Last week, CNN Money reported that according to the Labor Department, “jobs in the temporary services industry are up 22.1% year-over-year…But the overall job market expanded only 0.2% during the same period.” There is a shift in the direction of employment, and it seems to be in the direction of a heavily contract, temporary, and consultant workforce.
Temporary hiring has traditionally been an economic indicator, as CNN Money reports that it is the first to be put on hold leading into a recession and the first to come back in times of recovery. But this time, things seems different. In an article I wrote a few weeks ago, I talked about the ‘starvation mode’ of businesses slowly coming out of this recession:
“The economy has been starving businesses. Recently, we’ve seen a little burst of energy from the economy – but it’s not feeding businesses with any consistency yet. When it comes to hiring, businesses are being cautious because they’re not sure if we’re really out of the woods yet. They have felt starved for so long and, while pleased to be fed, they are unsure when the next meal is coming. So rather than investing heavily in hiring, i.e. feeding the muscles, they are conserving the energy being reintroduced into the system and storing it, i.e. investing in fixed assets and other safer investments to keep the business’s vital “organs” functioning. Until businesses no longer feel starved, they will continue to store and be extremely cautious about investing in the “muscle” again.”
As a result, it appears that companies are more interested in ‘no commitment’ hiring – bringing on temporary workers and using contractors and consultants as needed as opposed to beefing up their employee base. CareerBuilder and USA Today recently released some survey results showing that only twenty-one percent of employers expect to add full-time, permanent employees in the fourth quarter this year. Granted, we are coming into the holiday season when lots of retailers traditionally hire temporary staff to handle increased traffic, but I get the feeling that things are different this time around…
There are a couple of potential reasons for this, the biggest of which I believe is the impending cost increase in providing benefits. John Hollon, Editor of our sister publication TLNT, recently attended the Benefits Forum & Expo in Florida and sat in on a session discussing the recent health care reform bill that was passed. He wrote in a follow-up post: “Steve Wojcik of the National Business Group on Health pointed out that not only are employers budgeting more for their 2011 health care costs in the wake of the passage of Obamacare, but employers are also going to be thinning benefits and raising what employees pay to help offset the expected increase. Even scarier yet is this — some 12 percent of employers said in a survey that they plan to reduce employment due to health care reform, primarily among smaller businesses.”
Another cause for this growing interest in temporary workforces is this increasing lack of desire to commit. If you look at TV commercials today, they all seem to be promoting “No Contracts!” “Try Before You Buy!” “No Commitment Necessary!” Since consumers no longer want to commit to anything, employers are simply taking the same route. Operating with ‘lean’ mentality, workforces can be scaled up or down depending on demand with less investment. The downside to this type of thinking is the disappearance of any sense of loyalty. As we look into this further, we find a study that Sodexo Motivation Solutions recently released stating that “employees aged between 16 and 28 years tend to look to leave their job within a year of starting”, and that 46 percent of the survey respondents said they are not offered any benefits aside from their salary.
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So what does this all mean for us? Opportunity.
With the increase in interest of companies to hire contract, consultant, or temporary workers, this opens up the opportunity for us to either grow our current contract placement business or expand the current offerings we provide to include contract placement. One does not have to abandon permanent placement to do this, and given the trends we are seeing that don’t look to be temporary (no pun intended) trends, it’s certainly an area in which many would be wise to explore.
To wrap up, I would be interested in hearing from those of you who currently do contract placement: have you seen your business increase over the last several months? Have you acquired many new clients as a result of this recovery period? Please share your thoughts in the comments below.