On the hiring line: All those temps signal good things to come

WASHINGTON — Last January, Rita Ruggles was on the verge of closing her temporary staffing agency in South Beloit, Ill.

She had only 25 workers placed with area companies, her billings had tumbled and she was forced to lay off all four of her office staffers.

"I was running the office by myself," said Ruggles, the president of Trinity Labor Services. "I was really thinking that we would be closing our doors."

Today, however, in the heart of northern Illinois' hard-hit manufacturing region, Ruggles is experiencing a renaissance of sorts. She's finding jobs for recycling workers, industrial welders and machine tool operators with increasing frequency. Business is back to pre-recession levels, nearly 100 of her temps are working and her office is fully staffed again.

Ruggles' good fortune is part of a national turnaround in the temporary-help service sector, which has added 117,000 jobs since July, including 52,400 in November, according to new government figures released Friday.

That's not exactly a hiring boom. After losing an average of 44,000 temporary help jobs each month from January 2008 through July 2009, however, the recent surge reflects an increased demand for labor, the kind that often precedes an expansion of the permanent work force.

"Employers will hire temporary help workers to sort of test the waters of a recovery before they make a commitment to full-time workers. And we are clearly starting to see that now," said Heidi Shierholz, an economist at the Economic Policy Institute, a liberal policy-research organization.

After the 1990 recession, the broader labor market added jobs about nine months after the temporary-help services sector began edging upward, Shierholz said. It took about 19 months after the 2000 recession, however, she said.

"Based on recent past experience from this indicator, we can expect to start adding jobs in the larger labor market at the end of next summer," Shierholz estimated.

Nigel Gault, the chief U.S. economist with IHS Global Insight, said the lag time between rising temporary hires and increased permanent hires would be shorter this time, however, because jobs and workers' hours have been cut much more severely than they were in 1990 or 2000. As a result, employers will realize that higher productivity can't be sustained without new hires.

"The existing work force is being worked much harder and perhaps being worked beyond what will be sustainable in the long run," Gault said, adding that employers "will find that they can't keep stretching the workers that are left, and therefore need to add more people to give them help."

The rise in temporary jobs also has meant more business for Bibby Financial Services Inc., an international accounts receivable-financing firm that works with many staffing agencies.

Staffing firms often use accounts-receivable financing because they don't have the collateral to get money from traditional banks, said Bob Jaskiewicz, an executive vice president in Bibby's Chicago office.

"A bank wants to see real estate, machinery and equipment or inventory. Temporary staffing firms don't have that," he said. "They have an office, a phone and employees."

In September, as the industry began to turn around, Bibby loaned $2.5 million to a Texas staffing company that provides geoscientists, engineers, designers and information technology specialists for the energy industry.

Another temporary-staffing company, which saw its monthly billings fall from nearly $9 million to less than $4 million during the recession, likewise has rebounded, with monthly billings at more than $13 million, Jaskiewicz said.

"They're at an all-time high right now," he said. "They're seeing more business than they've ever seen in their six-year history with us."


For more information on the temporary help industry, visit the American Staffing Association


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