Drop in U.S. temp workers signals tough job market for new grads

By Melissa Fares and Gina Cherelus

NEW YORK (Reuters) – Madison Sawyer, 20, was determined to quit the temporary job she took after graduating with honors from Santa Fe College in December and find a permanent position, but so far she is stuck making $10 an hour.

Even temporary jobs, like the one held by Sawyer through staffing company Kelly Services Inc, may be harder to come by, creating a tough environment for new college graduates. The May jobs report released on Friday, which showed the U.S. economy created the fewest jobs in more than 5 years, also showed a continuing decline in temporary employment, a trend that typically is a leading indicator for declines in overall employment.

Since the Labor Department began tracking temporary help data in 1990, changes in the trajectory of temporary employment have preceded those of overall employment by more than half a year on average, Bureau of Labor Statistics data showed.

Ahead of the Great Recession, for example, temporary staffing jobs began declining on a consistent basis in the spring of 2007, roughly a year before employment overall began to plummet. Coming out of the recession, temporary staffing levels started trending higher by September 2009, six months ahead of the comparable trend in wider employment.

In the first five months of the year, U.S. employers shed about 64,000 temporary jobs, the biggest decline since August 2009 when the global financial crisis was still hampering economic activity. The number of temporary jobs fell by 21,000 in May.

“Last quarter, we saw the slowdown at the commercial staffing companies,” said Jeff Silber, an analyst at BMO Capital Markets. “That’s usually the first sector that sees this kind of slow down.”

“I don’t want to pull the fire alarm here, but those numbers indicate that we’re not moving in the right direction,” he said.

Employers turn to temporary workers when they see growth in their demand outlook but are not sure if that growth is permanent. That wariness could dampen prospects for the 1.8 million college graduates headed into the labor market this summer.

Friday’s data confirmed softening demand for part-time workers flagged by at least one staffing industry chief executive in recent months. In lowering his company’s outlook in April, TrueBlue Inc Chief Executive Steven Cooper said staffing demand was slowing among the company’s largest customers.

“Manufacturing and related industries remain sluggish,” he said in a statement reporting TrueBlue’s first-quarter earnings.

And while full-time employers are expected to hire 5.2 percent more new graduates from the class of 2016 compared to last year, that figure is well below the 11 percent increase originally projected in November, according to the National Association of Colleges and Employers.

Laura Botero, 25, recently returned from Brazil, where she was a Fulbright scholar. She had a six-month temporary job lined up as a research associate at Harvard University when she returned, but her contract there ends in one week.

“Finding a job has been harder than I thought. While companies are hiring and positions are open, getting an offer has been a challenge,” said Botero. “Getting rejected over and over makes you think about what you are doing wrong. All I feel is panic.”

Still there are some bright spots in the market. According to Challenger, Gray & Christmas, a firm that tracks layoffs, jobs in technology and health care should be plentiful.

Hannah Jin, who graduates from UCLA next week with a degree in computer science and software engineering, is interning at Facebook as a software engineer. Facebook offered her a full-time job, but she turned the offer down to work at a startup.

“There are not enough software engineers and we are more valued when we are younger,” said Jin. “Those two makes the job market work in our favor.”

(Writing by Anna Driver; Editing by Meredith Mazzilli)