As job creation has picked up over the past couple of months, one key segment has played a big role in the surge. And that could be good news for apartment owners.
In January, the economy added 20,000 temporary service sector jobs, according to the Bureau of Labor Statistics. That’s 7 percent of overall job growth. In all, temporary-help services have added 656,000 jobs since August 2009. Recovery in the temporary sector began in the third quarter of 2010 and hit 10 percent of all job growth in the second quarter of 2011.
“In general, if you look at the numbers, temporary employment is growing at a faster rate than full employment,” says Ron Johnsey, president of Dallas-based multifamily market research firm Axiometrics.
That’s all well and good, but what does it mean for apartment owners? Well, possibly it means two good things. For one, temporary workers are a lot more likely to be renters than owners.
“It’s a positive for the apartment market,” Johnsey says. “They don’t make as much as full-timers. They don’t have benefits. They’re more likely to be a renter.”
The bigger indicator may be that jumps in temporary employment are usually a precursor of full-time job growth, which, of course, leads to household demand. Axiometrics says that rent growth lags the return of temporary workers by about four quarters. Unless there’s been a structural change in this downturn, analysts expect the same thing to occur this time around.
“Temp jobs are almost always the first to come back after the labor market recovery begins,” says Ryan Severino, an economist at New York–based market research firm Reis.
But not everyone sees temporary-employment numbers making a huge impact on the rental market. “It’s really just something we’ll have among a long list of qualitative factors that we’ll use to help guide us when choosing among the range of outcomes that the stat models suggest are possible,” says Greg Willett, head of the research and analysis team at Carrollton, Texas–based MPF Research. “And we’ll think of it as being among the least important of those factors.”