More Temp Jobs as Economy Rebounds

CHICAGO (TheStreet) -- Already faced with shrinking benefits, a lack of job stability and the demise of pension plans, full-time employees may be on their way to becoming an endangered species.

A theorized corporate shift from a permanent workforce to a network of project-based freelancers has created a buzz among economists and financial analysts. Earlier this month, BusinessWeek weighed in on the matter with a cover story entitled "The Disposable Workforce."

A sea change in how companies hire employees may not seem so imminent based on recent employment statistics. According to the U.S. Census Bureau, third-quarter revenue for the employment services industry was down 7% from the same time a year earlier. Staffing Industry Analysts (SIA), a provider of information about the contingent workforce, projects that total staffing industry revenue declined 26% from 2009 to 2008.

If past history is any indication, that downward trend could reverse course as scaled-back businesses shake off the economic slump.

SIA data shows that employer spending on contingent labor spikes following recessions. In 2000, companies spent $81.5 billion on temporary labor. That number decreased between 2001 and 2003 as the economy declined to as low as $73.3 billion. By 2006, spending not only recovered, it increased to $95 billion.

Theories about such a redefinition of the workplace are nothing new. Back in 1994, a study by the Sloan School of Management at the Massachusetts Institute of Technology predicted that companies would downsize their traditional workforces and supplement them with larger networks of contingent workers.

With temporary employees, companies would be able to avoid paying for costly benefits, such as health insurance. These skilled workers would come together to form temporary organizations or "virtual companies" that would exist only until a given project was completed.

MIT predicted 2015 as a date for such a shift, but some analysts believe that transition has already begun.

Research by Littler Mendelson, a Chicago-based employment and labor law firm, estimates that contingent workers will constitute 50% of the workers hired by companies after the economy recovers. Temporary employees could eventually make up 25% to 35% of the total workforce.

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