accurately respond to changes in demand for final products, in turn helping to reduce volatility in the overall economy.

Not all jobs are created equal, however. There are important differences in the labor market experience of temporary help services workers compared with workers in other sectors. For many workers, temporary employment provides an entree into a more permanent position, but, as seen here, that path may prove to be quite rocky.

RELATED ARTICLE: View from the trenches: current temp staffing trends are up.

What does recent temp hiring look like, and what does it mean for employment growth in other sectors? Reports from those who respond to demands for temp workers indicate that demand in the first quarter of 2004 started out stronger than expected.

The staffing supervisor at one Florida temp agency reported an amazing first quarter in 2004. Demand for his temps is up 35 percent during the first quarter. That jump comes on the heels of a 22 percent increase in demand during the fourth quarter of 2003. This supervisor also reported seeing growth in the high-end market (employees making $75,000 a year and up), where clients often use temp agencies to screen skilled permanent workers.