Final answer:
Temporary workers increase an organization's flexibility, contributing to lower unemployment rates by providing a stepping-stone to permanent employment and helping companies adjust labor needs without the costs of hiring permanent staff during economic uncertainties.
Step-by-step explanation:
Organizations that wish to stay ahead of their rivals often rely heavily on temporary workers. This strategy helps organizations to increase their flexibility. The use of temporary workers can be understood within the broader context of employment trends and economic conditions that affect hiring practices. The growth of the temporary worker industry has likely helped reduce the natural rate of unemployment. With the prevalence of temp agencies rising from 0.5% in the early 1980s to over 2% by the early 2000s, these agencies have provided a vital service in matching employers with potential employees. Temp jobs offer a unique opportunity as a stepping-stone to permanent positions, helping to decrease frictional unemployment by facilitating smoother transitions between jobs. Additionally, during economic downturns, firms may favor retaining their workforce or using temporary workers instead of immediately hiring permanent staff, to avoid the costs involved with recruitment and training if the improvement in demand is uncertain.