Healing U.S. Labor Market Means Fewer Temporary Jobs

Temporary employment is contributing less to job creation in the U.S. after buoying the labor market in the first six months of the year, a sign employers are more confident about the durability of the economic expansion.

The monthly change in the number of people on payrolls of temporary-help service businesses averaged 2.2 percent of the monthly gains in total nonfarm payrolls during the July-October period, well below almost 19 percent in the first half of 2012, based on seasonally adjusted data from the Labor Department.

The steep decline came as the total number of jobs created each month rose to an average of 173,000 in July-October compared with 66,667 in the second quarter. The “significant improvement” shows that companies became comfortable adding full-time workers to their payrolls, said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. The result is a “double positive” for the economy: more jobs and more of them full-time.

“From a psychological standpoint, if you have a full-time job, your spending decisions are going to be more optimistic than if you have a temporary job,” Canally said. That’s largely because of the stability these positions typically provide, as well as noncompensation benefits, including health insurance and retirement contributions, that temps may not be offered, he said.

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