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.

More Workers Moving Out-of-State for Jobs

During the recession, many Americans were unable to move for a job because they couldn’t sell homes that had fallen in value, according to a recent USA TODAY article. However, now that the economy is improving, American workers are less hesitant to consider a move.

“We’re starting to see (candidates) open up the job search to make sure they find the right position,” Janette Marx of staffing firm Adecco says in the article.

However, the movement still isn’t up to pre-recession numbers, according to the article. In the 12 months from March 2010 to March 2011, 4.8 million, or 1.6 percent of Americans, moved to a different state, up from 4.3 million the previous 12 months, according to the U.S. Census Bureau. As a comparison, in 2002, 7.6 million people moved between states.

For more information, read the entire article by clicking here.

Top 12 Cities to Find an IT Job

As the economy continues to recover, companies are investing in IT projects that had been put on hold during the recession, according to Modis, a national IT staffing firm.

The firm rated the top 12 cities to find an IT job in the current economic environment, with Houston topping the list for the second year in a row. They are:

  1. Houston
  2. Toronto, Ontario
  3. Orlando, Fla.
  4. San Francisco
  5. Minneapolis
  6. McLean, Va.
  7. Walnut Creek, Calif.
  8. Detroit
  9. Jacksonville, Fla.
  10. New York
  11. Denver
  12. Boston

“A strong, up-to-date IT infrastructure is crucial to businesses, and so with increased confidence in the economy, many companies are reinvesting in IT initiatives, beginning with talent,” said Jack Cullen, president of Modis. “Given the geographical spread of cities on this list as well as the breadth of skills needed, there is opportunity across North America for IT professionals who are looking to get ahead and further their careers.”

Top 4 Staffing Stocks For Improving Economy

The unemployment rate’s recent dip to 8.3 percent is great news for staffing firms, as workers are not only looking for jobs in general but better jobs in this improved economy.

TheStreet, a digital financial media company, reports the four staffing stocks to watch:

  • Robert Half International: Although the company didn’t take a deep hit during the recession, its revenues in 2010 and 2011 were less than those in 2006 and 2007. The improving economy can help Robert Half eventually get back to those pre-recession levels, especially as it is a vendor of choice for many companies.
  • Manpower Group: The company’s shares decreased last summer, mainly because of its strong European presence. While European markets lag behind U.S. markets, they will ultimately see a similar improvement. Analysts predict Manpower’s EPS will decrease to about 5 percent this year but sharply improve after that.
  • Kelly Services: Kelly is in transition as much of its work is transferring from temporary to permanent placements. As companies that have been relying heavily on temporary placements shift to more permanent placements, this will boost Kelly’s margins.
  • On Assignment: A more conservative play, On Assignment provides staffing in health care, biotech research, engineering and other niches that aren’t economically sensitive. It has topped EPS estimates by at least 14 percent for four straight quarters and releases its recent numbers Feb. 14.

For more information on these stocks, read the full article by clicking here.