Temporary workers have been a growing segment of the labor force since the recovery began. In 2010, 26.2% of private sector hiring can be accounted for by temporary workers alone. A front page article in the New York Times today by Motoko Rich explores this phenomenon. Rich worries that firms hiring more temporary workers is the start of a disturbing new trend. But looking a little more deeply at the data shows that this fear is overblown.
Here's why Rich is concerned about the possibility that firms will gravitate towards temporary workers going forward:
This is bad news for the nation's workers, who are already facing one of the bleakest labor markets in recent history. Temporary employees generally receive fewer benefits or none at all, and have virtually no job security. It is harder for them to save. And it is much more difficult for them to develop a career arc while hopping from boss to boss.
That's pretty grim stuff. But should we really be worried about the rise of temporary workers? In general, as hiring begins again after a recession hits, temporary workers make up a large portion of all hires. So we shouldn't really be surprised. Firms are generally nervous about whether or not a recession is truly over, and temporary workers provide companies the flexibility of cutting its staff quickly again, if necessary. They also provide cheaper labor to satisfy increasing customer demand as companies get back on their feet. Yet, Rich says that this time, it's different:
This year, 26.2 percent of all jobs added by private sector employers were temporary positions. In the comparable period after the recession of the early 1990s, only 10.9 percent of the private sector jobs added were temporary, and after the downturn earlier this decade, just 7.1 percent were temporary.
It's a little bit hard to understand where Rich's numbers are coming from here. This year began six months after the recession technically ended (in June 2009). If you look at the early 1990s recession (which ended in March 1991), a comparable period would be October 1991 through August 1992. Over that period, a whopping 41.2% of new jobs were temporary. That's far higher a portion than the 26.2% for this recession. The 2001 recession is harder to analyze, since jobs didn't begin to consistently grow for 20 months after the recession technically ended.