Are We Moving Toward a Perma-Temp Workplace?

Last Friday, the Bureau of Labor Statistics announced the unemployment rate remained flat in July. Since we entered August, Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Tim Geithner have been repeating the mantra that job growth may still be farther off than we’d like. But is the truth we have finally made a more meaningful shift to a perma-temp society of workers?

The Invisible Hand Moves Slowly, But It Keeps Moving Nonetheless

When we first bought the concept of “free market capitalism”, it was an easy sell. We were told we’d be able to buy whatever we want whenever we want it … at everyday low prices! We were also told access to free markets would unlock incredible wealth for the United States.

Unfortunately, to increase the variety of choices in store aisles and increase the size of the stores to warehouse-sized big boxes, we had to open our markets to a much larger base of foreign competition. In addition, to offer these countless shiny widgets at the most affordable prices possible, the wholesale cost of these items had to be driven much lower.

Source: Dolarz

True to fashion, we jumped in without a care for the long term consequences. For a little while, we enjoyed the best of all possible worlds as domestic jobs were still plentiful and cheap imports flooded our favorite stores. All the while the Invisible Hand was slowly adapting to the new economic model. The first phase of this major gestalt shift was for corporations to unlock the untapped value of outsourcing production or relocating those jobs and facilities where labor was cheaper.

Although this phenomenon ravaged classic manufacturing towns, the recent housing bubble muted the full devastation because many skilled blue-collar workers were able to participate in construction and remodeling businesses. Given the current state of the real estate market, we now have a much more accurate picture of how harshly free markets have affected blue collar jobs.

Outsourcing White Collar Jobs Gets Easier Everyday

The same Invisible Hand that restructured physical labor markets has also been meaningfully restructuring intellectual labor markets. The first big wave was witnessed when US firms started outsourcing IT and call centers to India. Now, we are seeing the next big wave of white collar jobs sail overseas to the cheapest bidder.

Websites such as Elance and ODesk offer intellectual labor in almost every major sector. And hiring is easy as making a date on Looking for graphic design work? Why pay $150 an hour when you can hire incredible talent for 90% less? Looking for a research assistant? Why pay $50 an hour when you can acquire the same exact work product for 80% less?

A New Generational Attitude Will Catalyze the Shift to a Perma-Temp Workplace

Once upon a time, companies and workers shared a symbiotic relationship. During that era, companies and workers were much more loyal to one another.

Skip forward a few chapters to the mushrooming of retail chains, NAFTA, and the dotcom implosion. Toss in a dash of 9/11, and we have a young generation which has a completely different perspective on work. Whether we call it cynicism or realism, these young people trust their employers as much as they’ve seen companies take care of their parents and grandparents over the past 20 years — and that’s not much.

Moreover, these younger workers prefer job flexibility. They have unprecedented access to affordable travel options. The digital revolution allows many of them to work remotely. It’s much more socially acceptable to take jobs all over the country. And, most importantly, if you talk with almost anyone under the age of 25, now more than ever they have absolutely no idea how they are supposed to deal with the idea of a career.

So, this entire segment of the labor market is actually catalyzing a later-stage shift to the perma-temp workplace. Based on their beliefs and ideals, many of them willingly choose lower pay and shorter-term contracts in exchange for the ability to feel freer.

The Dotcom and Housing Bubbles Exemplify the Perma-Temp Future

When the dotcom boom ignited, hordes of workers dumped their stable jobs for the nouveau American Dream to get rich quick. People either joined sexy startups, became stockbrokers, or tried their hand at day trading. As we quickly learned, the overwhelming majority of these jobs were temporary. The same can be said for all the contractors, real estate agents, and property flippers during the most recent housing bubble.

So Long As Someone Else Can Do Your Job Cheaper, Prepare to Hear You’re “Overqualified”

This leaves us to answer the question: are we moving toward a perma-temp workplace? Is the labor market becoming so large that businesses will find cheaper workers of equal value for shorter term contracts? I have a feeling this is why many job applicants are told they are “overqualified”.

Coming full circle, the current unemployment picture is actually much more complicated and unprecedented than any other time in post WWII US history. Bernanke and Geithner are not going out on a limb to promise a future of stable jobs. According to the most basic economic principles, they should have a very good idea the stage has been set for businesses to walk down the labor aisle with the same giddy glow as the first generation of Walmart (NYSE: WMT) shoppers. The cosmic irony is almost too much to handle.

Since one person’s pain can be another’s gain, we must recognize that our loss of stable jobs has brought new opportunity to others across the world (the quality of that opportunity is not for me to judge here). But we must also look in the mirror and start accepting the fact that the US workplace is different. Even when the economy improves, the ratio of temp to real full-time jobs (i.e., long term contracts, benefits, fair wages, etc.) will remain high.

Do you think we’re moving toward a perma-temp workplace? Sure looks that way to me …