As I reviewed the February Employment Report, one number really stuck out. The U6 unemployment rate, which includes discouraged workers and those working part-time for economic reasons, jumped .5% to 8.0%. Still on the low side and it is only one month. But I got to thinking – is there a correlation between the U6 rate and contract (temporary) staffing?
My findings? Yes, there is a clear parallel between a rise in the U6 unemployment rate and an increase in contract (temporary) employment. The U6 rate tends to spike during economic downturns and periods of uncertainty. Historically, as the U6 rises, businesses become more hesitant to commit to full-time hires and instead turn to temporary staffing to maintain flexibility while managing costs.
For example, during the Great Recession (2007–2009), the U6 unemployment rate surged from around 8% in 2007 to over 17% by 2009. In response, temporary staffing saw a sharp increase, as companies sought to scale their workforce according to fluctuating demand. Similarly, during the COVID-19 pandemic, the U6 rate skyrocketed from 7% in early 2020 to over 22% in April 2020. Again, businesses moved towards contract workers as they navigated uncertainty.
This pattern underscores a broader trend: when economic confidence wanes, businesses prioritize flexibility, making temporary staffing a key strategy. Companies avoid long-term labor commitments due to fears of prolonged downturns or sluggish recoveries. Plus, talent is more open to accepting a contract position – something that they are reluctant to do when permanent jobs are more plentiful.
I will be keeping an eye on the U6 rate and temporary help in the months to come.
For those experiencing increased demand for staffing, no need to turn business away. With an unlimited funding program, you can easily add new clients, increase placements, and driving profits without financial roadblocks.
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Nick Andriacchi – Chief Revenue Officer
Madison Resources
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