This Just In
  • Detroit’s Cobo Center receives ASTM Venue Standard recertification, having first received certification in 2015.
  • Host to this year’s Sustainable Brands Conference, Cobo Center was the 9th facility in 2015 to receive ASTM Venue Standard certification.
  • Convention Data Services broke ground on its new corporate headquarters in mid-March. The approximate 30,000-sf building opens in Q1 2018.
  • The new digs are next to the current CDS HQ in Bourne, Mass. The construction will accommodate the company’s growth and create new jobs.
  • China’s Shenyang New World EXPO opened March 1, hosting 2 exhibitions in its first month of operation, with a third to be held 23-25 March.
  • To date, the largest event was a dental equipment and oral health exhibition, open 16-19 March, which drew more than 39,000 attendees.

Are Temp Jobs Becoming
a Permanent Tradition?

Darlene Gudea
, President
August 1, 2013

CLICK TO DOWNLOAD

THE COMPLETE PDF

Oceanside, CA – Now that the Federal Reserve (FED) has quit pretending to taper its bond buyback program anytime soon, otherwise known as QE 3, the U.S. will finally achieve the full-fledged recovery that we’ve been waiting for over five years. Right?

Not so fast, said Frank Chow, chief economist for Trade Show Executive Media Group. With mortgage rates and stock/bond markets regaining levels prior to the Fed’s tapering talk, along with the latest economic data pointing up, it is tempting to think in such a fashion, he said. This optimism was reflected by the Reuters/University of Michigan’s Consumer Sentiment Index in June, which recorded a near six-year high. “While the employment, sales and housing numbers look good thus far this year, a peek underneath the employment ‘rug’ reveals a lot of challenges exist to achieving a more dynamic recovery,” Chow pointed out.

In June, the U.S. economy created 195,000 jobs, easily beating expectations of 165,000, according to the Bureau of Labor Statistics Current Employment Statistics Survey, also known as the Payroll Survey. Also, payrolls for April and May were revised higher, revealing an additional 70,000 jobs. “This meant the Second Quarter averaged over 190,000 new jobs a month — almost double from the First Quarter,” said Chow. Wall Street viewed this as evidence the economy was finally on solid ground and gaining momentum.

However, the volatile Current Population Survey, also called the Household Survey, which captures self-employment, showed a slightly different picture. The unemployment rate remained unchanged at 7.6%, but Chow said the broader U-6 unemployment rate, which includes people who have dropped out of the work force or can only find part-time work, was 14.3%, up from May's 13.8%, its highest level in four months. Looking deeper into the data, 360,000 of the new jobs were part-time, of which 322,000 were involuntary, and full-time jobs actually plunged (240,000). This is a definite departure from the past two years. Some analysts believe this outcome is due to the effects of ObamaCare, while others blame it on the weak economy.

Moreover, economists are noticing a quality issue with the jobs being created: they are mostly in low wage sectors, suggesting continued sluggish economic growth, said Chow. Leisure and hospitality increased by 75,000 jobs, after posting a 69,000 gain in May. Retail added 37,000 jobs. Meanwhile, the manufacturing sector lost 6,000 jobs in June, representing the fourth consecutive monthly contraction. In fact, the number of manufacturing employees is near its lowest point since 1946. Over the past decade, more than 2.6 million manufacturing jobs have been destroyed.

The Adult Population is
Growing Faster than Job Growth

Job growth in June barely kept up with the adult population which has risen about 200,000 a month this past year. “With the average monthly job growth of 191,000 over the past 12 months, it is no wonder the unemployment rate has not budged,” Chow pointed out. The percentage of working-age Americans with a job has fluctuated between 58.2% and 58.7%, its lowest level since 1983. “This is nowhere near the height in 2006 and 2007 when more than 63% of the population had a job,” he noted.

“The good news is that the average wage is increasing and the number of long-term unemployed is falling,” Chow said. The average quarterly annualized rate of wage growth was 2.1%, only slightly below the rate of inflation (CPI) over the past year, which was 2.2%. The long-term unemployed fell by 1 million over the last 12 months. 

