A Publication of WTVP

One of America’s leading economic indicators, staffing companies, continues to show hiring strength. According to the American Staffing Association (ASA), there were 50,000 more temporary and contract workers per day in the second quarter of this year than in the first. They estimate U.S. staffing firms employed an average of 2.18 million workers per day from April through June, a 9 percent increase over the same period last year. It was the third consecutive quarter of year-over-year staffing employment growth after eight comparable quarters of decline.

The best news is that it also appears the trend is continuing, as the Department of Labor has estimated 2.4 temporary and contract workers were employed in September, a level not seen since January of 2001.

Does this mean anything to traditional employment? Of course it does. Staffing firms create jobs by allowing companies the flexibility they need to meet increased demand until they’re confident enough to add to their own workforces. In other words, staffing industry employment is leading traditional employment. Good news for staffing industry employment indicates good news is coming for traditional employment.

It happens because staffing flexibility makes businesses more likely to create jobs. For example, the Bureau of Labor Statistics reported an increase of 570,000 manufacturing jobs from 1992 to 1997. An independent study by the Employment Policies Institute estimated manufacturing employment actually increased by 1,075,000 during that time. They said temporary help workers accounted for the difference-about half a million jobs. In the absence of a flexible staffing alternative, the study concluded, manufacturers wouldn’t have hired aggressively in response to rapid increases in demand.

Of course it also goes the other way, as demonstrated by the last downturn. The American economy peaked in March 2001, meaning that’s when the recession began. For the staffing industry, however, it started six months earlier.

Employment in the staffing industry began to fall in October 2000 and kept falling. By December 2000, staffing employment was less than that of the previous December, the first of 23 consecutive months of negative monthly year-over-year comparisons. By the first quarter of 2002, more than 739,000 temporary staffing jobs vanished, off 28 percent from the industry’s peak, a level comparable to that of 1996.

Nevertheless, most economists believe the recession ended in early 2002. That’s when the staffing slump bottomed out and growth finally emerged. Staffing industry employment increased from March through July and slackened the rest of the year. For the year as a whole, temporary staffing average daily employment totaled 2.06 million, 5.7 percent less than in 2001 and far less than the 2.54 million average in 2000.

This year, staffing employment is predicted to increase by 4.8 percent. That’s good for the economy because, as already demonstrated, when staffing employment is rebounding, the economy is recovering. It’s just another indicator that shows economic expansion continues to seem likely. IBI