Is the Temp Workforce Business Dead?
The short answer is no, the temp workforce is not dead. However, certain aspects of how companies utilize temp labor and staffing companies are clearly changing due to unprecedented low unemployment rates.
The temp labor quick history…
1970’s Administrative Vacation Coverage –
Temporary labor began to grow in popularity during the 70’s with the concept of short term clerical workers. The first company to successfully market the idea was Kelly Services. The now out of date term,” Kelly Girl”, was widely marketed and understood. An administrative staff was on-call ready for vacation or sick day work coverage. This process provided a quick and cost-effective method to cover for employee absence.
1980’s Seasonal Industrial Labor –
During this period, many if not most US based manufacturing companies had a very seasonal production model. A 400-person manufacturing plant might hire an additional 100 workers for a 6-month busy season, and then lay them off as production needs dropped. As federal unemployment laws and penalties began to change, this model was no longer efficient. The concept of contract seasonal labor was thusly born. Manufacturers began to use staffing companies for the busy seasons, which allowed their hiring partners to transition workers to other companies as production needs changed from company to company.
1990’s Temp to Hire –
As manufacturing became more sophisticated on using product mix to standardized production needs across the year, the need for drastic seasonal workforces began to slow. However, the partnership between staffing companies and manufacturing was too strong to end. Companies realized that a staffing company with many recruiters could more effectively connect with potential employees than a small, internal HR team. Employers began to use temporary labor as a hiring system. A typical 90 day “temp-to-hire program” was a way for employees and employers to ensure a good fit before a full-time job was offered.
So what has changed…and why has it changed?
As mentioned above, we are in unprecedented employment numbers. As reported by the U.S. Bureau of Labor Statistics, U.S. unemployment has maintained a rate near or at 3.6% for nearly a year. This is the lowest since 1969. In my state of South Carolina, the rate is currently 2.9%, the lowest in state history. The highest state in the country is Alaska at 6.2%…which again is the lowest for that state in history.
What this means for the staffing industry and employers is this…it is a buyer’s market for employees. There are many jobs available, and employees can be selective in which jobs they seek. Though all three of the above staffing models do still exist to some extent, other creative uses of hiring companies are currently rapidly growing.
Hourly Direct Hire –
For years, hiring managers have paid fees to hire exempt employees, while using temp to hire methods for hourly associates. This model is changing quickly. Whether industrial or administrative, roughly 97% of the workforce is currently employed. An hourly machine operator who is working full-time may be a better fit for another manufacturer nearby. But because they currently have a full-time, benefited job, they will not likely risk leaving for a “chance” with a temp to hire job. Therefore, employers are embracing the direct-hire hourly model, in which everything from administrative positions to machine operators to fork-lift drivers are recruited by staffing companies, and placed directly with the employer. For skilled/technical positions, employers are now paying full relocation packages for techs just as they would an engineer or manager.
As often happens, crises lead to innovation. Employers still have some seasonal or short-term production and project needs. Top staffing companies are now providing third party services to accomplish these issues. Rather than bringing in 50 temps on a project, employers may outsource a function to a staffing or project management company. These companies can use their own FTR associates on multiple projects on an as need basis. Or, on a manufacturing floor, a staffing company may carve out an area on the floor, and provide not only the labor, but also the supervision, HR, safety, and be responsible for the production output and KPI’s.
Temporary labor and staffing are here to stay. And the employers who are creatively utilizing and partnering with staffing agencies are set to gain the best results, employees, and efficiency.