An unfortunate reality of the economic recovery since the 2008 crisis is the lack of robust job creation, especially in high-skilled manufacturing sectors. Many cities are now relying on a surge in temp jobs, which are not translating into permanent employment for job seekers, adding to this problem.
EMSI, an economic research firm, found that 15 percent of new jobs created over the past four years were in the temporary help services sector. Yet this sector only accounts for 2 percent of the total labor force.
What is particularly concerning is that much of this growth is happening in major U.S. cities, where economic growth is hinging on temp jobs rather than more permanent sources of employment. Using data from the Bureau of Labor Statistics, EMSI calculated that
[t]emp jobs accounted for whopping 116 percent of job growth in Memphis (that means that one sector added more jobs than all other industries together), 66 percent in Birmingham, 65 percent in Cincinnati, 58 percent in Hartford, 51 percent in Milwaukee, 46 percent in Kansas City, and 40 percent or more in Cleveland, Chicago, and Philadelphia.
There is a negative correlation between an increase in temp jobs and overall economic growth. EMSI found that the cities that have recovered fastest from the recession are those with the lowest growth in temp jobs. These cities have all experienced steady job increases overall.
For example, Washington D.C. has added 117,238 jobs since 2009, and only 2 percent of those jobs were in the temporary help sector. Similarly, San Francisco added 125,134 jobs with only 4 percent constituting temp jobs. Austin, Houston, Seattle, and Boston also experienced fairly sizable increases in jobs but coupled with low proportions of temp jobs. By comparison, in Philadelphia, where 41 percent of jobs are temporary, the economy has added only 19,752 jobs overall since 2009.
In general, the economy has added 765,000 more temp jobs since 2009, and according to the most recent numbers from the Department of Labor, the number of temporary workers has reached 2.7 million, a record high. Temp jobs are usually low-skilled, low-wage service sector positions, which do little to aid the long-term recovery because they cannot replace the high-skilled, high-wage manufacturing jobs that drove American economic growth for decades.
Previous economic recoveries began with growth in the temporary employment but gradually transitioned to adding permanent jobs. But things have been different this time. Businesses are reluctant to hire workers permanently due to economic uncertainty, citing concerns over “tight fiscal policy” and government budget cuts, an increase in payroll taxes, and higher healthcare costs as the Affordable Care Act goes into effect.