The temporary employe business is booming.

In the Washington area, many businesses report that they now regularly budget for use of temporary workers to avoid having to hire workers only for a short-term project or face eventual layoffs if the economy takes a downturn. Even the federal government finds the idea of temporary workers appealing. Last December, Donald J. Devine, then director of the Office of Personnel Management, advised federal agencies to hire more temporary workers in place of career workers, claiming it offered better management flexibility.

Edward Dunkelberger, a partner in the law firm of Covington & Burling, said his firm has increasingly turned to temporary help in the last five years. "We concluded we were better off maintaining a staff for minimal demand. We can satisfy short-term increases with temporary help. It's more cost effective and better management."

"Our business has changed from a replacement and fill-in service to an effective labor tool for managing labor costs," said Frank Liguori, an executive vice president of Olsten Corp., one of the nation's three largest temporary agencies. Olsten's direct and franchise sales have leaped from $233 million in 1983 to $332 million last year, with profits growing from $3.7 million to $6 million.

The U.S. Bureau of Labor Statistics rates temporary employment as among the five fastest-growing industries. The three largest firms, in addition to Olsten, are Manpower Inc., a subsidiary of the Parker Pen Co., and Kelly Services Inc. All three firms have experienced huge growth in recent years. Kelly reported a 41 percent growth in sales, up from $524 million in 1983 to $741 million last year, with profits jumping from $17.5 million to $26.7 million. Manpower Inc. broke $1 billion in sales for the first time last year, reporting an increase in corporate profits from $34 million to $42 million.

Although temporary agencies stress that they do not tell companies to lay off workers to hire temporary employes, they do encourage them to use their temporary employes rather than create permanent positions. The National Association of Temporary Services (NATS), which represents the bulk of the temporary manpower business, reported that five million people worked as temporaries last year, with 600,000 jobs filled by temporary workers in any given week.

Temporary help is attractive to employers because there is no risk of eventual layoffs. In general, the more a company lays off employes, the greater the percentage of its payroll it has to pay into the federal unemployment fund, since the federal government computes that percentage based on how many employes a company has let go. By hiring only temporary workers, a company can keep down that percentage, which ranges from 1 1/2 percent to 10 percent of the total payroll, according the Bureau of Labor Statistics.

BLS officials have expressed concern that the use of temporary workers may be making the job picture in manufacturing look somewhat worse than it is. The agency measures employment based on numbers of permanent employes, an approach that doesn't count the growing numbers of temporaries. Likewise, the trend by manufacturers to contract with outside firms for services their employes used to provide may cause an understating of manufacturing employment, he said. The BLS is tentatively planning a survey this fall on these questions.

According to NATS, temporary workers had a payroll of $6 billion in 1984, up 26 percent from 1983. Sixty percent of temporary workers perform clerical tasks, about 20 percent work in technical or professional capacities, about 12 percent work in the medical field and nine percent in manual labor, mostly light industrial work, according to NATS. The association says there are now between 2,200 and 2,400 temporary help companies with 7,000 offices nationally.

Until recently, pay and benefits for temporary workers were generally lower than those for permanent workers, although competition among the agencies for temporaries has pushed up wages and prompted the offer of better benefit packages to attract and keep good workers at their agency. Agencies acknowledge that as the competition has increased in the temporary help industry, the rise in wages for their workers as well as the added benefits have cut into profits. This loss, they say, is more than offset by the large amount of new business as more companies opt to hire temporary help.

Competition for skilled office workers is particularly keen in cities such as Washington, where the demand for office workers is strong and local unemployment is relatively low. A temporary worker trained in word processing can earn up to $12 or $13 dollars an hour, according to area temporary employment agencies.

The pay, in general, is much lower. Olsten's Liguori estimates his company's average wage to be about $6 an hour, with a range of $4 to $15 an hour. For benefits, Liquori says, Olsten offers one week of vacation pay for about every 32 weeks worked, a group insurance rate, some compensation if a worker is hospitalized, and in some markets where recruitment is more difficult, paid national holidays and bonuses.

Olsten's benefit package is fairly typical of a temporary agency, and is not as comprehensive as most plans offered to permanent employes. This, combined with the fact that the pay is generally slightly lower than that of the fulltime employes, makes labor unions worry about the fate of the worker as the number of temporary employes in the work force grows.

"It's a serious problem. We're creating a two-tier work force," said Linda Lampkin, director of research for the American Federation of State, County and Municipal Employees, referring to the permanent employes with full benefits and the temporary employes currently with little prospect of a company-funded pension or many other fringe benefits.

The cost of temporary workers -- temporary agencies can charge up to 70 percent above what it pays a worker per hour -- is not considered by many large area companies to be a barrier in using temporary workers.

"It's cost-effective in that temporary employes do not cost any more to the organization than regular employes and they help us meet our personnel needs without adding to the regular staff," said Mac Barret, manager of press relations at McCormick & Co. Inc.'s Hunt Valley, Md., headquarters. The companies are relieved of responsibility for any employment cost, except for the flat fee per hour to the temporary agency, and many companies estimate that this fee is the same or even lower than the total hourly cost of keeping an employe on a company payroll with complete benefits.

But there can be problems for companies that keep temporaries on the job for many months or even years, because both employer and employe may begin to think of the attachment as permanent. On the other hand, heavy reliance on temporaries may hurt employe loyalty and morale, some critics say. "We feel that someone who has a permanent commitment is a better worker," said Lambkin of municipal employes. For temporaries, "their loyalties are different -- they're working for Kelly Girl, not the State of Wisconsin."

Temporary agencies, accustomed to a transient work force, are finding that more workers are making a career out of temporary service and try to build loyalties to the agency. Most Olsten workers only work for the agency for about 6 to 8 weeks, says Vice President Liguori, but both Manpower and Olsten estimate that up to 15 percent of their temporaries consider their jobs with the service permanent, even as they jump from assignment to assignment.

"As the use of temporary workers has grown, a better quality of worker has been attracted to temporary work," said Mitchell Fromstein, president of Manpower. According to Fromstein, 60 percent to 70 percent of Manpower workers have some college education, compared with about 30 percent of their workers 10 years ago.

Agencies also claim that temporary employes are more efficient on the job, motivated in part by the impermanent nature of the job and the knowledge that they are frequently assessed by the agency they work for. "Think -- if one phone call could tell you your job is over," said Geoff John, president of the national agency Temporaries Inc., which is based in Washington.

"I'm getting 90 percent of the benefits that any firm would offer me," said Sheraldine Cook, a 41-year-old D.C. resident who has been a full-time temporary worker for TeleSec, a local agency, for most of the last 13 years. She said that she didn't mind no pay on national holidays or perhaps losing out on a few other benefits because she values her freedom. Cooke added that she has moved up in salary with TeleSec over the years as she learned more and more secretarial skills through the agency.

Despite the rise of career temporaries, temporary agencies are still scrambling to find enough workers as their industry grows. Robert S. Goodfriend, who owns the D.C.-area Goodfriend Temporary Services, says he has tripled his advertising budget and even tried radio ads to attract workers to his business, which employed 5,000 temporary workers in the Washington area last year.

Agencies are putting emphasis on company spirit to get and keep workers, perks that can range from Manpower's sterling silver necklace from Tiffany's for dedicated workers to Temporaries Inc.'s credit union and free family insurance coverage for its temporary workers.