Temp Work Grows; Jobs Rebound Seen Modest
By CHRIS CZIBORR
Businesses are stepping up their use of temporary workers,a strong signal that the recent upswing in overall job growth will strengthen.
But observers say it’s too early to conclude that companies are converting temp workers to permanent positions, and that any jobs recovery won’t be as dramatic as those in the past.
“I believe we’ll have a slow, steady rebound this time compared to previous recoveries,” said Kim Megonigal, president of Irvine-based Kimco Staffing Services Inc.
Megonigal said the recovery from the early 1990s recession saw rapid job growth because the bounce was off unemployment rates “twice what they are today.”
Overall, Megonigal said the pickup looks like a precursor to more permanent hiring.
“I think the permanent hiring side of our business is picking up, too,” he said.
The pace of temp job growth is expected to quicken later this year.
“We won’t start to see a lot of hiring until the fourth quarter,” Megonigal said.
Through May, Kimco said its temp hiring rose 14%, versus a year earlier.
Meanwhile, demand for temp workers in the U.S. is expected to jump 10.5% in the third quarter, compared to a year earlier, according to Aliso Viejo-based RemedyTemp Inc.’s quarterly labor forecast released in June.
The staffing industry has posted 12 consecutive months of sequential growth, said RemedyTemp Chief Executive Greg Palmer.
“That usually is a precursor to overall job growth,” Palmer said. “Our outlook is that this year is going to be much, much stronger than last year. We’re seeing temp hiring increases in healthcare, construction, government and even manufacturing is starting to add jobs, which hasn’t happened in a long time.”
The forecast is based in part on the Bureau of Labor Statistics and other key indicators. The A. Gary Anderson Center for Economic Research at Orange-based Chapman University and RemedyTemp prepared the forecast.
Chapman University economists predict Orange County will add 27,000 permanent jobs this year and 30,000 in 2005.
OC’s temp hiring numbers have been rising each year,including this year through May,after a dramatic drop-off in 2001, said Esmael Adibi, director and professor of economics at Chapman.
“The increases each year indicate the job market is firming up,” Adibi said. “Usually what happens is employers hire temps to satisfy the demand and to get a feel of whether the improvement is real.”
Still, while growth in temp hiring has persisted for a relatively long time, Adibi said it must continue before companies aggressively convert some of those temps to permanent workers.
Karen Powers, president of Santa Ana-based Abbott Resource Group Inc., said temp hiring is up 20% through May, versus a year earlier,ahead of company projections.
“We’re feeling some good vibes from the economy,” Powers said.
It’s too early to say if temp growth will lead to more permanent hiring, she said.
“Our permanent placement business also is doing well, but we’re not seeing the same kind of growth as we’re seeing with temp hiring,” Powers said.
The same goes for Milwaukee-based Manpower Inc.’s Irvine office.
“We’ve had year-after-year upticks in temp hiring, but there still isn’t really an upturn in permanent hiring, although I am seeing more companies going from hiring temps to making permanent hires,” said Sue Foigelman (photo), area manager at Manpower.
A recent Manpower survey of OC employers found that 32% of companies interviewed plan to hire more employees in the third quarter.
At this time last year, 12% of companies said they expected hiring to grow in the period.
