Tuesday, July 20, 2010

Temporary help indicates recovery underway?

We often hear about the temporary help industry as an economic indicator; changes in temp help can signal changes in the broader economy. The economic theory is sound: Employers will cut temp workers before they cut regular staff as they attempt to control costs, and they'll add temp workers before adding regular staff, in case a recovery doesn't hold. While the theory is sound, questions remain about using this industry to forecast growth across the economy.

The graph below says it all, and is a favorite of those predicting big job gains...soon. Bill McBride, the author of CalculatedRisk, posted this statement June 4, when the May employment numbers were released. "Unfortunately the data on temporary help services only goes back to 1990, but it does appear that temporary help leads employment by about four months (although noisy)...Since the number of temporary workers increased sharply late last year, some people argued this was signaling the beginning of a strong employment recovery - probably in April and May. It didn't happen."

In Oregon, there were more than 700 temporary help businesses in 2009, employing about 24,000 workers, or 1.5 percent of the total workforce covered by unemployment insurance. Oregon statewide industry payroll was close to $600 million in 2009. The average pay per worker in the industry was $24,659, well below the all industry average pay per worker of $40,740.

The largest occupations in the employment services industry run the gamut from office work to production lines, construction labor to customer service and retail. One thing these occupations have in common is fairly low hourly wages.

The full article, written by Economist Jessica Nelson ( 503-947-1276) contains more interesting facts and figures about the temporary help industry. Check it out!

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