The New Permanent Temporary Economy

Companies are hiring temp workers, and the NY Times says that's good because if the recovery holds, those temp workers will become permanent ones.

To which I say "You guys aren't that bright, are you?"

Last month 52,000 temps were added, greater than the number of new workers in any other category. Not even health care and government, stalwarts through the long recession, did better.

“Sometimes we’re asked by a company to bring back ex-employees as temps,” said Joanie Ruge, a senior vice president of Adecco. Some are even ex-employees who have been laid off. “That does happen,” she said.

In the past, temps who do well have often been offered regular employment, with higher pay and benefits. Given the uncertainties about this recovery, companies are not doing that now, and temps, as a result, are less likely to spend as freely as regular employees or to qualify for credit, generating less demand than permanent employment would.

Adding to this undertow, corporate America is investing very little in expansion at a moment when current capacity — the machinery and floor space now available — is underused. And pressure is rising on the Obama administration and Congress to offset the shortfalls by authorizing more stimulus spending — enough to bring the national unemployment rate down from the present 10 percent.

“Depression has been forestalled only because major government borrowing and spending is filling the gap,” Albert M. Wojnilower, a Wall Street economist and consultant at Craig Drill Capital, said in a newsletter last week.

Why should these employers turn these folks into full-time workers with benefits?  There's no demand to justify it.  There's costs to keep down.  Why not have workers on demand as well in our on-demand economy?  Why not have entire workforces that way?

The switch to temp workers in America is going to be permanent.  Companies are going to go to more and more skilled temp workers, especially in IT and customer service positions.  Now less-skilled positions are going to temp workers, because there are so many unemployed.  Companies can ride out this trend for years.

Double-digit unemployment is going to be the new normal.