Reuters (03/09/12) Nick Zieminski

Companies that provide temporary labor are seeing more contract workers hired as permanent employees, in a sign job gains may be broadening as U.S. employers gain confidence in the recovery, staffing executives report. The staffing sector added 45,000 jobs in February, while temporary job gains in January and December were stronger than initially estimated, data from the U.S. Department of Labor showed. The percentage of temporary workers in the U.S. labor force, at 1.86%, marked the eighth straight monthly increase. Employment analysts expect that metric to pass its April 2000 peak above 2.0% as more employers embrace temporary labor in an uncertain economic climate.

Companies are using temporary employees to try out candidates for permanent jobs, says Jeff Joerres, chief executive of ManpowerGroup. “Our temporary to permanent conversions are very high,” Joerres says. Taking on temporary workers “also is a way of being agile and cautious, so if something happens in the Middle East and demand goes down precipitously, (they) have a way to adjust without affecting the permanent work force.” Small and mid-size companies are stepping up use of temporary workers as easier access to credit allows them to invest, notes Randstad employment analyst Joanie Ruge. “It is robust,” Ruge says. “Companies are going to look for more flexibility in their work force. They will expand and contract as their demand fluctuates.”

Joel Capperella, vice president of Yoh, points out that wages are still flat. A Yoh index of wages for skilled temporary workers found only a 1% gain over a year ago. “Wages aren’t really moving a whole lot,” Capperella says. “Clients of our services are in the driver’s seat. Things are good but you have to temper it.”