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Excessive worries about temporary jobs [ClearOnMoney]
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Commentary

Excessive worries about temporary jobs

20 Dec 2010 by Jim Fickett.

There has been a large number of articles suggesting that rapid hiring of temporary employees may imply structural problems in US employment. There are more than enough substantial issues to worry about with the US employment situation; this is not one of them. Currently 1.7% of jobs are in “temporary help services” and, although the fraction rose steeply following the crisis, it remains far below peak levels of the past decade.

At least since January, Calculated Risk has been repeating a comment along the lines of,

there has been some evidence of a shift by employers to more temporary workers, and the saying may become “We are all temporary now!”

Yesterday the New York Times had a long article worrying out loud about temps becoming a permanently larger fraction of the work force:

Despite a surge this year in short-term hiring, many American businesses are still skittish about making those jobs permanent, raising concerns among workers and some labor experts that temporary employees will become a larger, more entrenched part of the work force. …

This year, companies have hired temporary workers in significant numbers. In November, they accounted for 80 percent of the 50,000 jobs added by private sector employers, according to the Labor Department. Since the beginning of the year, employers have added a net 307,000 temporary workers, more than a quarter of the 1.17 million private sector jobs added in total.

And today, Naked Capitalism took it a step further, comparing the US to Japan, where a large class of underprivileged workers seems to be stuck in a career path where quality jobs remain always out of reach.

One of the post-bubble era trends in Japan that has caused consternation within the island nation is the rise of an employed underclass. The old economic model was lifetime employment …

In the new economic paradigm … the rise of “freeters” or workers hired into temporary jobs. …

As with Japan, the long term implications of this [trend towards more temps in the US] are not good: employers providing lower-quality employment;, workers attaining less in the way of skills, which puts them on a permanently weaker career path; the resulting lower income workers less able to build up economic reserves in an era of weakening safety nets.

Hang on just a minute. It is always possible that the US will move to a situation where there is a large class of permanent temps, but we are a long way from such a dire situation. Here is a graph of the fraction of all jobs (non-farm payrolls) that are classed as “temporary help services”.

(Data from the BLS. Click for larger image.)

Yes, it is true, as the New York Times notes, that the fraction rose very rapidly in late 2009 and early 2010. But the level, only 1.7%, does not look out of line with history. And, so far, the fraction of temporary jobs remains much lower than previous peak levels. After the shock of 2008, it is not too surprising that companies chose to hire mainly temps for a while. That does not mean that the whole workforce is going temporary.

It is very difficult to make any direct comparison with Japan. The usual number quoted is “non-regular worker”, which includes those on a limited term employment contract, part-timers, “dispatched workers” - what we would call agency temps, and workers who are employed by a company other than the one at which they are working, as part of a larger service contract. Given that in the US much employment is “at will”, limited term contracts are common, and outsourcing to service companies is also common, there is a large and amorphous overlap between the Japanese concept of “non-regular” and several US employment categories.