Published December 13, 2010
This is the first entirely "temporary help service" job recovery. Our current "recovery" might be in its seventeenth month, but the few new private sector jobs have come from companies temporarily hiring staff on a contract basis. What were once jobs reserved for people hired to cover seasonal demand or permanent employees on sick leave have become the standard employment for many workers. Companies simply don’t want the risk of hiring workers that they might soon have to get rid of.
Since the recovery started in June 2009, the total number of private sector jobs has increased by 203,000. But these weren't "regular," permanent jobs. Indeed, permanent private sector jobs fell by 257,000.
"Temporary help service" jobs is what made up the difference, as they increased by 460,000. For all sectors of the economy, including government jobs, the drop in the number of permanent jobs during the recovery was even worse -- a drop of 561,000.
The trend has recently been getting worse. During five of the last six months, the total number of permanent jobs fell. The new unemployment numbers released on Friday weren't as bad as other recent numbers. There were 39,000 more jobs during November. However, with 39,500 coming from temporary jobs, there would have been essentially no new permanent jobs.
When the Bureau of Labor Statistics started collecting data on these temporary jobs in 1990, such jobs were much less common than today. Only about half as many people held temporary jobs two decades ago. Since then, the current recovery is record-setting in terms of adding temporary jobs. We can compare the three recessions since 1990. While the current recovery has seen the share of jobs held by temporary workers increase by 26 percent, the recession that ended in March 1991 saw a 10 percent increase in share held by temporary workers and the recession that ended in November 2001 had no increase (see the diagram here).
The explanation behind temporary job creation is pretty simple: uncertainty. Companies don’t want to make longer-term commitments if they don’t know what the next couple of years will look like. New regulations are being imposed on companies, be it health care, finance, the environment, and the other areas. And the exact form and extent of these regulations still have to be determined by regulators. Many small companies don't even know what tax rates they will face after the beginning of the year. Neither the president nor the Democratically controlled congress attempted to prevent income tax rates from rising for even the middle class until just a few weeks before they were expected to rise.
President Obama's stimulus and regulations have created much of today's unemployment by moving around trillions of dollars in the economy and moving around the jobs that are associated with that money. People haven't instantly moved from one job to another.
A 9.8 percent unemployment rate that is higher than when the recovery began and 6.3 million people who have been unemployed for more than 6 months are both bad enough. But Obama hasn't just created a lot of unemployment and a stagnant economy, he has also changed the types of jobs that people are getting.