Who’s Using Temporary Help Workers in North Carolina?

<p>Temporary and other employment services jobs have been increasing in North Carolina since 2009, but we know very little about the industries in which these jobs are contracted. In this article, we explore a creative method for estimating the number of temp jobs in each industry in which temps are likely to be placed.</p>

Author: Steven Pennington

The LEAD Feed recently addressed the growth in temporary jobs in North Carolina since 2009. In recent years, there has been some speculation and analysis suggesting that manufacturing industries (“Industrial” sectors) are largely responsible for the recent rise in temporary jobs in the U.S. economy. However, federal data collection practices make it difficult to know much about the industries in which temporary workers and other employment services workers are actually being assigned to perform tasks. An analysis from LEAD, using industry staffing pattern data, suggests that several manufacturing industries may be among the most concentrated with Temporary Help workers.

The following table shows the economic subsectors estimated to have the highest concentration of Employment Services positions (includes Temporary Help) relative to the rest of their workforce.

Manufacturing subsectors dominate this list, holding eight of the top 10 spots (all except Warehousing/Storage and Performing Arts/Spectator Sports/Related Industries). In fact, looking further down the list, manufacturing subsectors make up 17 of the top 20 subsectors most concentrated with Employment Services positions. Motor Vehicle Body/Parts manufacturing and Aerospace Products manufacturing are driving the Transportation Equipment manufacturing subsector’s use of Employment Services workers in North Carolina. Use of Employment Services workers in the particularly large Food manufacturing subsector is being driven largely by our state’s sizable Animal Slaughtering and Processing industry group.

Industry-level data collection often relies upon a standardized industry classification structure called the North American Industry Classification System (NAICS). The NAICS system classifies individual industries into industry groups, which can be aggregated into larger sectors of related industries. As mentioned in our previous post about contract workers, the Employment Services industry group (NAICS 5613) is broken down into two main industries:

  1. Temporary Help Services – jobs belong to people who work in a wide variety of industries, but are employed by temp agencies.
  2. Professional Employment Organizations (PEOs)– jobs belong to people who work for companies that are contracted to fulfill particular functions within other businesses, like HR functions.

For federal statistical programs measuring job counts, individual employers are required to submit information on the number of positions recently employed within their establishment. In this way, these jobs can be counted as part of the employer’s particular industry.

However, the Employment Services industry group provides a unique situation. The workers who show up on the payrolls of Temporary Help agencies and PEOs are almost entirely performing tasks for other industries. This quirk in the classification of these jobs creates a situation in which workers are being paid by one industry, but are effectively working in another.

For instance, imagine two workers performing the same task on the production line of a textile manufacturing mill. One worker is a permanent employee, while the other was placed in the plant by a Temporary Help agency. While the two workers perform identical tasks, the permanent position is classified as a textile manufacturing job and the temp position as a Temporary Help Services industry job.

So while Employment Services jobs in North Carolina have been increasing in number since 2009, federal statistics do not identify the industries in which those jobs have been contracted.

With this in mind, we have developed a creative method to estimate where Employment Services jobs are actually being put to work. We use 2014 staffing pattern data by industry from the Occupational Employment Statistics (OES) program to see which industries employ many of the same occupations that are employed in the Employment Services industry group. For this exercise, we assume that Employment Services workers follow the same industry employment patterns as other workers in their occupation. In other words, if 50 percent of bakers work in Bakeries, then we assume that 50 percent of Employment Services bakers will also work in Bakeries. Based on 2014 staffing patterns, we assign all Employment Services jobs to other industries, adding the Employment Services jobs to each industry’s 2014 job levels.

This methodology assumes that each industry’s propensity to contract with Employment Services jobs is identical. For this reason, our analysis is likely to underestimate the portion of Employment Services positions working within industries particularly prone to using Temporary Help and PEOs. Conversely, it is likely to overestimate the presence of Employment Services jobs in industries that tend to stay away from, for whatever reason, these sorts of positions.

Nevertheless, this exercise provides a glimpse into the various industries of functional work for Temporary Help and PEO jobs, and could provide a starting point for investigating industries that may be likely to hire temps and contractors.

Special thanks to Sr. Economist Derek Ramirez, who helped greatly in developing the methodology and calculating estimates for this article.

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