Cooling US Job Market... 110,000 Temporary Workers Laid Off Over Four Months

35,000 Laid Off in December... Largest Number Since Early 2021
Temporary Workers Cut First to Reduce Costs

A trader is handling tasks at the New York Stock Exchange in the United States. [Photo by Yonhap News]

[Asia Economy Reporter Kim Junran] The heat in the U.S. job market is rapidly cooling down. This is because companies are quickly reducing the number of temporary workers they have hired. As a result, there are forecasts that the previously heated U.S. job market may enter a cooling period again.

On the 24th (local time), The Wall Street Journal (WSJ) reported, citing the U.S. Department of Labor employment report, that the number of temporary workers in the U.S. decreased by 35,000 compared to the previous month in December last year. This is the largest decline since April 2021 (a decrease of 115,100).

From August to December last year, the total number of temporary workers laid off by U.S. companies reached 110,800. Experts interpret this scale of numbers as a sign of changes in the job market. In particular, the increase in layoffs of temporary workers is seen as a sign that the job market downturn is beginning. Since temporary workers are easier to hire and fire than regular employees, this sector reflects economic changes the fastest.

Layoffs of temporary workers are evidence that companies have no choice but to cut costs. WSJ referred to the recession period from 2007 to 2009, analyzing that employment in the temporary sector began to decline in early 2007, and about a year later, employment in all sectors decreased.

However, there are counterarguments that this trend cannot be seen solely as a precursor to a recession. Layoffs of temporary workers cannot necessarily be interpreted only as an economic downturn. WSJ introduced a case in 1995, during an economic expansion, when the number of temporary workers decreased for four consecutive months.

Some experts also analyzed that temporary employment, which had surged due to COVID-19, is normalizing. During last year and the year before, companies in the food and distribution sectors massively hired short-term workers to meet the rapidly increasing customer demand as COVID-19 lockdowns were lifted, and some restructuring of this workforce is now taking place.

There is also an interpretation that the number of temporary workers has decreased because companies recently increased regular employment. This is seen as an "optical illusion" where temporary workers decrease as they are converted into regular employees. In fact, according to the employment situation report released earlier this month, the U.S. unemployment rate in December last year was 3.5%, the lowest level in over 50 years since 1968.