Surge in temp jobs may hinder recovery

A job seeker holds a pamphlet during a job and career fair at City College of San Francisco southeast campus on May 30, 2013, in San Francisco, Calif. Justin Sullivan/Getty Images

Commentary:

(MoneyWatch) The job market is looking up. According to a new survey conducted for job search site CareerBuilder, 44 percent of U.S. employers intend to hire full-time workers in the second half of 2013, while 25 percent will hire part-timers and 31 percent will hire temporary employees. Good news, right?

Not really. While everyone is pleased to see that hiring of permanent workers is at least relatively stable and not shrinking, the increase in part-time and temporary employees is part of a worrying trend. The U.S. now has 2.7 million temporary workers -- more than ever before in its history. These are people who typically lack health care benefits and any paid sick leave or time off.

Meanwhile, those who work in construction and manufacturing are twice as likely to be injured as permanent employees and, of course, when they're off work they aren't being paid at all. In retail, temp jobs don't produce a living wage, especially in the big expensive metropolitan areas where they're largely concentrated. Yet this represents the growth sector in American employment, with temp jobs growing faster than any other kind of paid work.

Although they're often represented as stepping stones in a career, temp and other so-called contingent jobs rarely lead to permanent employment. In most instances, nobody really cares about these workers -- they often get little management, let alone guidance, and their opportunity to develop is virtually nil. They are treated like machines (Many, such as cashiers, have in fact been replaced by machines as companies turn to technology to enhance productivity.)

What's especially ironic is to discover that, of the army of temp workers, roughly 16 percent work in HR. In other words, the very people who are supposed to understand how to get the best out of employees are treated in ways that ensure their companies will get the least from them. This merely guarantees that an intelligent, informed debate about how best to treat a workforce cannot and will not occur.

It's long been the orthodoxy in business that what every growing economy (and, by inference, every growing company) needs is a flexible workforce. Quite where this orthodoxy originated is unclear, but it isn't from research, which shows quite the opposite.

A highly casualized workforce may cut costs, but it will never increase productivity or profits. Workers on temp contracts, working through agencies, don't care about their companies because their companies don't care about them. So they might have ideas about how to improve products or service, but no one will ever hear them. They might have potential, but no one will ever develop them. Many temps are on the front line of customer service, where they have first-hand insight into what works and what doesn't, into the mood and attitudes of customers. But while many business leaders urge employees to show creativity and to innovate, they adopt hiring practices that specifically militate the very thing they claim to want.

The costs these companies cut from employing so many transient workers do not go away. People who are injured, sick, exhausted, out of work or paid below a living wage incur costs -- they're just not paid by their erstwhile employer. They're paid for by the taxpayer, by you and by me. Such costs are "externalized," in the lingo of economists, as companies shift costs off their balance sheet and onto the public purse. The companies and their shareholders don't really care where the costs go, but it's naive to imagine that they vanish.

The rise of this temporary workforce isn't just wasteful of human labor and dishonest in its redistribution of costs -- it's also economically stupid. We know now that "trickle down" economics doesn't work, that concentrating huge wealth at the top of society does not lead to it cascading down to businesses and families below. We also know that what works is its opposite -- trickle-up.

Henry Ford figured this out when he realized that paying his workers more -- not less -- grew the market for his products. After all, employees aren't only workers -- they're also consumers. And the more the mass of workers are paid, the more money they have to spend on the economy as a whole. We know this -- we're just willfully blind to it.

One things we've learned from this recession is that not all growth is equal. Likewise, not all jobs growth is equal. What we still haven't figured out is why we embrace what doesn't work in order to ignore what does.

  • Margaret Heffernan On Twitter»

    Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on www.MHeffernan.com.

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