Temp Jobs Become a Way of Life for Some

The following article recently appeared on NBCNews.com. It makes some interesting points but misses on some considerations. Temporary jobs are the one area where there has been a lot of growth in recent years but economists in this article bemoan the fact that permanent jobs aren’t increasing at the same pace. The article fails to point out that many temporary jobs turn into direct jobs through a temp-to-hire opportunity. Still, it’s an interesting article.

By Allison Linn, NBC News

When Kenneth Foreman had “a decent job with a decent company,” he did the things that most people with a strong, steady paycheck do. He and his wife bought a house close to his elderly parents in Hopewell, Va., and lived what he describes as a normal middle-class life.

“You know, work was good, family was good, kids were good,” he said. But since he was laid off in December 2006 from the technology job he held for nearly six years, Foreman, 49, has only been able to string together a series of temporary jobs, often with months of unemployment between gigs.

Although he feels grateful for the paychecks, he is well aware they could stop anytime. “They are not even required to give me notice,” he said of his current job as a hardware planner for a large technology company. “I could come in one day and my badge won’t work and they’ll say that you were relieved.”

Foreman is far from alone as “permatemps” like him become an enduring feature of the slow-growth economy.
About 2.53 million people were working temporary jobs as of June, an increase of more than 40 percent from the summer of 2009, when about 1.75 million people held such jobs. The number is expected to rise again Friday when the government reports employment data for July.

But three years into the economic recovery, the rise in temporary jobs is not necessarily signaling an increase in permanent employment as it did in the past. Instead, cautious employers are content to have a substantial part of the work force on a contingency basis, which makes it easier to downsize if business slows again.
“They’re not willing to commit to full-time, permanent employees,” said Nigel Gault, chief U.S. economist for IHS Global Insight.

And with the unemployment rate at 8.2 percent in June, employers have little reason to be worried about relying on temp workers. Many undoubtedly conclude that they can just hire a batch of new ones if work picks up again, and with temporary workers they don’t have to worry about the costs of benefits or severance.

“They’re accepting the turnover so they don’t have to pay the benefits,” said Joel Naroff, president of Naroff Economic Advisors. Naroff believes the economy still isn’t adding enough temporary jobs.

Although the economy has added about 780,000 temporary jobs over the past three years, it has only just gotten close to the level of temp jobs that existed in December 2007, when the nation went into recession.
“The growth in the use of temporary workers is just as disappointing as the growth in jobs,” Naroff said.

But Gault said the rate of temporary jobs being added is about the same as in past recoveries. “The problem is we’re just not adding the permanent jobs,” he said. Even if hiring starts to perk up, Gault said temp workers could still find it hard to land those longer-term positions. That’s because they’ll face competition from the millions of people who have been sitting out the tough job market, waiting for things to improve.

“It’s a perfectly legitimate fear that they may have great difficulty finding a permanent job even when more permanent jobs become available,” Gault said.

Zach O’Claire, 39, would like nothing more than to be hired into a full-time, permanent job. He’s currently working in a part-time, temporary job as a lead systems engineer. It’s one of many such jobs he’s held in the last five years.

O’Claire started working in information technology in Silicon Valley in the late 1990s, after having earlier served in the military. He held a full-time position for years with a startup that folded.

After losing that job in 2006, he struggled with addiction, he said. He went through a recovery program and says he has been clean and sober for more than four years.

“I fully own up to the fact that I’ve made a couple of mistakes in my life,” he said. Although he has been able to find contract positions, he hasn’t been able to land a permanent, full-time job. He’s grateful for the jobs that he’s had but said the money isn’t always enough.

O’Claire expects he will make between $24,000 and $30,000 this year, a salary that is tough to live on in costly Santa Clara, Calif. He’s sold off many of his possessions to keep himself afloat and has had to rely on county-funded programs for his health care. A small setback, such as a car repair, will easily burn through whatever financial safety net he can build up.

“It does get frustrating,” he said. “I see all these other people that are able to go out and have these great cars, do these great things. That’s stuff I want for myself.”

Foreman, the temporary communications worker in Virginia, makes nearly $23 an hour at the job he’s held since February. His wife doesn’t currently work because of health problems. Foreman said he’s looking for affordable health insurance, but in the meantime he is paying cash for his wife’s medications and any health care for his two children, who are 17 and 19.

The couple has been able to make their mortgage payments but are still at risk of foreclosure because they missed three mortgage payments years ago, during short stints of unemployment. Meanwhile, Foreman is worried that his current temp job will be cut before the end of the year. He said he’s constantly looking for new jobs but hasn’t found anything that pays enough.

“Most big employers, they don’t want to commit to hiring people full time,” he said. “They’d rather just use the temps when they need them, and then they just let them go.”

Naroff, the economist, noted that there is one danger to that cycle: At some point, the job market could improve.

“Once job growth picks up and the unemployment rate comes down, it’s ‘Take this job and shove it’ time, and the turnover is going to be massive because everybody has been dumped on for the last five years,” Naroff said. “For those businesses (in which) turnover matters, it’s going to kill them.”

Staffing Indutry Trends

Unemployment will remain high by historical standards.

