September Economic Advisory Note

The Bureau of Labor Statistics reported last Friday (September 3, 2010) that aggregate US employment was little changed in August from the previous month’s level. However, the private sector did manage a modest, 28,000 jobs gain.

So far this year, the health care sector has reported some of the strongest gains, adding a total of 160,000 jobs. In addition to bolstering payrolls, and thereby the demand for workers compensation coverage, the health care sector’s expansion has helped to increase demand for other lines of coverage. For example, this pace of employment gains is consistent with the creation of about 6,000 new small firms, each of which needs at least basic BOP coverage for its office exposures.

Again last month, temporary employment services recorded sizable job gains underscoring many employers’ atypical reluctance to create new, full-time positions. Over the past year, these temporary staffing firms have added almost 400,000 new employees. Such rapid temporary jobs growth continues to represent a significant challenge to workers comp insurers, many of whom struggle to align the rate charged with the jobs actually performed by these workers.