Unemployment extension 101: Why now is a good time for temp jobs

It could be a good time to head to the fields to help farmers pick corn. Or maybe find a small business in need of seasonal help.

Until recently it probably wasn't the best financial idea for anyone collecting federal unemployment extension benefits to seek temporary work. Doing so may have meant receiving a lower level of unemployment benefits in the future.

But President Obama eliminated that potential penalty with the Emergency Unemployment Compensation Fix (EUC Fix) when he signed the latest unemployment benefits extension bill on July 22.

Here are some questions relating to the new change and the issue of temp work:

Do employment specialists think it’s a good idea to take a temp job?

Anyone who has been out of work for six months or more should consider a temp job, says John Challenger of Challenger Gray & Christmas, a Chicago outplacement firm.

“It’s not healthy just sitting around at the computer waiting for a job,” he reasons. “Getting back to work is rejuvenating,” he says, adding, “It’s a good way to show you are filling in the gaps while unemployed.”

Pamela Garber, a New York psychotherapist in private practice, often recommends that her clients do temp work in between jobs or making a career change. She says it can give an individual “a forward thought process” by having new challenges. And, she says in an email, they get to learn about different companies “via the front row.”

In fact, according to Tina Chen, director of operations for Carlisle Staffing in Westmont, Ill., many companies view temps as trial employees.

“A lot of business owners are looking to be efficient, they are cognizant of hiring costs and want to be sure they made the right decisions,” says Ms. Chen. “So, we can be considered an extension of their HR department if they want to do a test drive to make sure they have right employee.”

What are the hottest areas for temps?

Temp hiring tends to go through a cycle, says William Grubbs, Chief Operating Officer at SFN Group (formerly Spherion), a staffing company based in Ft. Lauderdale, Fla. For example, first companies hire light industrial workers, then clerical and then service professionals, such as finance and accounting, he says.

“Now we are seeing a momentum in all the skill sets,” he says.

In fact, the higher the skill level, the hotter the demand from employers, says Janice Bryant Howroyd, the CEO of Torrance, California-based AppleOne, an international staffing company. She specifically says demand is good for individuals with experience in graphic design and engineering.

If I get a temp job will I receive vacations and medical benefits?

Low-skilled workers often don’t get these benefits. But, high-skilled workers may earn time off and bonuses the longer they work for a company, says Bill Driscoll, a Boston-based regional president at Robert Half International, which he says also offers access to health care benefits to many of its professional workers.

What’s the downside to working in a temp job?

First, the salary may be less since the staffing company will be getting a fee that will be factored into how much you will get paid. Secondly, if a company runs into a slow period, temps are usually the first to be let go. “We saw that in the last downturn when temporary help staffing started down in January 2007, well before the layoffs of permanent workers,” says Mr. Grubbs.

In the past, the unemployment compensation issue was also a detriment. What has changed?

Federal law has always required state unemployment agencies to reexamine a claimant’s unemployment benefits after 52 weeks. Before the EUC Fix was made, some claimants collecting federal extension benefits who worked part-time or took temp jobs could find themselves forced to start a new round of regular state benefits using their short-term jobs as their base. The end result: much lower benefits. But, now, individuals will no longer be penalized as long as certain thresholds are met.

What are those thresholds?

If wages earned on your temp job mean your new state unemployment benefit rate will be $100 or 25 percent less than your current (higher) weekly benefit amount, you would qualify for the higher federal rate. Otherwise, you will move to a new regular state benefits claim.

“Say someone had been getting $300 a week in federal unemployment insurance, and they would drop to $200 a week in state benefits after their temp work,” says George Wentworth, a policy analyst at the National Employment Law Project (NELP) in New York. “They would now be able to stay on the $300 federal rate because $200 represents a 33 percent drop in their benefit.”

Are all states required to adopt this change?

Yes, every state will have to honor the federal change. However, the impact of the change will vary by state because every state has different earnings qualifications.