Using Temporary Workers to Forecast the PA Economy

Sean Brandon, InternBy Sean Brandon, Intern

The employment services industry provides a variety of human resources services, including most notably supplying temporary workers to other businesses. Because of the unique characteristics of this industry, economists often use its job market trends as an economic forecasting tool. The reason is simple: When the economy starts to slide, the first workers to go are usually the temporary employees, but when the economy begins to pick up, businesses will hire temporary workers first.

Historically, the employment services industry has proved a reliable indicator of broader job market trends. Let’s consider the Great Recession as an example. In the past five years, the height of employment (a 12-month moving average of not-seasonally-adjusted employment data) in the employment services industry in Pennsylvania was in January 2008, just after the recession began. The employment services industry then shed 23,517 jobs before it reached its low point in December 2009.

On the other hand, total nonfarm employment in Pennsylvania did not reach its peak until September 2008, eight months after employment services peaked. Furthermore, total nonfarm employment did not begin to recover until April 2010, after employment services had seen steady growth for four months.

In the case of both the recession and the recovery, the employment pattern in the employment services industry foreshadowed what was going to happen to Pennsylvania’s job market as a whole.

So what are the statistics in Pennsylvania’s employment services industry suggesting now?

From September 2009 to September 2010, employment in the employment services industry grew by 9%. In the subsequent year, employment only grew by 7%. The trend has been job growth, but employment is increasing at a slower rate.

As of October, Pennsylvania’s job deficit, the number of jobs lost during the recession plus the number of jobs needed in order to keep pace with the state’s population growth, was over 240,000. In this hole, Pennsylvania needs to add 8,000 jobs each month in order to get back to full employment in three years.

Recently, the Pennsylvania Department of Labor and Industry reported that the number of jobs in the commonwealth grew by 13,800 in October. Relatively, October was a very good month for Pennsylvania. Previous months have seen weak private-sector job growth and continued public-sector job losses, resulting in net job losses. With the recent employment stagnation of the employment services industry, it is likely that October is an exception and that the coming months will yield more moderate job growth.

Sean Brandon served as an intern with the Keystone Research Center and Pennsylvania Budget and Policy Center in 2010 and 2011. Read Sean's bio.

Comments

0 comments posted

Post new comment

Comment Policy:

Thank you for joining the conversation. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the Keystone Research Center or Pennsylvania Budget and Policy Center and do not constitute official endorsement by either organization. Please note that comments will be approved during the Keystone Research Center's business hours.

If you have questions, please contact [email protected]

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <p> <img>
  • Lines and paragraphs break automatically.
Refresh Type the characters you see in this picture. Type the characters you see in the picture; if you can't read them, submit the form and a new image will be generated. Not case sensitive.  Switch to audio verification.