Decline in employment services jobs another sign of recession
by Sara Sargent Apr 09, 2008
At Ultimate Staffing Services in Schaumburg branch manager Penny Phillips has cast a wider net for potential clients as a way to offset the decrease in demand for her pool of temporary employees.
Since the beginning of 2008, Phillips has witnessed a gradual decline in the need for her company's employment services.
"We've started targeting other types of industries and businesses who utilize our services, particularly ones that are fairly recession-proof," Phillips said, including health care and customer service.
Phillips' assertions that she's seen "a little bit of a decline" and that "things are sort of slow" are echoed by the staffing industry nationwide. According to Keith Hall, commissioner of the U.S. Bureau of Labor Statistics, the employment services sector—which includes temporary help services—shed 42,000 jobs in March.
"To put these recent changes into context, I would note that labor market conditions started to weaken more than a year ago," Hall told the Joint Economic Committee of Congress last week. "Over the past 12 months, employment services has lost 158,000 jobs, three-fourths of which were in temporary help."
The statistics for the employment service industry comprise all employees receiving paychecks from employment services agencies, which include people working at the agencies as well as people for whom the agencies found employment. According preliminary data for March, there were 3.5 million people in the employment services industry, down 4 percent from 3.6 million in March 2007.
Out in the marketplace, that 4 percent decline has hit hard.
Linda Reyes, owner of The Hospitality Staffing Network in Chicago, said that during the past 36 months, her usual clients—restaurants, catering businesses, casinos—went directly to culinary schools to find prospective employees, instead of enlisting her services. "I get resumes all day," she said. "We're getting all the workers and we're not getting the work."
Reyes' experience parallels that of Derek Siegel, sales and staffing manager at the Chicago branch of Food Team Inc., a national full-service staffing company.
"There definitely was a decline in demand in January and February and most of March," Siegel remarked. "Food services are pretty seasonal, but it was unusually slow."In the eyes of some economists and market specialists, declining jobs in the employment-services sector means that Penny Phillips is right: It's time to identify those recession-proof industries because a recession is imminent if not already under way.
Emy Sok, an economist with the Division of Labor Force Statistics at BLS, indicated that a downturn at staffing agencies forecasts trouble.
"People view employment at staffing agencies as an indicator. If times are starting to turn bad, these are somewhat expendable employees…That's what you see with the last recession,” Sok said.
That last recession—which lasted from March 2001 to November 2001—saw a drastic reduction in the number of employment services employees. During the eight-month recession period, the number of employment-services employees declined 11 percent to 3.2 million in November from 3.6 million in March.
Furthermore, in the 12 months leading up to the start of the recession in March 2001, the number of employees in that sector dropped 5 percent.
With the most recent 2008 employment services data indicating a 4 percent drop in employment, people are beginning to wonder: Are we in a recession or aren't we?"We may very well be in one, but the National Bureau of Economic Research hasn't put a date on it yet," said Donna Zerwitz, director of public information at NBER, the organization responsible for officially declaring a recession. "By the time we date it—which means there's enough data received to be valid—we could be out of the recession because it takes us that long to be precise."
But whether or not NBER officially declares a recession in the near future, staffing agency employers are calling it like they see it.
"It is a reflection of the coming recession," Reyes opined about her employment problems at The Hospitality Staffing Network. "Different competitors are going through the same thing. We're all trying to catch the same customers and nobody's biting our bait."
If employment service industry professionals are unable to tap into recession-proof industries, their only alternative is to prepare for the eventual rebound.
Edie Clark, spokeswoman for the National Association of Professional Employer Organizations, suggests that focusing now on ways to improve a business will help when the economy improves.
"We think that the small business that has focused on human resources practices during this downturn will benefit when the market begins to turn up," she remarked. "The small businesses that are really good are focused on HR and need to be because they need to be positioned for the upswing in the economy and the competiveness that brings."
But for now, with the economy still experiencing a downswing, staffing agencies wait.
"It's been pretty bad," Reyes said. "It's getting discouraging. How are we going to stay in business?"
