Temp Workers and the Slow Return of Manufacturing

Manufacturing iconIn Grand Rapids, Mich., the manufacturing sector has done something that likely won’t happen in all of America for years: return to the same number of jobs it had at the start of 2008. The West Michigan metro has added thousands of jobs in industries that specialize in the making of motor vehicle parts, plastic products, metalwork machinery — not to mention more than a dozen other sub-sectors like machine shops and animal slaughtering/processing.

At the same time as manufacturing’s return in Grand Rapids (a trend that’s played out to a smaller degree across the United States), temporary employment has seen a full-blown revival. Is this a coincidence? Not likely.

More manufacturers, facing fluctuating demand for their products and general uncertainty, are turning to the flexibility offered by temp or contract workers. The trend started in the 1990s, when just-in-time production brought with it just-in-time labor, as Ron Wirtz of the Minneapolis Federal Reserve observed.

From 2009 to 2013, nearly 1 in 5 (18%) jobs added in the U.S. were temporary positions, according to EMSI’s most recent data. And an estimated 22% of all temp jobs in 2013 were staffed by workers in production occupations — jobs that are overwhelmingly concentrated in manufacturing.

Mfg-Temp_2001-2013

The temp boom isn’t likely to subside either. The Wall Street Journal’s Damian Paletta quoted Manpower CEO Jeffrey Joerres as saying that the pickup in short-term hiring is an indicator that the staffing industry “will be absorbing more of the workforce than it did in the past.”

More than 11 million people had a temp position at some point in 2013, according to the American Staffing Association, with just under three million currently in the industry.

Following up on our analysis on how temporary employment is dominating job growth in large cities and recent data that we released with CareerBuilder, we explored EMSI data to better understand the connection between temp work and manufacturing, and where in the U.S. temp jobs are becoming an increasingly prevalent force.

Manufacturing and Temp Upswings

It’s worth emphasizing at the outset that temporary help services and manufacturing are distinct industries. Because of how the government structures labor market data, we can’t see how many temp jobs are in manufacturing (the W.E. Upjohn Institute for Employment Research estimates close to 40%, as cited in Paletta’s WSJ article). But we can examine the occupations that make up temporary help services using EMSI’s regionalized industry staffing patterns, and production occupations figure prominently as we mentioned above. (For more, see our note on temp data at the bottom of the piece.)

Mfg_Metros_Temp_2010-2013Stepping back to look at national industry trends, manufacturing would have to add nearly 1.4 million jobs to get back to 2008 employment — and 4.4 million jobs to return 2001 job levels. But the sector expanded 4.3% from 2010 to 2013, creating nearly 490,000 jobs (100,000 of which of have come in Detroit, Houston, Seattle-Tacoma, and yep, Grand Rapids).

The rebound in temporary work started in earnest in 2009, a year before manufacturing began to bounce back ever so slightly. Temp jobs didn’t just return, though; their growth has been explosive. The temp industry grew 46% nationally from 2009 to 2013, with 10 large metros and three states nearly doubling or more than doubling their temp workforce.

In each of these metros and states, manufacturing looms large.

Metros Most Reliant on Temp Jobs

Grand Rapids is fertile ground for temp work, so much so that temporary help services is now the single largest detailed industry in the metro area (at just over 25,000 jobs in 2013, it outpaces the next-largest, general medical and surgical hospitals, by nearly 2,500). What’s more, 5.2% of all salaried jobs in Grand Rapids are in the temp industry, twice the share in 2009 and more than double the national rate (2.2%).

But Grand Rapids isn’t the fastest-growing metro for temp growth among the 125 most populous MSAs. That distinction belongs to Madison, Wis., where temp employment ballooned 127% from 2009 to 2013. Grand Rapids is second, at 116%, followed by Provo-Orem, Utah (114%); Port St. Lucie, Fla. (113%); and Knoxville, Tenn. (110%).

Temp employment has thrived in college towns with strong manufacturing presences, perhaps because the work that staffing agencies provide is ideal for students — and for employers. In addition to Knoxville, temporary help is the largest-growing industry in Lansing-East Lansing, Mich. (109% growth), Columbia, S.C. (103%), and Lexington-Fayette, Ky. (94%).

Other metros in which the temp industry grew at least 100% from 2009 to 2013: Flint, Mich., and Fort Wayne, Ind., both at 107%. In each of these and the aforementioned metros that grew 100% (or close to it), manufacturing has experienced a renaissance.

Other key takeaways from our metro temp analysis:

1. Greenville, S.C., Is the Most Concentrated Metro for Temp Jobs

The real ground zero for temp work is Greenville-Anderson-Mauldin, S.C., where an eye-opening 6.7% of all wage-and-salary jobs (i.e., traditional employees for companies as opposed to self-employed or independent contractors) are in temp industries. That’s the highest concentration among the largest 125 metros in the U.S., and three times the national rate.

In Greenville-Anderson-Mauldin, part of an Upstate South Carolina region that has transformed itself from textile mills to auto manufacturing, 31.5% of temp jobs are staffed by production workers — the team assemblers, machinists, packaging operators, etc., that are crucial to manufacturing operations. Among large metros with the highest share of temp workers (see table below), Grand Rapids has the next-highest share of production workers in temp, at 28.7%.

