Monthly Employment Situation with an emphasis on staffing and temporary help services

U.S. Employment Situation (February 2010)
presented by Bruce Steinberg | March 5, 2010

named as a Top 100 Influencer in HR-Recruiting

www.brucesteinberg.net

Home of the first and only U.S. employment report podcasts

Temporary workers & the manufacturing sector ...

For staffing companies -- specifically, temporary help services -- that service, or are contemplating servicing the manufacturing sector, we have something that may be of great interest. And as hiring in that sector begins to pick up, a study by the Federal Reserve Bank of Chicago revised just last month (February 2010) may provide some direction for current and future marketing efforts. It examines how a manufacturing facility's "... use of temporary workers is associated with the nature of its output fluctuations and other plant characteristics."

In other words, it looks at the several variables that affect a plant's use of temporary workers. It should come as no surprise to staffing professionals that "a plant in an industry that is highly unionized seems to use fewer temporary workers, possibly because unions are successful in resisting the use of nonmembers’ labor." The paper supports a long-standing staffing industry held contention that "... temporary work arrangements facilitate flexibility in a firm’s use of labor and allow it to accommodate output fluctuations at lower cost."

Common sense often lead staffing executives to devote more marketing efforts to facilities where jobs are being added under the premise that they need workers and temporary workers can fill that bill. That may be the case for a temp-to-perm service line, but the empirical evidence suggests "... that a plant chooses temporary workers over permanent workers when it expects its output to fall ..." Therefore, depending upon the circumstances, it may worth the effort to alter marketing plans and what specific staffing services to pitch depending if the target customer is growing or waning.

But, a few caveats: 1) the data analyzed (from 1998-2001) is from a different economic cycle than the one we are in now, 2) even the authors told me that they realize the "paper looks at the topic only from one angle. We didn't look at dynamic nature of the use of temps", 3) and as the auto industry says, "your actual mileage may vary" so it's important to view this paper's results within the parameters of your own business plan.

There is indeed a fair amount of wording devoted to explaining the statistical modeling utilized, but if you wade through those parts, we're confident that you'll find a fair amount of useful, actionable information. The 49-page study can be downloaded from here.

For example, this study may help you decide that larger plants may be better customers for temporary help services ("... results generally suggest that bigger plants are more likely to use temporary workers, and if they do, the temporary worker share is greater than smaller plants."), plants employing higher wage workers may not be ( "... higher wage plants may use fewer temporary workers."), and if older facilities are better or worse as a potential customer ("The likelihood for plants built pre-1975 to use temporary workers is 8.2 percentage points smaller than newer plants.").

And, if you need to pinpoint what industries in your local market are growing or failing in order to concentrate your marketing efforts, take a look at our strategic planning tools specifically designed for the staffing sector.

Staffing, IT activity, & labor market roundup ...

Earlier this week, the Federal Reserve Board published it widely followed Beige Book, the Fed's anecdotal summary of economic and employment activity around the country. We've excerpted several passages relevant to the staffing and information technology sectors for your review and determine if reading the entire 17,000+ word report is worth your time. Among some information you may find of interest is hiring freezes have been lifted in the software and technology sector in the northeast and temporary help services are reporting increased activity in several sectors and geographic areas of the country. Our summation is here along with a link to the full report for your convenience.

Yes, there is such a thing as a free lunch (or at least a calendar to schedule it on) ...

One way to keep on top of developments in these changing economic times is to pay closer attention to economic developments and indicators. Although this is another pitch to visit our Economic Indicators webpage, we are giving away a calendar marked with the dates of key economic and employment data releases throughout 2010.

"The Economic Release Calendar has been a valuable resource to myself and my sales team since we started referencing it last year. ... I highly recommend the download!" – Mike Schaefer,
Senior Regional Sales Manager
CareerBuilder.com

For more information, visit the calendar's web page and fill out a simple form, or just shoot me an e-mail now, or pick up the phone and call me at 571.482.9799, and I'll get a copy to you.

February 2010 Employment Report

Quick recap -- not much changed since last month -- now, a little more ...

The unemployment rate was unchanged at 9.7 percent and jobs declined by 36,000 in February, which was roughly the same as the previous month (down 26,000 in January).

Although the severe winter storms during February could have impacted this employment situation report, in order to affect the counts an employee needed to be off for the entire pay period (about half in the survey are on a two-week pay period) and not be paid for time missed. As the Bureau of Labor Statistics points out, "Workers who received pay for any part of the reference pay period, even one hour, are counted in the February payroll employment figures." Therefore, although it is unlikely that the weather affected the number of people working receiving paychecks, it may have impacted new job growth. If so, then we may see a surge in March's job growth figures.

Jobs Report

The total number of jobs lost in February was only 36,000. The private Goods-producing sector responsible for all of that loss and then some since it lost 60,000 jobs while the private Service-providing sector, which has more than 85 percent of the economy's jobs, grew by 42,000.

The Construction sector, which was likely impacted by the severe weather, lost 64,000 jobs in February across all major sub-sectors; FYI, it lost even more jobs (77,000) in January.
Jobs in the Manufacturing sector eked out a gain of 1,000 jobs last month on top of a 20,000 job gain in January.

Looking for more? Check out our podcasts!