At Ultimate Staffing Services in Schaumburg branch manager Penny Phillips has cast a wider net for potential clients as a way to offset the decrease in demand for her pool of temporary employees.
Since the beginning of 2008, Phillips has witnessed a gradual decline in the need for her company's employment services.
"We've started targeting other types of industries and businesses who utilize our services, particularly ones that are fairly recession-proof," Phillips said, including health care and customer service.
Phillips' assertions that she's seen "a little bit of a decline" and that "things are sort of slow" are echoed by the staffing industry nationwide. According to Keith Hall, commissioner of the U.S. Bureau of Labor Statistics, the employment services sector—which includes temporary help services—shed 42,000 jobs in March.
"To put these recent changes into context, I would note that labor market conditions started to weaken more than a year ago," Hall told the Joint Economic Committee of Congress last week. "Over the past 12 months, employment services has lost 158,000 jobs, three-fourths of which were in temporary help."
The statistics for the employment service industry comprise all employees receiving paychecks from employment services agencies, which include people working at the agencies as well as people for whom the agencies found employment. According preliminary data for March, there were 3.5 million people in the employment services industry, down 4 percent from 3.6 million in March 2007.
Out in the marketplace, that 4 percent decline has hit hard.
Linda Reyes, owner of The Hospitality Staffing Network in Chicago, said that during the past 36 months, her usual clients—restaurants, catering businesses, casinos—went directly to culinary schools to find prospective employees, instead of enlisting her services. "I get resumes all day," she said. "We're getting all the workers and we're not getting the work."
Reyes' experience parallels that of Derek Siegel, sales and staffing manager at the Chicago branch of Food Team Inc., a national full-service staffing company.
"There definitely was a decline in demand in January and February and most of March," Siegel remarked. "Food services are pretty seasonal, but it was unusually slow."In the eyes of some economists and market specialists, declining jobs in the employment-services sector means that Penny Phillips is right: It's time to identify those recession-proof industries because a recession is imminent if not already under way.
Emy Sok, an economist with the Division of Labor Force Statistics at BLS, indicated that a downturn at staffing agencies forecasts trouble.
"People view employment at staffing agencies as an indicator. If times are starting to turn bad, these are somewhat expendable employees…That's what you see with the last recession,” Sok said.
That last recession—which lasted from March 2001 to November 2001—saw a drastic reduction in the number of employment services employees. During the eight-month recession period, the number of employment-services employees declined 11 percent to 3.2 million in November from 3.6 million in March.
Furthermore, in the 12 months leading up to the start of the recession in March 2001, the number of employees in that sector dropped 5 percent.
With the most recent 2008 employment services data indicating a 4 percent drop in employment, people are beginning to wonder: Are we in a recession or aren't we?"We may very well be in one, but the National Bureau of Economic Research hasn't put a date on it yet," said Donna Zerwitz, director of public information at NBER, the organization responsible for officially declaring a recession. "By the time we date it—which means there's enough data received to be valid—we could be out of the recession because it takes us that long to be precise."
But whether or not NBER officially declares a recession in the near future, staffing agency employers are calling it like they see it.
"It is a reflection of the coming recession," Reyes opined about her employment problems at The Hospitality Staffing Network. "Different competitors are going through the same thing. We're all trying to catch the same customers and nobody's biting our bait."
If employment service industry professionals are unable to tap into recession-proof industries, their only alternative is to prepare for the eventual rebound.
Edie Clark, spokeswoman for the National Association of Professional Employer Organizations, suggests that focusing now on ways to improve a business will help when the economy improves.
"We think that the small business that has focused on human resources practices during this downturn will benefit when the market begins to turn up," she remarked. "The small businesses that are really good are focused on HR and need to be because they need to be positioned for the upswing in the economy and the competiveness that brings."
But for now, with the economy still experiencing a downswing, staffing agencies wait.
"It's been pretty bad," Reyes said. "It's getting discouraging. How are we going to stay in business?"
Labels: business closings, employment agencies
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