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Temp hiring booms, outpacing other sectors

People with temporary jobs spend less — boosting the economy less, economists say.

Amy Sancetta /Associated Press/File 2009

People with temporary jobs spend less — boosting the economy less, economists say.

WASHINGTON — Hiring is exploding in the one corner of the economy where few want to be hired: temporary work.

From Walmart to General Motors to PepsiCo, companies are increasingly turning to temps and to a much larger universe of freelancers, contract workers, and consultants. Combined, these workers number nearly 17 million people — about 12 percent of everyone with a job.

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Hiring is always healthy for an economy. Yet the rise in temp and contract work shows that many employers aren’t willing to hire for the long run.

The number of temps has jumped more than 50 percent since the recession ended four years ago to nearly 2.7 million — the most on government records dating to 1990. In no other sector has hiring come close.

Driving the trend are lingering uncertainty about the economy and employers’ desire for more flexibility. Some have also sought to sidestep the new health care law’s rule that they provide medical coverage for permanent workers. Last week, the Obama administration delayed that provision for a year.

The use of temps has extended into sectors that seldom used them in the past — professional services, for example, which includes medicine and information technology.

Temps typically get lower pay, few benefits, and scant job security. That makes them less likely to spend, so temp jobs don’t tend to boost the economy the way permanent jobs do. More temps and contract workers also help explain why pay has barely outpaced inflation since the recession ended.

Beyond economic uncertainty, Ethan Harris, global economist at Bank of America Merrill Lynch, thinks more lasting changes are taking root. ‘‘There’s been a generational shift toward a less committed relationship between the firm and the worker,’’ he says.

An Associated Press survey of 37 economists found three-quarters thought more use of temps and contract workers represents a trend — intensified by the depth of the recession and the tepid pace of the recovery. Long-term employment isn’t a cost all companies want to bear anymore.

‘‘There’s much more appreciation of the importance of having flexibility in the workforce,’’ said Barry Asin of Staffing Industry Analysts.

This marks a shift from what economists used to call ‘‘labor hoarding’’: Companies typically retained most of their staff throughout recessions, hoping to ride out the downturn.

Executives say temps help companies stay competitive. They also argue temp work can provide valuable experience.

Temp hiring has accelerated even though the economy has 2.4 million fewer jobs than five years ago. Temp jobs made up about 10 percent of jobs lost to the recession. Yet they’ve made up nearly 20 percent of jobs gained since the recession.

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