Promising temp hiring in Minn. could forecast better jobs market

The seesawing stock market, anemic economic growth and worries about European sovereign debt have stirred fears of a second recession over the past few weeks.

But in Minnesota, the job market is generally holding up, and temp hiring — an important bellwether — reflects a bright spot in the state's economy.

Temp jobs also may provide a bridge to permanent employment for workers like Nick Hannula of Minneapolis. Hannula, 23, thought a graduate degree would give him an advantage looking for work. But so far, his master's in public policy from the University of Minnesota hasn't landed him a permanent job.

So Hannula accepted a temporary job reviewing mortgage applications for a major lender. He only recently considered temping.

"I didn't see it as a reliable source of income or a large enough source, because of my student loans," Hannula said. "But having finished grad school, I'm having to take all comers at this point. It's difficult to find work and whatever I come across I've got to take."

Employers who have more work than they can handle but are nervous about hiring permanent employees can turn to temp workers to expand their capacity to provide goods and services without making expensive long-term commitments in a dicey economy. If business slows, employers can easily ditch those temp workers.

"That is part of the reason it's such a good leading indicator," state labor market analyst Steve Hine said of temp hiring. "It responds very significantly to changes in the economy."

Hine said temp jobs account for about three-quarters of a sector called employment services. In the last decade, changes in that sector have reliably signaled recessions and recoveries with a lead time of eight to 18 months. He notes the employment services sector is still showing healthy year-over-year growth in Minnesota.

"That would suggest we're at least 10 months away from a downturn in the economy," Hine said.

But that conclusion comes with caveats. The annual growth rate of the employment services sector has slackened since earlier this year. In January, it was up about 20 percent from the year before. In July, that growth rate dropped to a still-healthy 11 percent.

But Hine said it's common to see a pattern in recoveries where temp hiring spikes and then levels off. Meanwhile, he said, employment in other parts of the state's economy has picked up.

The private sector added an average of 10,000 jobs in each of the past three months. The signs could mean temp jobs are simply becoming permanent positions.

"We have seen an increase in the number of people converted over to permanent," said Jeff Gerkin, general manager of metro markets for Manpower, a national staffing firm with offices in Minnesota.

While temporary workers are shifting to permanent work, it's taking longer to do so than in past recoveries, he said.

That said, Gerkin said demand for temp workers in the Twin Cities is still robust. He attributes that to growth in the manufacturing, customer service, call centers, and loan processing industries.

Manpower surveyed Twin Cities employers about their plans to hire temporary and permanent workers in the third quarter of the year. That poll showed a bump in hiring plans over 2010.

The net employment outlook for the Twin Cities was 17 percent for the third quarter, compared to a net outlook of 14 percent in the same period last year.

Despite weak gross domestic product numbers and brittle consumer confidence, employers have not reduced their requests for staffing help, said Bob Bretwisch, Manpower's Twin Cities regional director.

"We haven't seen that, luckily. As a matter of fact, in the last couple of weeks, we've been getting prepared for a couple large ramp-ups," Bretwisch said. "And their outlook has stayed the same, even though the news hasn't been the most positive."

That consistent demand could be a hopeful sign that Nick Hannula will keep finding temp work. But it doesn't allay his fears about longer-term prospects. For Hannula, the proof of real vitality and resilience in the economy will only come when permanent jobs are readily available for an entry-level worker like him.

"Once you start to see those jobs pop up that don't say three to five years of experience and say instead things like 'paid training' and 'any major may apply,' that's when we'll know when that's picked up," Hannula said.

Until then, he's just glad to be working 40 hours a week.

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