Temporary Staffing and the Economy

Last Friday, employment numbers came in and the number of individuals under the temporary-help service sector increased for the fifth straight month. This is not surprising; in fact it is a typical response to the tail end of a recession. At the beginning of a downturn, companies stop using temporary workers before layoffs, but as things pick up they realize they’ve cut too deep and hire temporary workers to meet the needs of their growing business until they are able to hire full-time roles.

This time, however, I think things are a little different: I don’t expect companies to rush to replace the temps they hire with full-time employees immediately. It is not that they do not want to hire people – many managers would prefer that- it is just that they do not want to fire anyone.

Despite some obvious signs of recovery, many are still not sure whether that other shoe is going to drop. Last month, Tishman and BlackRock walked away from their $5 billion dollar investment in Stuyvesant Town and the world is watching now as the Greek government desperately tries to avoid defaulting on their debt. Many analysts believe Portugal, Ireland and Spain are not too far behind Greece, with respect to large scale loan defaults. I don’t think anyone honestly knows how all of this upheaval in the credit market is going to affect the economy and that uncertainty scars people.

We are seeing some conversions to our client’s payroll and we rejoice in those opportunities – but I think this is going to be a long haul.

Next post I will discuss my thoughts on how the temporary staffing industry will change yet again post-recovery.

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