Good News, Bad News
April 30, 2009 – 8:13 pm
Leading Indicators –
I recall hearing a pundit explain that a rally in the stock market typically leads a rally in the general economy by about six months, and an up-tic in the general economy leads an increase in hiring by another six months. So, if you are unemployed, a rise in the stock market is good news. The bad news is that you can expect to be out of work for another year or so.
Temp Agencies Hit Hard by this Recession
The Contingent Workforce Strategies Daily News, published daily by Staffing Industry Analysts, http://www.staffingindustry.com/, reports regularly on staffing industry trends. Recent issues contain some very grim statistics. Below are some snippets. Follow the link to staffingindustry.com for the full stories:
From April 30, 2009:
“Spherion Corp. (NYSE: SFN) reported first-quarter revenue fell 26.1% year-over-year to $425.9 million.”
“First-quarter revenue fell 22.2% year-over-year at CDI Corp. (NYSE: CDI) to $228.7 million.”
“Revenue fell 11.3% year-over-year in the first quarter at Comsys IT Partners Inc. (NASD: CITP) to $162.7 million.”
“General Employment Enterprises Inc. (AMEX: JOB) reported revenue fell 36.4% year-over-year to $2.5 million in its fiscal second quarter ended March 31.”
“The Monster Worldwide Inc. (NYSE: MWW) employment index for Canada fell 19 points to a reading of 99 in the first quarter. It’s down 50 points year-over-year.”
From April 28:
“First-quarter revenue fell 24.9% at Kelly Services Inc. (NASD: KELYA) to $1.04 billion from $1.39 billion in the year-ago quarter.” Kelly is the nation’s oldest staffing firm.
From April 21:
“Manpower Inc.’s (NYSE: MAN) first-quarter revenue fell 32.3% year-over-year amid a dismal global economy, and the company reported a $6.9 million reorganization charge for severances, office closures and consolidations.” Manpower is perhaps the largest non-governmental employer in the USA.
This is the bad news: Companies are not hiring or, perhaps, they have simply cut way back on using expensive staffing firms to fill their open positions for regular employees, temps and contract workers.
So, what is the good news? The Bureau of Labor Statistics today issued the latest Employment Cost Index news release (http://www.bls.gov/news.release/pdf/eci.pdf). Here is a summary statement from the BLS:
“Total compensation costs for civilian workers increased 0.3 percent, seasonally adjusted, from December 2008 to March 2009. For the year ended March 2009, compensation costs rose 2.1 percent. The 12-month increase for wages and salaries was 2.2 percent and the benefits increase was 2.0 percent.”
Apparently, if you are still lucky enough to have a job, your employer is paying more to keep you on board. I cannot say how much of that increased cost actually trickles down to your gross wage, but at least it appears that employers are not yet cutting labor costs (and wages) — at least, that is, for those of us who are still employed!
More Good News
I am pleased to report that, unlike the trend in traditional staffing companies, Solo W-2, Inc. has been relatively unaffected by the current jobs crisis. In fact, the number of consultants-at-large employed by Solo W-2, Inc. is actually increasing, partly due, I think, to the tendency of companies to lay off regular employees and then bring them back as consultants on a project-to-project basis. In this regard, I am happy to say, Solo W-2, Inc. seems uniquely well positioned, not only to survive the current economic downturn but to thrive because of it. Read more on this subject in my earlier blog post, Forward to the Past — The Fall of Traditional Employment and the Rise of Contingent Work.
James R. Ziegler, Ph.D.
