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The Employment Services Industry

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Employment services was one of the fastest-growing industries throughout the 1990s. By March 2001, the end of the expansion, it accounted for 3.6 million workers (2.7% of U.S. employment). About two-thirds of these workers are at temporary help agencies; the remaining third work for professional employer organizations and employee placement agencies. This makes employment in the industry more volatile than aggregate employment and potentially a leading indicator. The potential for signaling future employment gains comes from firms’ tendency to make permanent hires from their temporary workers. The data reveal that hiring in employment services and temporary-help agencies leads aggregate employment by about six months and is about five times as volatile. The scale of these changes can make this industry appear to be the only or primary expanding sector. However, its workers are spread throughout the economy.

Suggested citation: "The Employment Services Industry," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-06, pp. 13, 06.01.2004.

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