Temp hiring is up

December 14, 2009
| By Pete Daly |
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Demand for temporary and contract workers in the U.S. has increased by 21 percent since July, a good sign that the economy is improving, according to the American Staffing Association.

"This is a good sign, but it doesn't mean to me that we're out of the woods yet," said George Erickcek, Senior Regional Analyst at the W.E. Upjohn Institute for Employment Research in Kalamazoo.

West Michigan employment agencies vary in their estimations of how well the region is faring in terms of hiring.

Staffing employment in the third quarter of this year showed marked improvement over the previous quarter, according to the ASA, although the number of jobs remains substantially lower than the same period last year. The association's members account for 85 percent of the $86 billion U.S. staffing industry; about 2.7 million Americans are sent to jobs by staffing companies every business day.

In early December, the ASA said federal Bureau of Labor Statistics data indicates that close to 100,000 temporary help jobs were added nationwide during October and November. The ASA reports that the temporary help industry has not experienced that degree of month-to-month employment growth since October 2004.

“The 52,000 temporary jobs added in November was the largest monthly gain since October 2004," says Richard Wahlquist, ASA president and chief executive officer. "The consistent increase in temporary jobs over the past several months is a very encouraging sign because increases in temporary employment historically signal the beginning of jobs recovery."

Citing preliminary data from the federal Bureau of Labor Statistics, Erickcek noted that while 190,000 permanent jobs were lost across the country in October, the ranks of temporary and contracted workers increased by about 33,000.

Michigan "shot up quite nicely," added Erickcek, with 84,900 employed as temps/contracted staff in October, compared to 71,700 in September and 61,200 in August.

The owner of a Wayland employment agency that specializes in placing professional workers in jobs in 18 states said he believes the economy "is picking up and things are happening, but much faster in other states than it is here."

"We're starting to see a little activity in engineering around here," said Arnaldo R. Rodriguez, president of Technical Professional Services Inc., based in Wayland.

Rodriguez said there was "a little bit" of improvement in CAD work in the West Michigan region, as well, "but not to the level it used to be."

Rodriguez started his small business in West Michigan in 1983. He said that in the late 1980s and first half of the 1990s, "the phone was always ringing off the hook." Around 1996, the phones stopped ringing so frequently.

"We knew something was coming up," he said. It was tough going — and it got worse. Around 2001, he said, "a lot of people got out of the (employment) industry" and "we saw a major drop-off in local business."

"In 2003, we contemplated closing our doors," said Rodriguez. Then he began to change the mix of business he was aiming at. One big change was the addition of government contracting, and also seeking clients in other states.

In Washington, D.C., TPS provides professionals to the Institute of Museum and Library Services. In the state of Washington, TPS serves the Department of Veteran Affairs. TPS employees work at National Guard bases in Michigan, Missouri and Texas; at the Naval Medical Center in Portsmouth, Va.; and at the Army Corps of Engineers in Louisiana.

Since 2003, TPS "has doubled sales each year," said Rodriguez.

Despite being headquartered in one of the worst state economies in the nation, TPS increased its internal staff from 5 in January to 9 today. It has 58 people on its payroll, assigned to clients around the country. They are professionals in fields that include medical support services, engineering, IT, and more.

Rodriguez said he believes the employment services business "kind of precedes what the economy is going to do" by about six to 12 months. "When you see our jobs orders drying up, things are going to start getting real tight," he said.

For now, Rodriguez is seeing improvement, but there’s better improvement in other states such as Texas, Nevada and Virginia, in his experience.

Life sciences are touted as one of the solutions in West Michigan to the decline in industry. Rodriguez said he had heard a couple of years ago that there was a shortage of professional and technical people for medical-related jobs here, but he said he did not find that to be true. "Medical is still very minimal" in this area as far as his business goes, he said. The little improvement he has seen here has been in light manufacturing.

Steve Brems at Elwood Professional, 3501 Lake Eastbrook Boulevard, said September, October and November were "three very strong months" for his office.

Elwood Professional is a division of Elwood Staffing, an employment service company based in Columbus, Ind., that has about 140 employees working for clients in seven states.

Brems said the Grand Rapids office mainly provides contracted technical and professional workers in the fields of engineering, manufacturing, IT, finance, accounting and more.

Of the last three strong months, Brem said that "a lot of it, surprisingly, came from automotive."

"I'm a little more optimistic about the West Michigan area" than other manufacturing areas in Michigan, said Brems.

The end of the year can be slow for a lot of companies, he said, with people on vacation and budgets for the year used up. Many companies then decide to wait "until January to start staffing up again. But I can say, over the last few months, more and more people I'm talking to are a little bit more optimistic."

Carol LoPresti, vice president of human resources at Beacon Services Inc., 4595 Broadmoor Ave. SE, said her company's business is starting to pick up. She said it's not like the level of business Beacon enjoyed in 2006, "but it's certainly up."

Temporary staffing services are always first to see the upticks in employment, she said, and Beacon's upticks are "in all sectors." Beacon does not reveal how many people it currently has placed in jobs, but reportedly had 15 recruiters in 2006. It serves the Grand Rapids area and the lakeshore from Holland to St. Joseph.

LoPresti said Beacon specializes in medical and legal workers and does some permanent placements "at the higher end." However, most of the employees are hourly workers in light industrial.

Erickcek, who gave his annual forecast in Grand Rapids last week on the employment outlook in West Michigan in the year ahead, told the Business Journal, "Don't depend on one indicator." However, he said the employment agency indicator "does have a story behind it. The story is, as orders begin to pick up, business starts to need more workers. The problem is that the business does not know if the orders are going to keep on coming in, or if it's a one-time shot. So they tend to be very hesitant to hire permanent workers. Therefore, they hire temps."

That type of hiring will continue until sufficient information gives business management confidence that it really does need new permanent workers, he said.

Since July, the upward trend in the number of people employed through temporary services is "suggesting that there is a turnaround" in the economy, said Erickcek.

So does that mean he is convinced?

"Yes, we are at the very beginning stages of a turnaround," replied Erickcek. "The challenge, I think, will be for employers to feel comfortable enough to hire permanently.  So the question, to me, is: How long will employers keep using temporary services because they are simply unsure that orders they see now will stick? That may take some time."

Erickcek said it could be several months "before employers start feeling like the recovery has stuck."

If the economy turns sluggish again, "then we'll probably see a decline in temporary help services, and a decline in overall employment, as well," he added.

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