MNI INTERVIEW: US Firms Seek Temp Workers Over Full-Time

America's job recovery is overstated because more firms are relying on temporary workers that represent a lack of confidence in adding full-time staff through the pandemic, or the acceleration of a longer-trend trend of gig employment, recruiters and industry experts told MNI.

Demand for temporary workers rose "immensely" last month, said Tom Gimbel, founder and CEO of the LaSalle Network, a Chicago-based staffing company. Employers are "putting their toe back into the water," he said, calling it "a very good sign going into the end of the year."

Temporary positions typically make up 24% of job postings but that number has grown to 35% since the Covid-19 pandemic according to Julia Pollak, an economist at ZipRecruiter. Those jobs are a critical bridge helping unemployed workers and also cash-strapped employers to protect their bottom line until they can sustain demand, Pollak said.

There is also a risk that valuable relationships could be eroded should short-term labor become increasingly popular in the post-Covid-19 economy, she said. "The shift to working from home could make some of the shift to independent contractor work permanent," and "that could lead to more precarious work arrangements."

NO ACCELERATION

A weak jobs recovery is also a problem for the Fed. Minneapolis President Neel Kashkari on Friday said he sees a "grinding" recovery even if a vaccine is widely available a year from now, saying this downturn is hitting vulnerable workers much harder. With interest rates likely stuck at zero for years, officials for now have said they need to see if the economy can work its way through without more support like stronger QE, while calling on Congress to offer more relief.

Temporary hiring won't drop off in coming months with the Nov. 3 presidential election approaching and putting a chill on bipartisan support for another federal fiscal aid package, said Josh Wright, chief economist at Wrightside Advisors in New York. "Caution is understandable at this point," on hiring, he said.

Short-term hiring or contract work is typically encouraging following an economic dip because it means the labor market is preparing to accelerate, Wright said. But this year, job gains have slowed markedly since peaking early in the summer.

LOW QUALITY JOBS

"We don't have any indication that we're going to accelerate right now," he said.

The U.S. economy added 661,000 jobs in September, less than half of August's 1.4 million which itself was a slowdown from a 1.7 million gain in July.

"All else equal, temporary hires are good because they are traditionally a sign that full-time hires are to come," he said. "But In this situation, I would consider those to be low-quality jobs."