Temporary Employment Declines as Workers Migrate to Permanent Roles

Temporary employment is reportedly experiencing a decline in the United States as workers and employers alike shift to permanent positions.

Although a decline in temporary employment was once considered a bellwether of economic weakness, the current trend is not signaling a downturn as it did in the past, The Wall Street Journal (WSJ) reported Thursday (Aug. 31).

The current decrease in temp workers is taking place in a robust labor market with low unemployment rates, according to the report. This shift reflects changes in both supply and demand dynamics, as workers and employers are increasingly opting for permanent positions.

Historically, declines in temporary employment were seen as an early warning sign of an impending recession, the report said. Businesses would hire temp workers to gauge economic growth, but as demand weakened, these workers would be the first to be let go, foreshadowing broader layoffs.

However, the current decline in temp employment is occurring in a strong labor market, with overall unemployment at a low of 3.5% in July, per the report.

The decrease in temp employment can be attributed to multiple factors, according to the report. Firstly, some businesses have reduced their orders for traveling nurses, project managers and other roles typically filled by temp workers. Additionally, temp workers themselves are finding more opportunities for permanent employment.

Both workers and employers are shifting towards permanent positions, the report said. In a labor market where job openings outnumber the unemployed, workers are finding the stability they desire. Employers, too, are showing a preference for permanent employees after facing labor shortages in recent years.

While the current migration of temp workers to permanent roles may be transitory, it reflects a labor market where workers have more options, per the report. However, the decline in temp employment does not suggest a long-term demise of temporary staffing. The pandemic has reshaped the way work is done, making organizations more open to remote and flexible work arrangements.

This report comes a day after research group ADP said that private employers in the United States added 177,000 jobs in August — a figure consistent with the pace of job creation before the pandemic.

“After two years of exceptional gains tied to the recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede,” ADP Chief Economist Nela Richardson said when announcing the job numbers.