American economy in ruins

One thing I found hard to grasp in the lead-up to the financial crisis was the widespread and seemingly nonchalant acceptance of economic imbalances, financial excesses, and patterns of behavior that were out of whack with economic reality and which were clearly unsustainable in the long run.

Whether you were talking about overall indebtedness, the trajectory of house prices, the proportion of the economy devoted to finance, insurance and real estate (FIRE), the low levels of risk spreads, assumptions about markets, liquidity, and worst-case scenarios etc. people seemed to think that things could somehow carry on as they were with no real reason for concern.

In the end, of course, that confidence proved horribly misplaced, and what couldn’t possibly last, didn’t.

Well, I’m not sure if it’s quite the same thing, but I must admit I had similar feelings of incomprehension when I read the following Atlanta Journal-Constitution report, „Non-Employee Labor a Growing Trend in Work Force,” which more or less implies that people are going to quietly acquiesce to corporate America’s relentless efforts to strip them of everything but a basic paycheck in the name of profit.

Recovering from the Great Recession won’t mean a return to business as usual. Fundamental changes are taking place in the American work force.

“Staffing companies have traditionally been the shock absorbers of the economy,” said Dan Campbell, CEO and founder of Hire Dynamics, an industry leader in staffing and recruitment with offices in Atlanta and Reno, Nev. “They take the first hits at the start of a recession, but they are also the first to benefit in a recovery.”

2009 was a terrible year for staffing, but Campbell has seen his business grow by 25 percent in the past 12 months. “This January was 30 percent better last January, and we expect business to be vibrant for the next several years.” The Bureau of Labor Statistics has projected staffing to be one of the top 10 industries for the next 10 years, he added.

Normally, Campbell would see his temporary job postings level off as companies increased their permanent hiring of employees, but after this recession, things have been different. “We’re seeing a new reality in the work force. Just-in-time labor is a growing trend,” he said.

According to Yoh’s 2010 Annual Workforce Trends Study, 80 percent of employers said that they expected the size of their non-employee work force (consultants, independent contractors, temporary employees and project teams) to stay the same or increase in the next year. Sixty-three percent of business leaders reported working on better ways to manage their non-employee work-force segment.

“Employers are saying that the recent recession has fundamentally changed their employment strategies and led to a ‘just-in-time’ hiring strategy that will make temporary employees an even greater pillar of the American economy,” said Lori Schultz, president of Yoh, a work-force solutions company.

“It’s a huge shift and it’s been coming on for the past four or five years. The recession and slow recovery have probably just accelerated it,” said Bill Kahnweiler, associate professor and human resource expert at Georgia State University’s Department of Public Management and Policy.

In the big picture, Kahnweiler sees a shift from an Industrial Age model of doing business, where organizations hired, nurtured and trained employees for the long haul; to a Knowledge Age model that is leaner and more adaptable to a fast-changing global market.

“It’s about money. Companies want more flexibility and less risk moving forward. They want to hire talent as they need it and not be burdened with full-time employment costs. It’s cheaper to hire contingent workers,” he said.