Will Hiring Turnaround Increase or Decrease Need for Temporary Workers?

The Labor Department recently reported that the U.S. economy added 734,000 jobs from December to February, the largest three-month increase since May 2010. With the economy shifting into higher gear, staffing experts are predicting that workers who have been stuck in unsatisfactory jobs the last couple years will start looking for a better situation.


We interviewed Lynne Sarikas, director of the MBA Career Center at Northeastern University, to understand the impact this hiring turnaround may have on the temporary staffing industry. You might be surprised by her answers.


How will a firmer economic recovery affect the temporary staffing industry?


We’re seeing more hiring than the last couple years, which is encouraging. I was recently at a session where a Department of Labor economist was sharing information, and their projections are that we won’t get all the way back to normal unemployment until 2014. But we are clearly making progress and moving in the right direction, and we’re seeing that in all kinds of areas.


It’s interesting because some people think that if companies are hiring more, that means temporary staffing will go down. I would argue that it’s just the opposite — that if companies are hiring, there will be more activity, and temp agencies will be busier. Several of the companies I work with, having been burned in the past with having to contract their work force on short notice, have adopted a new hiring model — temp to perm.


Instead of hiring full-time employees right out of the gate, they bring them in as temps, test them out for six months, then convert them to full-time hires. And I think we’re likely to see more of that as we move forward.


Do you think the economy has entered a period of self-sustaining recovery, and how would that affect staffing firms?


I’m not sure I’d go all the way to “boom.” I’m cautiously optimistic. We’re clearly seeing more hiring, which is a good thing, and I have every reason to believe that’s going to continue. The one thing that’s not on the radar screen and doesn’t show up in the statistics is what I refer to as the “movement of the complacent.”


In a healthy economy, there’s always a natural amount of churn. Some percentage of the work force turns over every year because people are looking to do new things and improve their circumstances. And that churn has been seriously depressed with the bleak job market over the last few years.


There are a lot of people in jobs that they’re not particularly happy with, and as they start to perceive things getting better, there’s going to be a lot more churn than we’ve seen in a while.


That in and of itself can have a positive impact on temp staffing, because some of those critical functions are going to have to be filled while they gear up a job search process. You’ll still have the unemployed that are continuing to look, and hopefully more and more of them will be gaining employment as the job market increases. But we’re going to see that shaken up with a lot of churn as well. We’re going to see a lot of movement the next couple years.


Proportionally speaking, do you think there are more temporary workers being hired than permanent workers?


From where I sit, with the employers I work with, I don’t think we’ve totally made that swing yet. But there’s certainly an increasing percentage of temporary workers. There’s a lot more of this new model of bringing them in as temps and proving them before you actually put them on the books.