Podcasts of the current employment situation will be available by 4:00 p.m. ET today, March 5th. The video podcast, which you can start and stop to study the tables and graphs as well as replay individual sections, also includes additional data and information. Watch the video version here or just listen to the audio version here (no special hardware or software required).

Mining and Logging brought up 3,000 more jobs from the depths of what some are now calling the "Great Recession" with the mining part adding more than its fair share (up 3,500).

The private Service-providing sector continued to add jobs. Last month, it piled 42,000 jobs on top of the 20,000 it added in January.

The Retail Trade sector, which had about 14.4 million jobs, declined by the slightest of margins with a loss of only 400 jobs (yes, 400), so let's label that as flat and move on.
And not much movement over in the Wholesale Trade sector that contracted by 1,000 jobs out of a total of about 5.5 million.
Perhaps the weather did affect the Transportation and Warehousing sector that was down 12,000 jobs in February (from a total of around 4.1 million) with Truck Transportation sliding by 4,300 jobs out of a total of about 1.2 million.
Still no surprises that the Financial Activities sector continues to cut jobs with a loss of 10,000 jobs (from a total of around 7.6 million).
Professional and Business Services continued to be a big winner with a gain of 51,000. Sectors doing particularly well were Computer Systems Design and Related Services that expanded its hard drive by 8,000 jobs last month on top of 7,200 jobs in January. And has been the case in recent months, much of the improving performance in this sector can be attributed to the better environment in Employment Services, specifically Temporary Help Services that added 47,500 jobs in February (see more on this below).
The same story in Education and Health Services. Educational Services, which is highly seasonally, added 11,800 jobs in February while Health Care and Social Assistance added 20,400 new jobs in most major sub sectors. Although the growth in Home Health Care Services was weak at only 500 jobs (out of a total of about one million), Social Assistance, with about 2.6 million jobs, saw a leap in hiring with 8,400 new jobs.

Although the Leisure and Hospitality sector experienced a gain of 7,000 jobs in February, it was all because of the "leisure" part (the Arts, Entertainment, and Recreation sub-sector that added 9,400 jobs) and not the "hospitality" part (the Accommodation sub-sector lost 2,700 jobs; the Food Services and Drinking Places sub-sector added 400 jobs).
The number of Government jobs declined by 18,000. Local Government did the heavy lifting here as it lost 31,000 jobs, as State Government added 6,000 jobs and the Federal Government added 7,000 jobs.

Temporary Help Services Roundup

Temporary Help Services continued to recover in February and posted its first year-over-year gain since -- wait for it, drum roll please -- March 2007! Temporary Help Services jobs were up 47,500 to 2,008,700 in February, the first time it was over 2 million since December 2008.

In February 2010, Temporary Help Services was up 2.4 percent from January and up 3.9 percent from February 2009.

(if chart is unclear, click on it to open in a browser window)

And Temporary Help Service's market share also gained ground. In February, Temporary Help Services jobs were 1.55 percent of all jobs that is a level it hasn't experienced since late in 2008.

Household Survey

The static unemployment rate is certainly not good news and further enforcing the view that this will be a slow recovery and even leading some to surmise that the economic cycle may ultimately be a double-dip recession, a view we do not hold. The 9.7 percent unemployment rate is the result of a labor force that grew by 342,000 to around 153 million while the number of them employed grew by 308,000 showing that the employment economy was able to adsorb most of the growth in the labor force. The number of unemployed persons only grew by 34,000 while. Those not in the labor force declined by 176,000.

The employment-to-population ratio rose to 58.5, a gain of 0.1 percentage points from the previous month while the labor force participation rate likewise grew by 0.1 to 64.8 percent.

NEXT EMPLOYMENT REPORT -- FRIDAY, APRIL 2, 2010

The Signature Back Office Solution is a complete suite of support services -- payroll / financial services, insurance services, group benefit plans, operation / back office support, as well as marketing support -- for staffing companies.

You tell client companies to let you handle their staffing needs and all that entails such as recruiting, screening, possibly training, and paying workers so your clients can concentrate on providing their product or service. Well, isn't it time to take your own advice?

Influencer in HR-Recruiting

Click on the graphic below to read why Bruce Steinberg was included on this auspicious list.

How do my strategic planning products perform?

"I have enjoyed working with the Employment Tracking Tool system. Your employment tracking tool has given us great localized information on which industries to move forward with for my existing commercial business, which places Administrative/Clerical, Engineering and Accounting personnel." – Marsha Murray, CPC, Murray Resources (Houston, TX)

View more Testimonials

Our Employment Tracking Tool – is designed to assist you in identifying and evaluating new sectors and markets. It examines the overall employment trends by industry in the given market to help determine possibly under-serviced industries to target marketing efforts (as well as what industries to avoid). By doing this, it shows what industries are growing and therefore are in expansion mode making them eager for a wide variety of products and services and likely in need of additional staff.

Another tool is the Temporary Help Services Interactive Data Book. This tool will enable to benchmark your staffing operation at the local level to see exactly where you are positioned in the market and if your offices are performing up to local staffing sector trends.

Demonstrations of both strategic planning tools are available.

See further descriptions of these two strategic planning tools and links to the demos

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