Monday, August 4, 2003
At Work

The stock market was rising. Worries about the war in Iraq were waning. And Frank Wyckoff, owner of Snelling Personnel Services in Eatontown, in June began to notice demand picking up. As a supplier of temporary help, Wyckoff's observation was no small thing. Analysts say temporary agencies often are the first to see an economic recovery.

"Clients are starting to be comfortable about what's happening," Wyckoff said.

Temporary agencies nationwide are noticing a similar trend. Even as the job market stagnates, companies are responding to strengthening demand by hiring more temporary workers and waiting for the economy to show surer signs of growth before hiring permanent workers.

Analysts say it's a significant development that signals stronger growth lies ahead. For now, temporary employment is filling a role that gained popularity in the 1980's as companies sought greater flexibility to tailor their payrolls with the ebb and flow of business.

After holding steady for a year, the number of temporary workers jumped by 44,000 in May and 38,000 in June, according to the U.S. Labor Department. In those two months, total payrolls shed 100,000 jobs and unemployment rose to 6.4 percent in June, the highest in nine years.

"It's picking up," said Barbara Davis, who owns a temporary agency in Red Bank, where activity in June was 5 percent ahead of last year. "We're getting more and more openings. We're very encouraged."

Some workers find temporary employment a valuable option. Gerri Pace Snee of Ocean Township was laid off in May 2002 from her job as an administrative assistant with an electrical services contractor.

She sent out about 500 resumes and interviewed for more than 30 jobs before taking a three-week assignment filing papers at Hovnanian Enterprises Inc. in Middletown.

Her supervisors, sold on her work ethic, offered her a full-time job in the training department when her assignment was over.

"When something's not working-like sending out 500 resumes and going on 30 or 35 job interviews - you have to look at it another way, " Snee said.

Cathy Carrolan Mata, director of training and development for Hovnanian, said temporary workers often have an advantage over the competition for a full-time job.

"We had some opportunities to have some exposure to (Snee's) work habits," Mata said. "I had been interviewing for two positions for quite some time, and it's so hard to judge people's capabilities through the interview process."

Investors have been betting that the world's biggest suppliers of temporary employees will be the first to benefit from the increased economic activity. Since March 11, they have bid up shares of Milwaukee-based Manpower Inc. 27 percent and Troy, Mich.-based Kelly Services Inc. 26 percent.

"People are trying to get in front of the recovery, and they're betting that corporations will hire temporary workers when the economy picks up because they're less costly and involve less of a commitment to keep on," said Brett Manderfeld, a stock analyst at U.S. Bancorp Piper Jaffray in Minneapolis.

Everyone is sure the economic recovery has arrived. Carl Camden, president of Kelly Services, said his company is finding job opportunities for workers in medical services, education, finance and even information technology.

But "it is not yet clear if the turning point of the economic cycle has truly arrived," Camden said. "We need several consecutive months of sequential gains (in job creation) to mark a real recovery." "Current conditions remain far short of that robust level," he said.

During the boom years of the 1990's, temps doubled to about 2 percent of U.S. jobholders - or 2.6 million - at the high point in September 2000. Startup companies in computer and software industries found they could attract younger workers by offering temporary slots with high pay and stock options. Temporary workers who are assigned to a job are counted as employed in the government's monthly job surveys.

When the recession started in March 2001, temps bore the brunt of the firings, which helped cushion the slowdown by protecting the jobs of permanent workers. The number of temporary employees in the United States fell to 2.1 million in January 2002, a drop of 515,000 or 19.4 percent. Over the same period, total employment shrank by 1.6 million jobs, or 1.2 percent.

The use of temp workers has spread to more industries, according to Andre Neveu, a researcher at the Employment Policies Institute in Washington, D.C.

"Not that long ago, it used to be that most temp workers were in secretarial or clerical jobs," he said. "Now, that's changed significantly. They're in a wide variety of industries, from manufacturing and medical jobs to legal services, financial services, information technology, accounting and engineering."

Besides gaining flexibility, he said, companies hold down their costs because they don't have to provide health and retirement benefits for temporary workers. There's no requirement for severance pay. On the other hand, temp workers often aren't as productive as permanent workers, and they usually have less loyalty to the company.

Bloomberg New Services contributed to this story.