Professional and Business Services: Employment Trends in the 2007-09 Recession: Employment in Professional and Business Services Fell with the Recent Slump in the Broader Economy; the Temporary Help Services Industry, Which Regularly Leads Fluctuations in Aggregate Employment, Accounted for a Large Portion of the Cumulative Job Losses

By Conlon, Frank | Monthly Labor Review, April 2011 | Go to article overview

Professional and Business Services: Employment Trends in the 2007-09 Recession: Employment in Professional and Business Services Fell with the Recent Slump in the Broader Economy; the Temporary Help Services Industry, Which Regularly Leads Fluctuations in Aggregate Employment, Accounted for a Large Portion of the Cumulative Job Losses


Conlon, Frank, Monthly Labor Review


During the most recent recession, (1) from December 2007 to June 2009, employment in the professional and business services industry (2) declined by more than 1.6 million, a figure that was second only to the approximately 2.0 million jobs lost in manufacturing. Compared with job losses in the previous 11 recessions, the 2007-09 contraction in professional and business services employment was the largest, in both percentage and absolute number, since the series began in 1939. (See chart 1.) This dramatic decrease in employment followed 5 years of steady growth: from 2003 to 2007, the industry had averaged an employment gain of roughly 3 percent per year, double the average annual growth rate of private sector employment as a whole.

Many of the same industries that flourished prior to the 2007-09 recession were the main contributors to the job losses experienced by professional and business services during the recession. This article analyzes recessionary employment trends among professional and business services industries, as well as the contemporaneous movements of related indicators.

Temporary help services

During the course of the 2007-09 recession, administrative and waste services accounted for more than 3 out of every 4 jobs lost in professional and business services. Administrative and waste services' payrolls shrank by more than 1 million positions, a drop that, as a percentage, was roughly 3 times larger than the sector's losses in the 2001 recession and about 5 times larger than in the 1990-91 recession.

Temporary help services (NAICS 56132) accounted for the lion's share of the jobs lost in administrative and waste services, with employment in the industry falling by 800,000, or 31 percent, to levels not seen since 1996. In comparison, during the 1990-91 and 2001 recessions, temporary help services employment fell by 4 percent and 13 percent, respectively. (See chart 2.)

Employment trends in temporary help services garner special attention, because the industry is considered by many to be a leading indicator of change in aggregate employment. During the 16 months leading up to the 2007-09 recession, temporary help services lost 93,000 jobs. From its peak in August 2006 to its trough in August 2009, temporary help services employment fell by 912,000. Then, between bottoming out and the end of 2010, the industry recovered 462,000 jobs, or about half of the positions cut from peak to trough.

Since 1990, peaks and troughs in temporary help services employment generally have led those of total nonfarm employment. Temporary help services employment reached a local high in March 1990, 3 months before nonfarm employment peaked; both series reached a trough in May 1991. (3) Payroll employment in temporary help services peaked in April 2000, 10 months before total nonfarm; bottomed out in April 2003, 4 months before total nonfarm; peaked in August 2006, 17 months prior to total nonfarm; and again reached a trough in August 2009, 6 months before total nonfarm. (See chart 3.)

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Between December 2007 and March 2008, temporary help services accounted for 48 percent of the employment losses in the nonfarm economy. This decline contrasts with what occurred during the first 3 months of the 1990-91 and 2001 recessions, when temporary help services contributed about 5 percent and 32 percent, respectively, of aggregate job losses. Over the course of those two recessions, job losses in temporary help services as a share of losses in total nonfarm employment narrowed, supporting the widely held notion that as payroll cuts become necessary during a downturn, most wary employers opt to purge their contract or temporary help employees before their permanent employees. (4) During the latest recession, falling demand for labor was accompanied by a precipitous fall in temporary help employment; concomitantly, the job openings rate for professional and business services fell 41 percent from December 2007 to June 2009. …

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Professional and Business Services: Employment Trends in the 2007-09 Recession: Employment in Professional and Business Services Fell with the Recent Slump in the Broader Economy; the Temporary Help Services Industry, Which Regularly Leads Fluctuations in Aggregate Employment, Accounted for a Large Portion of the Cumulative Job Losses
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