Business is picking up. The latest indicator shows a significant increase in the use of temporary workers.

Employers need people to get the work done, but managers are not allowed to add "headcount" yet. The increase in business has not been sustained quite long enough to authorize hiring permanent staff again. Even though the companies are still under hiring freezes, they can hire temporary employees without a long-term commitment. Those temps get the job done. They're more expensive per hour, but that's all right for the short-term.

The current phenomenon repeats what happened in the 1990s before the boom economy kicked in and generated a tight labor market by the end of the decade. The increased use of temporary employees— at all levels— is a precursor of the shift toward hiring permanent employees again.

Layoffs, downsizings, restructurings, and reorganizations have put a lot of people out of work. In today's depressed job market, many people are frustrated and disillusioned because they can't find another job as easily as they could during the late 1990s. This condition is a short-term situation, but people need to put bread on the table. So, many workers are taking temporary employment assignments to earn what money they can.

There's another aspect to this picture. A high proportion of temporary workers is actually looking for permanent full-time work. Under the temp-to-perm arrangement, people can use temporary assignments to gain full-time jobs. Does it work?

According to Adecco, the largest temporary employment agency in the world, leveraging temporary jobs to permanent assignments does work. In a study conducted in the 1990s, during an economic period comparable to 2002, 85 percent of temporary workers desiring full-time permanent work found those jobs within six months. While most of these were conversions in the employing companies, others did find jobs outside their temp jobs. The overall statistic is meaningful, and we anticipate that we will again see this kind of transition.

The increased use of temporary workers is a good sign for the economy, and it's a good sign for people anticipating the transfer from temp to perm.