Metropolitan Statistical Area Name Temp Jobs As Share of Total Salaried Jobs (2013) Production Workers As Share of all Temp Jobs
Source: EMSI 2014.1 Class of Worker (QCEW Employees)
Greenville-Anderson-Mauldin, SC 6.7% 31.5%
Grand Rapids-Wyoming, MI 5.2% 28.7%
Memphis, TN-MS-AR 4.8% 28.6%
Lexington-Fayette, KY 4.2% 26.0%
Greensboro-High Point, NC 4.0% 24.7%
Louisville/Jefferson County, KY-IN 3.8% 26.2%
Indianapolis-Carmel-Anderson, IN 3.8% 24.1%
Chicago-Naperville-Elgin, IL-IN-WI 3.7% 22.1%
Nashville-Davidson–Murfreesboro–Franklin, TN 3.6% 26.1%
Winston-Salem, NC 3.5% 25.1%
United States 2.2% 21.5%
2. Temp Jobs Make Up At Least 50% of All New Jobs in Cincinnati, Milwaukee (And Others)

From 2009 to 2013, temp jobs accounted for 59% of new jobs in Greenville-Anderson-Mauldin. That’s comparable to larger metros like Cincinnati (58%) and Milwaukee (51%), but smaller than the share in St. Louis (73%).

Other metros, though, have even higher shares: temp made up 83% of new jobs in Fresno, Calif., and Winston-Salem, N.C. Meanwhile in York-Hanover, Pa. — which has the third-highest concentration of manufacturing jobs among the 125 largest MSAs — 70% of new jobs have been temp positions.

After York-Hanover, five other metros are close to or above 60%:

  • Shreveport-Bossier City, La. (68%)
  • Lancaster, Pa. (65%)
  • Greensboro-High Point, N.C. (65%)
  • Jackson, Miss. (59%)
  • Greenville-Anderson-Mauldin, S.C. (59%)

Just below these metros is the Los Angeles-Long Beach-Anaheim MSA — temp jobs accounted for 43% of new jobs in the L.A. metro, a major share for the second-largest metro in America.

Meanwhile, in metros with robust, diverse economies — Houston, San Jose, and Austin, for example — temp position accounted for around 10% or less of new jobs from 2009 to 2013, a point we made in our original analysis. Temp jobs make up an especially tiny share of new jobs in government-dominated Washington, D.C. metro, as well as San Diego and Oklahoma City (2% to 3%).

3. In the Some of the Most Concentrated Metros for Temp Jobs, Workers Earn Less Than Half the Regional Average

Temp earnings as a percentage of average industry earnings also fluctuate for the 125 largest metros. Raleigh, N.C., has the highest share, at 82% of earnings for all industries, followed by Baton Rouge (78%), Omaha (77%), Albuquerque (76%), and San Jose (75%).

Tucson, Grand Rapids, and Memphis have the lowest share, each coming in at 42% of industry earnings. This means that temp workers make on average less than half of average industry earnings for each metro. We’ve already mentioned Grand Rapids, but Memphis too has a much-higher-than-average share of temp workers. However, based on the metros with the lowest share of earnings (see chart below), there doesn’t seem to be a correlation between a concentrated temp workforce and a low-paid temp workforce as compared to earnings in all industries.

TempEarnings_Metros

Temp-Driven Job Growth by State

Like most of the metros with the biggest temp surges, the South is at the top of the list for temp jobs at the state level, a boom headlined by Kentucky. It is one of three states, along with South Dakota and Indiana, that have roughly twice as many temp jobs as they had in 2009.

Kentucky has the largest share of temp jobs (3.5% of all wage-and-salary workers), just ahead of Illinois, South Carolina, and Tennessee (all at 3.4%). The lowest shares are in Alaska, Wyoming, South Dakota, Hawaii, and Vermont, all of which are under 1%.

Kentucky also had the fastest temp growth from 2009 to 2013 after much-smaller South Dakota (106%), going from nearly 31,000 temp jobs to 61,000 (a 99% increase). Those 30,000-plus new jobs account for 52% of all new jobs in Kentucky — the largest share of any state that saw more overall job gains than temp gains.

States_Share_Temp

Notes on Temp Industry and EMSI Data

We used two industries for our temp analysis. Temporary help services encompasses staffing agencies who supply workers to companies for limited periods of time; the individuals provided are legal employees of the temp agency they’re associated with. Employment placement agencies/executive search services includes firms that refer or place applicants for jobs; the workers referred or placed are not employees of the employment agency.

In EMSI occupation data, temp jobs are classified under the occupation that best describes the work they do. There are two main limitations of using EMSI data specifically to analyze temporary workers:

  1. Geographic anomalies. Temp workers will be shown as located in the county of the temp agency establishment that writes their paycheck. This may be a different county from the one where they are actually doing the work.
  2. Staffing pattern detail. The most detailed source data we have for staffing patterns is for employment services (NAICS 5613), which includes other types of businesses than just temporary help services (however, temporary help services is the dominant sub-industry of this sector). In addition, some regional differences in the staffing industry may not be fully captured by EMSI regionalized staffing patterns. Lastly, the staffing pattern for this industry includes both actual employees of the temporary help services company as well as the temporary workers whom they provide to other businesses.

Data for this post comes from Analyst, EMSI’s web-based labor market data and analysis tool. For more information, contact Josh Wright (jwright@economicmodeling.com)Follow us on Twitter @DesktopEcon.

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