This article is republished with permission of Daraius Irani and the newsletter of Regional Economic Studies Institute of Towson University.
By Daraius Irani
Job numbers released on Friday (Aug. 21) gave Marylanders a reason to celebrate this past July’s activity. The revision of the June job numbers moved figures from an initial loss of 6,200 jobs between May and June to a loss of 3,400 jobs. However, July preliminary job estimates reported a 9,200 job increase from June to July.
Maryland’s economy has grown significantly since July 2014, adding an estimated 53,700 jobs to payrolls.
While several sectors are growing and expanding, five subsectors have stood out among the rest: Health Care and Social Assistance; Administrative and Support and Waste Management and Remediation Services; Professional, Scientific, and Technical Services; Accommodation and Food Services; and Retail.
Jobs of independence
Last July, Forbes magazine discussed the explosion of the “Freelance Economy” and businesses’ new mechanism for labor. Rather than seeking to hire full-time staff with benefits, firms are finding ways to cut costs and remain competitive through short-term labor contracts.
Another factor impacting the rise of temporary workers may stem from the rising demand for services beginning to exceed the supply of labor. Short-term employment can help meet this demand.
Since 2010 the Administrative and Support and Waste Management and Remediation Services subsector grew by approximately 4,900 jobs annually. Part of this rise may be a result of the lagged recessionary impacts throughout some state economies.
Last June, RESI featured a blog post on forces that were disturbing the economic recovery—praising job growth but questioning the types of jobs and long-term stability.
Short spark, long wait
But what if the short spark in the Administrative and Support and Waste Management and Remediation Services subsector is a result of the wait for adequate labor supply?
Recently, Senior Economist Susan Steward wrote a blog post regarding the shortfall in Maryland-based labor supply for registered nursing demand. She found the demand for registered nurses in Maryland growing at an average of 2 percent each year for the next three years. However, Maryland graduates filled less than 70 percent of this demand on average each year.
Meanwhile, subsectors such as Health Care and Social Assistance have continued to grow year-over-year by 11,500 jobs since last July. On average, since 2010 this subsector has reported annual growth of 6,900 jobs.
Is it possible that the other 30 percent is being met mostly by temporary staff? Yes, and these temporary workers might be just a shadow labor supply waiting to become full-time employees.
Most staffing agencies will register under the North American Industry Classification code for Temporary Employment Services, which happens to reside under the subsector Administrative and Support and Waste Management and Remediation Services.
Therefore, hospital staff obtained through staffing agencies will not be captured under the Health Care and Social Assistance subsector. The more experience a temporary worker gains, the more marketable and interested in long-term full-time employment that worker will likely become.
One of the key aspects, as reported a year ago by the Wall Street Journal, is that recruiters are looking for at least two years of experience for entry-level positions. Temporary staffing positions offer many new graduates a way to gain a professional reputation and the required experience. If that’s the case, the significant growth in the Professional, Scientific, and Technical Services and Health Care and Social Assistance subsectors may have begun more than two years ago in the Administrative and Support and Waste Management and Remediation Services subsector.
Given that it sometimes takes a few years for temporary workers to gain experience and begin to move on to fulltime or part-time employment within their respective industries, the “real” job impacts may be as far as two years away. While temporary workers continue to gain experience, Maryland will sit back and wait for the big bang. It may be just as important to watch the spark as it follows the fuse, as subsectors grow and temporary workers become permanent employees. Time will tell if the hype is a boom or bust and if Maryland can sustain this workforce change.
Daraius Irani is the chief economist of the Regional Economic Studies Institute of Towson University, email@example.com