According to a recent survey conducted by OI Partners, a global career transition and coaching firm, 40 percent of the employers who participated reported that they rehired previously laid-off workers, but not all of them came back as full-time employees. Many returned to work on a part-time or freelance basis.

Does this rehiring of former employees mean jobs are about to increase?

 “Rehiring laid-off employees does not necessarily reflect job growth,” said Amy Murphy, director of Corporate and Community Services for Joliet Junior College (JJC). “After all, these jobs are not new positions created to fill the need of an expanding economy. They are old jobs re-instated to fill an intermittent need.”  

That view is underscored by what Tim Schoonover, chairman of OI Partners said in an article published in talentmgt.com. "Financial services and manufacturing were among the industries affected most by the recession and made the deepest workforce cutbacks. That is why they may be more ready than other sectors to rehire some employees they had to let go," said Schoonover.

Some analysts believe that the usual path to increased employment, however, is for companies to hire temps first. “Most businesses are reluctant to hire full-time employees right away,” said Murphy. “They want to wait until they know their business is picking up and they really need a new employee.”

While there are many benefits to using temps before hiring full-time workers, hiring previous employees as temps has the added benefit of eliminating the cost of making a bad hiring decision. "The cost of a bad hire can reach as high as three times an employee's salary when including severance, unemployment compensation, recruiting expenses, lost business income and productivity, and potential wrongful termination lawsuits," said Schoonover.

For that reason, it is probably a good idea for laid-off workers to keep in touch with their previous employers. "It pays for people who were laid off from their employers while in good standing to keep in touch with them, especially if the company's financial results improve and it begins hiring again," said Schoonover.

Nevertheless, there are some employers who have cut back on temporary help. Employers like Microsoft, for example, have cut what they pay temp workers by 10 percent last February with plans to increase that amount to 15 percent in the future.

“As a high-tech company, Microsoft employs a large number of temporary workers all the time,” said Murphy. “It makes sense for them to cut back on this staffing cost rather than lose experienced full-time employees.”

It appears, then, that temporary workers are becoming a way for management to maintain productivity and reduce costs. If they need to add skills to keep their businesses going, they bring in the temps, if they need to cut costs, they cut their temp staffs or temp salaries. It seems to provide employers the flexibility they need to survive this recession. But is it also a reflection of a possible jobless recovery?

Many economists believe a jobless recovery is imminent. In a recent CNN Money.com article, Paul R. La Monica quotes Oscar Gonzalez, an economist with John Hancock Financial Services in Boston who said, "You can't really call an end to the recession until we have a better situation in the labor market. We are not going to have a strong, sharp recovery unless there are gains in the job market.”

With unemployment at nearly 10 percent, the economy has a long way to go before it can recover the 7.2 million jobs lost since the recession officially began 21 months ago. Add to this the Labor Department (DOL) report that identifies a so-called underemployment rate which counts people who are working part-time because they cannot get a full-time job and discouraged workers who have given up trying to find a job and you have an underemployment rate of 17 percent as reported by the DOL last month. In the previous downturn in 2001, that number did not exceed 10.4 percent.

Another indicator of a jobless recovery is the fact that there were two unemployed workers for every job opening during the last recession. Today, that ratio is closer to four-to-one and seems to be growing.

“I think temporary workers will be in demand for quite a while,” said Murphy. “If this is going to be a jobless recovery, employers are going to need qualified temps to stay competitive. Rehiring previous employees can be a win-win for everyone. In those cases, where a temp is hired through an agency or on an independent contract basis, employers may need to consider a brief training program to help bring them on board quickly.”

To learn more about ways Joliet Junior College can help you with your staffing issues, call Amy Murphy at (815) 280-1418, or e-mail amurphy@jjc.edu.

For more information about this story, visit the following sites:

Money Morning:
http://www.moneymorning.com/2009/10/05/unemployment-rate-5/

Talent Management:
http://www.talentmgt.com/industry_news/2009/September/5052/index.php

OI Partners:
http://www.oipartners.net/news/pr_archived/pr_sep142009(2).html

Microsoft Cuts Temp Pay: http://www.techflash.com/seattle/2009/02/Microsoft_slashes_rates_for_temp_workers_blaming_bad_
economy_40321577.html#

CNN Money:
http://money.cnn.com/2009/10/06/markets/thebuzz/index.htm