Temporary employment rising: What does it mean for staffing?

Jeremy Market Trends, Staffing

According to data from the U.S. Bureau of Labor Statistics, temporary employment has trended upward in recent months. Staffing agencies are contributing to getting Americans to work, but they must stay responsive to changing conditions in the market. Here is how the labor market is currently shaping up and what it means for staffing professionals:

Employment and the economic outlook
The BLS jobs report showed continued gains in workers filling temporary roles from June, with demand higher than in 2015. July brought a 0.6 percent increase in temporary help, or about 17,000 jobs. These staffing employment figures were 1.9 percent greater than in the same month the previous year.

"July brought increases in temporary work."

These numbers were part of a general improvement in the employment picture over the past two months. The overall statistics for July showed 255,000 jobs added. Meanwhile, unemployment held at 4.9 percent, while labor force participation reached 62.8 percent.

Jason Furman, chairman for the White House's Council of Economic Advisors, lauded the steady job growth over the past two months. He pointed out that businesses have added a total of 15 million jobs since 2010. For 2016, growth has so far averaged at 186,000 jobs per month, sufficient to maintain a low unemployment rate.

While these improvements are relatively modest and may fall off in the months to come, the current pace is encouraging to many observers. Speaking to Reuters, Bank of America Merrill Lynch Senior Economist Michelle Meyer gave an upbeat assessment.

"The July jobs report was everything you could have asked for and more," she said. "Provided the strength in jobs is confirmed with other economic data, the Fed will have sufficient reason to hike [rates] this year."

The Federal Reserve raised interest rates for the first time in almost 10 years in December 2015. It remains uncertain whether another increase is on its way soon, but encouraging labor figures will help the case.

Rising temp jobs and the gig economy
It's important not to underestimate the role played by the rapid growth of temporary work in the larger employment landscape. While the latest statistics reveal continued growth, it seems employers are still generally tentative about adding permanent jobs. That often leads to looking for short-term options, like hiring on a contingent basis. Richard Wahlquist, president and chief executive officer of the American Staffing Association, commented on the outlook in a press release.

"Given current levels of political and economic uncertainty, businesses continue to add to their permanent and flexible workforces in cautious and very strategic ways," he said. "However, economic and employment indicators suggest slowed but continued growth—a sign of encouragement for jobseekers."

The rise of temporary jobs is also part of a larger shift in how Americans work. Two labor economists –  Harvard's Lawrence F. Katz and Princeton's Alan B. Krueger –  found in late 2015 that 15.8 percent of workers were engaged in temporary work arrangements such as working through a staffing agency or as independent contractors or freelancers. This is more than a 10 percent increase from a decade prior.

The various forms of contingent labor have been greatly influenced by technological developments. Smartphones make it possible to work through a mobile application, and employers can more easily stay in touch with or monitor contract employees who work remotely. Staffing agencies also benefit from software solutions with applicant tracking systems that allow them to engage with candidates easily and efficiently.

While many people closely associate the gig economy with online companies like Uber, they only account for seven percent of these workers overall. Others are employed through other means with over 2 million people working through temporary help agencies and more than 4.5 million through contract firms. Nor is it just young people interested in flexibility who are working this way. According to Katz and Krueger, people between the ages of 55 and 74 were the major factor in growing the temporary workforce.

Gig workers using online services are just one part of the growing contingent workforce.Gig workers using online services are just one part of the growing contingent labor force.

Adapting your staffing
Staffing agencies can accomplish their goals under these uncertain conditions of modest growth and increasing emphasis on short-term gigs. The keys are robust business intelligence and exceptional agility.  Staffing professionals need to understand how employment conditions are continuing to change and make sure they have the systems and tools on hand that help them stay ahead of the game. Strategies like mobile recruiting and social recruiting will only become more crucial for finding and contacting candidates, as well as matching the best ones to the positions opening up.

The nature of employment in the U.S. has changed, and that impacts the work of staffing professionals. By taking advantage of smart data and profiling, they can connect the segment of the workforce looking for temporary work with the rising number of vacancies. They must remain alert to both the changing needs of employers and best practices for communicating with candidates.