FORTUNE -- It's a glass half full/half empty situation. Well, maybe American employers just stole half a glass from their workers. The rise in temporary worker hires may be a smart business move, insulating employers in a volatile economy, or it could be creating a permanent wedge of cheaper, benefit-less workers that eventually supplants a big chunk of the full-time workforce.
It all depends on how you interpret a sliver of data on temporary hiring from the U.S. Department of Labor, which tracks job placements by temp agencies but not temp hiring by individual companies. The department also doesn't keep tabs on how often companies downgrade positions from permanent to temporary status.
The latest federal data show that 2.3 million people held temporary jobs in March, up from a low in mid-2009 of 1.7 million, as companies seek to satisfy customer demand without making long-term commitments to worker salary and benefits.
"Employers know that the economy could change at any time," says Jon Osborne, vice president for research at Staffing Industry Analysts, which follows temporary staffing agencies, "so by hiring somebody temporarily, companies have staffing for their peak needs but can let them go when they are no longer needed."
Companies stand to benefit from this flexibility, with the economy seesawing in the midst of a recovery that may take as long as five years. But it underscores the uncertainty for employees, with a huge number of workers -- 8.4 million -- reporting that they are involuntarily employed part-time, according to the latest federal statistics. Some of the underemployed are likely working for temporary agencies, while others are in informal settings.
Labor experts warn that these hire-and-fire positions can undermine company morale and long-term prospects.
"Temporary workers don't want to devote their lives and loyalty to an employer," observes Lauren Appelbaum, research director for the UCLA Institute for Labor and Employment.
Temporary workers are often paid less than full-time workers, and are not likely to receive any benefits. Such workers, according to a recent U.S. General Accountability Office report, are less likely to have health insurance or retirement benefits, or be protected by labor laws. Not providing health insurance means that ailing workers often rely on emergency room treatment or Medicaid, treatment scenarios in which the costs are largely covered by the public, adding to the taxpayer burden -- a charge, for example, that has been made against giant retailer Wal-Mart (WMT).
The disappearance of benefits and job security are part of a larger trend in which work has become increasingly informal in recent years, says Nik Theodore, director of the Center for Urban Economic Development at the University of Illinois.
"Temporary jobs are the tip of the iceberg of ways that work has become casual-ized," he says
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