Labor Forecast Predicts 12.3% Increase in Demand for Temporary Workers for 2021 Fourth Quarter, Signaling Further Signs of Recovery

  By G. Palmer & Associates  |    Thursday October 14, 2021

Category: News Releases



-- Industry Consulting Firm G. Palmer & Associates’ Quarterly Forecast

Assists in Previewing Near-Term Hiring Patterns --

 

Demand for temporary workers in the United States is expected to increase 14.4% on a seasonally adjusted basis for the 2021 fourth quarter, when compared with the same period in 2020, according to the Palmer Forecast™, released today. The increase in demand principally reflects economic recovery from pandemic-related business lockdowns and interruptions and the US economy returning to a more normal pace.

The Palmer Forecast™ indicated a 19.0% increase in temporary help for the 2021 third quarter. Actual results as reported by the Bureau of Labor Statistics (BLS) came in less than anticipated, with an increase of 14.4%. The difference was due primarily to higher than anticipated unemployment rates. Demand for labor continues to be strong, with more than 10.4 million open jobs, as reported by the BLS on October 12, 2021. The Covid-19 Delta variant remains to be a contributing factor in limiting labor recovery, as well as the federal government’s enhanced weekly unemployment and other related benefits enacted early in 2021, which ended in early September.

 

                 Source: G. Palmer & Associates; Bureau of Labor Statistics (BLS)  

 

            Source: Bureau of Labor Statistics (BLS)

 

The BLS reported temp help jobs for the third quarter 2021 increased 14.4% over the same quarter last year, but declined by 5,200 jobs in September versus August. There has been a solid rebound in temp help jobs thus far in 2021, with a total of 62,000 added year-to-date and 6,800 average per month. According to the BLS, 332,000 temp jobs were lost in 2020, the second straight year of declines, or an average job loss of 27,750 per month. The BLS also reported that 42,000 temp help jobs were lost in 2019, an average of 3,500 fewer jobs per month. In 2018, more than 99,000 temp help jobs were added versus 2017, an average of 8,200 per month. Additionally, 96,000 temp jobs were added in 2017 over 2016, an average of 8,000 per month, compared with 32,000 temp jobs added in 2016, or an average of 2,600 per month. In 2015, approximately 97,000 temporary jobs were added, compared with 162,000 new temp jobs in 2014.

The Labor Department reported nonfarm payroll employment increased by 194,000 jobs in September 2021, significantly less than consensus estimate increases of 488,000 jobs. For the third quarter 2021, there were 550,000 nonfarm jobs added on an average monthly basis. For 2020, nonfarm employment was down 6.17%, or 9,372,000 jobs, compared with 2019. To put this in perspective, there were 176,000 nonfarm jobs added on average per month in 2019 and 2.1 million total jobs added for the year, which was less than the 220,000 added per month in 2018, and 2.6 million for that year. For 2017, a total of 2.1 million new jobs were created, versus 2.2 million new jobs in 2016. 

 

The key categories of jobs created/lost in September 2021 are as follows:

  • Private Sector: +265,000
  • Total Nonfarm Jobs: +194,000
  • Leisure and Hospitality: +74,000
  • Professional and Business Services: +60,000
  • Retail: +56,000
  • Manufacturing: +26,000
  • Construction: +22,000
  • Temp Help: -5,200
  • Education and Health Services: -18,000
  • Government Sector: -123,000

 

                                   Source: Bureau of Labor Statistics (BLS)

 

In September 2021, the labor participation rate was unchanged at 61.6%, and it has been in a narrow range of 61.4% and 61.7% since June of 2020. The U3, commonly referred to as the unemployment rate, decreased slightly to 4.8% in September, from 5.2% in August.

 

As reported by the BLS, the rate of unemployment for workers with college degrees decreased 25 bps in September versus August, to 2.5%, and the unemployment rate for workers with less than a high school education increased 10 bps to 7.9%. The U6 unemployment rate, which tracks those who are unemployed, as well as those who are underemployed and are working part-time for economic reasons, was down 30 bps to 8.5% in September versus August. The U6 rate is considered the rate that most broadly depicts those most affected by the last economic downturn and measures the rate of discouraged workers.

 

                                  Source: Bureau of Labor Statistics (BLS)

 

“One of the most revealing indicators to watch is the temp help penetration rate, because it measures temp help as a percentage of total employment. In September 2021, the temp penetration rate was unchanged from August, at 1.83% of the total labor market. The penetration rate cycle peaked at 2.05% in December 2019 and a low of 1.3% in June 2009,” said Greg Palmer, founder and managing director of G. Palmer & Associates, an Orange County, California-based human capital advisory firm that specializes in workforce solutions.

 

“Even as the economy recovers, the largest issue remains the number of workers re-entering the workforce, as they are able to be more selective in seeking new opportunities with high demand for employees,” Palmer added. “Staffing companies are reporting extreme difficulty in filling the many current open jobs they have. The American Staffing Association Staffing Index is also rebounding from an index low of 59.9 on May 10, 2020, to a strong close of 99 on September 19, 2021, a 26.1% increase from the same week last year and have exceeded 2019 levels. This all adds up to further signs of recovery in temp help as we move toward the close of 2021.”

 

About the Palmer Forecast™

The Palmer Forecast™ is based, in part, on BLS and other key indicators. The model was initially developed by the A. Gary Anderson Center for Economic Research at Chapman University and serves as an indicator of economic activity. Companies that employ temporary staff use the forecast as a guide to navigate through fluctuating economic conditions in managing their workforce to meet business demands.

 

About G. Palmer & Associates

G. Palmer & Associates, founded in 2006, provides advisory services in the human capital sector. Founder Greg Palmer has served on the board of the American Staffing Association and was president and chief executive officer of RemedyTemp, Inc., one of the nation’s largest temporary staffing companies, prior to its sale in June 2006. For more information, visit www.GPalmerandAssociates.com.

 

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