“We could have a recovering economy, yet still have high unemployment,” said Ira Wolfe, author of “The Perfect Labor Storm 2.0” and president of Success Performance Solutions, a pre-employment and leadership testing firm based in Lancaster, Pa. “Ten years out, we will probably still be seeing relatively high unemployment, at least higher than we’ve been used to.”

It might seem that if a lot of people are looking for work, companies won’t need the help of staffing companies to fill positions. But that’s not necessarily the case.

“Employers are finding it increasingly difficult to find people with the skills” they need, Wolfe said. In addition to specific job-related skills, these include “the ability to fit in, to work collaboratively, and, if the job does require telecommuting, to be able to do that.”

How to prepare: To find the workers who can serve employers’ needs, staffing firms will need to refine their ability to hone in on specific skills. This could involve deepening their networking connections with workers who have specialized expertise, for example. For the softer skills that Wolfe mentioned, staffing firms will need to be able to gauge how important they are for a particular position, and how well candidates would do.

Demand for knowledge workers will increase.

As we moved in past centuries from an agricultural economy to an industrial economy to a skills-based economy, job demands changed. Today, we are moving to what some describe as a knowledge-based economy: from “hand labor to semi-hand labor to skilled labor to knowledge labor,” Wolfe said.

“The definition of work has changed, which has changed the type of work, which ultimately will change what staffing firms are being asked to do,” Wolfe said.

“The definition of work has changed, which has changed the type of work, which ultimately will change what staffing firms are being asked to do,” Wolfe said. “Teams are dispersed. They’re also temporary. You may be staffing for facilities that are not local, or you may be working for a local company that’s sending people to a remote team.”

How to prepare: The landscape is changing quickly, and Wolfe predicts that staffing firms will have to adjust their business models to compensate. If firms see their customers becoming less tied to local labor, for example, they may need to find ways to provide workers in other locations. This broadening of the location of work could also open up new opportunities for staffing firms to provide workers outside their immediate areas.

“At-Will” Employment Disclaimers Can Violate National Labor Relations Act

According to two recent National Labor Relations Board (“NLRB”) decisions, requiring an employee to sign an “at-will” acknowledgement form violates the employee’s right to engage in concerted activity under Section 7of the National Labor Relations Act (“NLRA”). In the first case, American Red Cross Arizona Blood Services Division, Lois Hampton, a Donor Recruitment Representative with the American Red Cross, was terminated for alleged performance issues. As a condition of employment, Hampton was required to sign a document titled “Agreement and Acknowledgement of Receipt of Employee Handbook” which stated in part, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The NLRB alleged in a complaint that language was a violation of Hampton’s Section 7 rights. In analyzing this language, the Administrative Law Judge (ALJ) acknowledged that it was questionable whether the language expressly restricted Section 7 activity, but held that there was “no doubt” that it violated the Act because employees would reasonably construe the language to prohibit Section 7 activity. Specifically, the ALJ reasoned that by signing the form the employee waived her right to individually attempt to change her at-will status. The language, however, could be interpreted by employees as also waiving the right to engage in concerted activity in an attempt to change that status. For these reasons, the ALJ concluded that the acknowledgement form contained “overly-broad and discriminatory language that had a chilling effect on the employee’s Section 7 rights,” and violated the NLRA. The American Red Cross was ordered to remove or revise the language, notify all employees in writing that the provision had been revised or rescinded, and post a notice advising employees of their rights under the NLRA, and assuring them it would respect those rights. In the second case, NLRB v. Hyatt Hotel Corp., the NLRB’s Acting General Counsel filed an unfair labor practice complaint against Hyatt Hotels in Phoenix, Arizona stating that its at-will provisions also violated the Act because it required employees to acknowledge that their at-will employment status could not be altered unless it was in writing and signed by a top Hyatt executive. Specifically, the provisions at issue provided:

“I understand that my employment is ‘at-will'”
“I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s Executive Vice President/Chief Operating Officer or Hyatt’s President.”
“In order to retain flexibility in its policies and procedures, I understand Hyatt, in its sole discretion, can change, modify or delete guidelines, rules, policies, practices and benefits in this handbook without prior notice at any time. The sole exception to this is the at-will status of my employment, which can only be changed in a writing signed by me and either Hyatt’s Executive Vice President/Chief Operating Officer or Hyatt’s President.”

At-Will” Employment Disclaimers Can Violate National Labor RelationsThe Acting General Counsel took the position that these provisions constituted employer interference, restraint and coercion with respect to an employee’s exercise of their right to engage in concerted activity should they want to change the status of their employment, as guaranteed by the Act. The case settled before the matter was presented for hearing, and Hyatt agreed to modify its at-will employment policies on a nationwide basis. Similar to the American Red Cross directive, the settlement required Hyatt to revise the at-will provisions, rescind the acknowledgement forms that included the challenged at-will provisions and post written notices in all Hyatt hotelsacross the country that the at-will language at issue would no longer be in effect.

These cases indicate that the Board is expanding its focus to include commonly used at-will employment provisions, and applying Section 7 very broadly to find such provisions unlawful under the Act. Therefore, employers should take great care and consider consulting with counsel when drafting at-will employment provisions.