Temp firms say business is good, hiring picking up again

Temporary hiring is rising again in the Indianapolis area, auguring a better environment for job-seekers, according to local staffing firms and government data.

But the pace of activity has yet to return even to 2008 levels, and staffing executives don’t expect it to for some time.

Employment services in the Indianapolis area reported a work force of nearly 35,000 in September, according to preliminary figures from the U.S. Bureau of Labor Statistics. That’s 1,100 more workers than the same month a year ago and 4,000 more than in 2009, just after the nation’s recession officially ended.

But employment agencies would have to place another 2,500 to return to the levels of 2008 and an extra 6,000 to regain the peak seen in 2007.

Economists look at temporary hiring as a leading indicator in the employment market, since recession-weary companies often hire workers on a temporary basis and  later convert them to full-time workers.

“It’s a try-before-you-buy mentality,” said Dave Kehlor, who oversees five Express Employment Professionals offices in the Indianapolis area. “Companies, they need people, but they’re not sure about the future. … The last thing they want to do is bring on a bunch of full-time people.”

Kehlor said Express Employment’s business is booming, with nearly 500 openings its clients want filled. Oklahoma City-based Express Employment recruits individuals and then, in most cases, acts as their employer while the person works on a contract basis for the client company. Most temporary workers are not provided benefits, such as health insurance.

“Unless there’s a shock to the economy, 2012 is going to be a good year,” Kehlor said. “We’re the recovery. When you see us jamming, then you know the recovery’s underway.”

Other employment agencies echo his sentiments. Greenwood-based Apple Tree Staffing announced Tuesday that it is on pace to place 100 workers by spring and another 100 or more by the end of next year.

Apple Tree said it is seeing strong demand for manufacturing and other types of industrial work, as well as for software engineers and sales professionals.

Indianapolis-based Pinnacle Partners, which places information technology and accounting workers, has seen those sectors boom in the last 12 and six months, respectively.

“It’s good and getting better,” said Dave Reese, director of staffing in Pinnacle’s accounting division, which has grown its own staff from seven to 12 in the past six months. “I’m not sure that it’s anywhere near the pre-recession times, and I don’t know whether we’ll see those times again, honestly. Business overall has been very good for us and continues to get better.”

Earlier this year, temp hiring was running even further ahead of of its 2010 pace than it is currently, according to data from the Bureau of Labor Statistics. However, in June and July, temp hiring actually dipped below the levels seen in those months last year. But, in August and September it once again exceeded 2010 levels.

Even as the job market recovers, employment firms expect their clients to use temps for a higher percentage of their work forces than they did before the recession. Part of that is due to the ongoing uncertainty about the strength of the economic recovery and about the extra costs of hiring new workers created by the 2010 health reform law.

But partly it’s also a realization by employers that they can operate effectively even without hiring people full-time.

“You hear this all the time, ‘We’re real busy, but we’re just not sure this is going to last,’” said Kehlor at Express Employment. “So they say, ‘Send me 30 temporary people,’ and then they go, ‘Hey, this works pretty well. If they’re good, then I can keep them. And if they’re bad, then I can just tell the staffing firm to get rid of them and get me some better ones.’ It’s really a flex staffing model.”

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