(Temporary) Help Wanted

By Dave Senf
September 2010

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The temporary employment sector is helping to lead Minnesota out of the recession, accounting for about 14 percent of the job growth in the state since last September.

Minnesota has been slowly gaining jobs in the past year, led in part by the very industry—temporary help—that headed the pack in shedding jobs as the Great Recession was taking hold.

Minnesota’s employment services sector (NAICS 5613), better known as the temp help industry, started cutting jobs in December 2006—a full year before the recession began. The industry reduced its workforce from a seasonally adjusted peak of 58,900 in late 2006 to 39,200 in September 2009, a decline of 33.4 percent.

Since then, the industry has begun to rebound, adding roughly 6,200 jobs through July of this year. That is about 14 percent of the 44,000 wage and salary jobs that the state added over that 10-month period, after accounting for roughly 12 percent of the jobs lost during the recession.

The bump in workforces at temporary staffing agencies is a good sign, at least during the initial stages of the recovery. Cautious employers, not sure if the economy is on a sustained expansion path, are reluctant to add permanent positions. Instead businesses are adding temp workers and independent contractors until they are sure that business conditions have permanently improved.

While the rebound in temp jobs is showing up in monthly Current Employment Statistics (CES), the growing use of independent contractors or freelancers isn’t as easy to see in the employment data collected by the Department of Employment and Economic Development (DEED).

In theory, most independent contractors or freelancers are self-employed and aren’t included in the wage and salary employment estimated monthly by the CES program.  The only real-time monthly source of Minnesota self-employment is the Local Area Unemployment Statistics (LAUS) program, which is used to estimate state and sub-state unemployment each month.  

The estimated self-employment total can vary significantly from month to month due to the small size of the household survey used to estimate unemployment. Self-employment estimates fell right along with wage and salary employment during the Great Recession and appeared to rebound about the same time as wage and salary employment turned around.  This would be consistent with numerous reports in the media of the rising use of freelance labor.  Little, however, is known about which industries and occupations are involved in the shift toward freelance work.[1]

 But here is what we do know about the temp help half of what is becoming known as the “just-in-time” or contingent workforce in Minnesota. The employment services industry accounts for a lower share of wage and salary employment in Minnesota than nationally—2.1 percent in Minnesota versus 2.7 percent nationally in 2006 before the recession got under way (see Table 1). The 2.1 percent share put Minnesota in the middle of all states. 

More employees in Minnesota’s temp help industry are working in production jobs than in office and administrative support occupations, which is a shift from just a few years ago (see Figure 1). In 2000, office and administrative workers, such as file clerks, general office clerks and data entry specialists, accounted for the largest share of temp help workers in Minnesota and the country.

Office workers still hold the most positions in the national temp help industry, but they have been pushed down to the second spot in Minnesota by production workers. Minnesota manufacturers have increasingly turned to the temp help industry to fill their staffing needs for occupations such as semiconductor processing, team assembling, and hand packing or packaging.

Production occupations accounted for one-third of all 2008 temp help employees in Minnesota, up substantially from one-fifth of the industry’s total employment in 2000.  The share of temp jobs in office and administrative support occupations, on the other hand, has been cut in half in Minnesota, dropping from 39 percent to 19 percent.   Minnesota manufacturers appeared, at least in 2008, to be utilizing staffing agencies more extensively than manufacturers across the country to recruit and fill production worker positions.

The increasing use of temporary workers to fill managerial and professional jobs has been widely reported in the media, and the data back up the reports. The share of temp jobs held by workers in managerial, business, financial, professional and related occupations increased in Minnesota and nationally between 2000 and 2008.

The trend of companies turning to temp help agencies to meet an increasing portion of their highly skilled professions staffing needs is confirmed by accountants and auditors, registered nurses, and lawyers making the list of top occupations filled by temporary help workers in 2008 (see Table 2).  

Keeping an eye on shifts in the occupational distribution of jobs in the temp ranks might provide insight into how the structure of the workforce has changed and where it is headed in Minnesota and the country. 

Endnotes
[1]Isidore, Chris, “Say Goodbye to Full-Time Jobs With Benefits,” www.money.cnn.com/2010/06/01/news/economy/contract_jobs/index.htm?postversion=2010060111; and Coy, Peter, Conlin, Michelle, and Herbst, Moira, “The Disposable Worker,” www.businessweek.com/magazine/content/10_03/b4163032935448.htm .

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