Bloomberg BusinessWeek (07/18/12) Anna Louise Jackson; Steve Matthews; Anthony Feld

Demand for temporary employees is on the rise as companies seek more flexible staffing arrangements. This has helped create a change within the labor force, as a “not-easily-forgotten recession” has made many executives cautious about hiring. A “flex supercycle” is driving business for Kforce Inc., because a “historically disproportionate” share of new jobs is coming from the temporary staffing industry, says Michael Blackman, chief corporate development officer for the firm.

He says that in the past, hiring of temporary employees foreshadowed improvement in the broader job market, but this time may be different as companies utilize temporary employees for a longer time. The increase in demand may boost staffing firms’ financial results.

The health care law and its associated costs are also creating anxiety among companies, prompting many customers of Kelly Services to use temporary employees instead of boosting their permanent headcount, says president and chief executive officer Carl Camden.

Jeffrey Joerres, chief executive officer of ManpowerGroup, says executives are delaying hiring so they don’t get “caught with too many people.” Clients say that is “painful, it’s expensive, it hurts morale.”