Temp Employment Is Dominating Job Growth In The Largest Cities

Earlier this week, we wrote about the fastest-growing employment sector in the U.S. — support activities for metal mining. But the industry that’s added the most total jobs since the recession is temporary help services, a low-paying sector that EMSI estimates has 765,000 more jobs in 2013 than it did at the start of 2009.

The hiring surge in temp help accounts for 15% of all job growth nationally the last four years (not including self-employment), even though the industry makes up 2% of the nation’s workforce. And in some metropolitan areas, the share of job growth that can be credited to the temp sector is much, much higher: 65% in Cincinnati, 51% in Milwaukee, 46% in Kansas City. Even in bigger metros, like Chicago and Philadelphia, the temp sector accounts for more than 40% of new jobs since 2009.

Is it a good thing that job growth in dozens of large cities has been dominated by temp help? The quick answer: probably not. Especially since few of these new temp jobs are turning into full-time employment offers.

Consider this exchange between The Wall Street Journal’s Lauren Weber and ManpowerGroup CEO Jeffrey Joerres:

WSJ: Companies typically staff up with temps during a recovery and convert them to permanent workers as conditions improve. Are you seeing that pattern now?

Mr. Joerres: In good times, 60% to 70% of our people will receive a full-time offer while on assignment. Right now, it’s around 30%, and the tepid economy is driving that. Permanent recruitment is up about 10% on a year-over-year basis in the U.S.

Manpower, an EMSI client, is one of the world’s largest staffing firms. Every day, as the WSJ pointed out, it sends out more than 600,000 temp workers to businesses in all sorts of sectors (up from 450,000 two years ago). And Joerres says only 30% of these workers are getting full-time offers during their temporary gigs. That’s hardly an encouraging sign when you consider the low wages for workers in temporary settings ($33,327 on average annually in the U.S.) and the fact that many firms are still hesitant — or “scared,” as CNN put it in a headline — to add permanent hires.

But here’s perhaps the most important takeaway from our quick research: The best-performing metros since the recession (e.g., Houston, Washington, D.C., San Jose) have the lowest share of new jobs coming from temp help services.

To see where in the U.S. the temp hiring boom has most consumed job growth, we checked the employment picture for the 100 most populous metros using EMSI’s 2013.2 dataset. Only four metros saw temp workforce declines from 2009-2013 (Tampa-St.Petersburg-Clearwater, New Orleans, Youngstown, and Palm Bay-Melbourne-Titusville). And most others saw enormous temp gains — particularly compared to all other industries.

But here’s perhaps the most important takeaway from our quick research: The best-performing metros since the recession (e.g., Houston, Washington, D.C., San Jose) have the lowest share of new jobs coming from temp help services.

Mapping Total Gains

The following map, from EMSI’s mapping tool, shows total temp gains and losses for the largest 100 metros.

Note: EMSI’s 2013 employment numbers are annual average estimates based on historic and projected data from state and federal sources, such as the BLS’ Current Employment Statistics (CES) and Quarterly Census of Employment and Wages (QCEW).

Chicago has added the most temp jobs since 2009 (an estimated 45,444), and Knoxville, Tenn., has grown at the quickest rate of the top 100 MSAs (137%, or 4,280 new jobs). But Stockton, Calif., is No. 1 in terms of temp job growth dwarfing total job change: the Central Valley metro has added 1,604 jobs in temp help, and just 40 jobs total. That means if we subtracted its temp help gains, Stockton would still have fewer jobs than it did in 2009 — 1,564 fewer (a 1% decrease instead holding steady).

Three other metros are in the same situation as Stockton: Scranton–Wilkes-Barre, Pa. (where temp help growth is 212% of total job change), Dayton (117% of total change), and Memphis (116%).

Meanwhile, Lakeland-Winter Haven, Fla., has added 508 jobs since 2009, and 500 of them have been in temp help (98% of job growth). Here are other metros at the top of the list (the full table is below):

• Birmingham-Hoover, Ala. — 66% of new jobs in temp help
• Cincinnati-Middletown, Ohio-Ky.-Ind. — 65%
• Greenville-Mauldin-Easley, S.C. — 64%
• Lancaster, Pa. — 60%
• Greensboro-High Point, N.C. — 59%
• Hartford-West Hartford-East Hartford, Conn. — 58%
• North Port-Bradenton-Sarasota, Fla. — 55%

Metros On The Rebound

On the flip side, the metros that have bounced back quickest from the recession have the smallest shares of new growth coming from temp help services. This includes Houston (8% of total job growth), San Jose (8%), Salt Lake City (6%), Austin (5%), and especially Washington, D.C. (2%). The temp help sector has grown by 11% in D.C. (2,701 new jobs), but the total D.C. economy has added 117,238 jobs.

Here’s the full list of metros. The top performers are at the bottom since we’ve ranked the metros by the highest share of new jobs in temp help.

Poorest-Performing Metros

Additionally, eight metros either experienced overall job loss from 2009-2013 or experienced job loss in the temp sector (the real exceptions, as we mentioned above). The worst of the lot is Albuquerque, which has nearly 10,000 fewer total jobs in 2013 than it did in 2009 and only 398 more temp jobs.

Data shown in this post comes from Analyst, EMSI’s web-based labor market data and analysis tool. To look at temp jobs in your region or for more information on EMSI, contact Josh Wright (jwright@economicmodeling.com). Follow us on Twitter @DesktopEcon.