A Temp Nation

From large corporations to school districts and hospitals, companies are increasingly turning to temps and to a much larger universe of freelancers, contract workers and consultants. Analysts estimate this pool of workers at nearly 17 million — about 12% of everyone with a job.

Hiring is always healthy for an economy, yet the rise in temp and contract work reveals that many employers aren't into long-term commitments. Temp services have jumped more than 50% since the recession ended four years ago — no other sector has come close. Driving the trend is lingering economic uncertainty and employers' desire for more flexibility in scaling wages up or down based on revenues.

Beyond economic uncertainty, Ethan Harris, a global economist at Bank of America Merrill Lynch, thinks more lasting changes are taking root. "There's been a generational shift toward a less committed relationship between the firm and the worker," Harris says. An Associated Press survey of 37 economists in May found that three-quarters believe the increased use of temps and contract workers represent a long-standing trend.

Susan Houseman, economist at the Upjohn Institute of Employment Research, says companies want to avoid having too many employees during a downturn, just as manufacturers want to avoid having too much inventory when demand slows. "You have your just-in-time workforce," Houseman says. "You only pay them when you need them." Business executives say temps help their companies stay competitive. They also argue temp work can provide valuable experience. "It opens more doors for people to enter the labor market," says Jeff Joerres, CEO of ManpowerGroup, a workplace staffing firm. But Houseman's research has found when jobs are classified as "temp to permanent," only 27% of such assignments lead to permanent positions.

The growth in demand for temp workers has spawned the emergence of online competitors to the temp industry just as Amazon and eBay disrupted retail. Employers spent $1 billion in 2012 hiring short-term workers through online labor exchanges or outsourcers, such as oDesk, Elance and Freelancer, according to Staffing Industry Analysts, a consulting company — that's 67% more than the previous year. Gigwalk, launched in 2011, helps businesses hire on-the-spot temps for brief projects without any interviews using mathematical analytics to rate performance. Anyone who downloads Gigwalk's app can see pinpoints on a map signifying available jobs nearby. "You can hire 10,000 people for 10 to 15 minutes," says Gigwalk CEO Bob Bahramipour. "When they're done, those 10,000 people just melt away."

Looking ahead, Staffing Industry Analysts found that companies with more than 1,000 employees expect 18% of their workforces to be made up of temps, freelancers or contract workers this year, up from 16% in 2012. SageWorks, a leading financial information company, conducted an interesting survey on corporate hiring plans of private businesses in March and again in July. In July, only 13% expected to increase employees, down from 20.3% in March and 12% expected to reduce employees, up from 6.5% in March.

Health Care Changes Will Reduce Headcount

SageWorks found that 66% of privately held companies expect the new health care changes will make it less likely that businesses will add new employees in the next year. A total of 16% said it would have “no impact,” and 14% said they were “unsure” about the ultimate impact. Only 2% said the Affordable Care Act makes it “more likely” that businesses will add new employees. “Private companies are performing well, but they’re simply not hiring with the same volume and consistency that we’d expect from them at this point in the economic recovery,” noted Sageworks Chairman Brian Hamilton. “The recent delay in the implementation of the Affordable Care Act, and the uncertainty that accompanies such a delay, won’t help the employment situation. Private businesses are trying to map out their hiring and investment plans for the next 12 months, and a last-minute delay like this will increase the likelihood that companies remain on the fence about hiring.” 

Evolving Trends in Hiring are Nonetheless
a Positive for Trade Show Industry

In summary, Chow expects employment and the economy to remain slow for the rest of the year. The trends in part-time and temp work will continue to expand and also impact employment on the service side of the trade show industry where managements are forced to offset rising health care costs in a slow economy.

“Looking on the bright side, companies which exhibit in trade shows are investing for tomorrow, but not much in full-time jobs,” Chow said. “Business investment in technology, plant enhancements, equipment purchases and overseas markets bodes well for healthy future corporate profits, which translates into support for marketing budgets and ultimately trade show expenditures,” he emphasized.