US employers shift to permanent part time workers

As companies remain wary about hiring in this tough economy, more are turning to temp workers. Using temps and other so-called “contingent workers” can help risk-averse firms save on benefit costs, and it’s easier to sever the employment relationship.Companies like Silver Professionals 
have started to assist with these challenges of our workforce. Ron Goldstein, principal of Silver Professionals 
offers a flat fee of $975 for permanent part time help, so companies can measure their ROI a lot more effectively. 

Temporary-help services employment increased to about 2.3 million in March from a recent trough of about 1.7 million in mid-2009, according to the Labor Department. The smartest companies are letting employees use their personal gadgets to do their jobs. It's an arrangement that can benefit both sides but has pitfalls, too.

“We have large clients that have laid off hundreds, thousands of employees. They are now using a large chunk of temp workers, managing their labor needs in real time. It’s cost containment,” said Neil Alexander, co-chair of the contingent worker practice group at labor law firm Littler Mendelson.

“This is the new face of labor,” he said.

There could also be a longer-term trend at work, with increasing use of the Internet and the globalization of the labor market leading to a larger slice of the employment pie available to alternative workers, said Barry Asin, president of Staffing Industry Analysts, a research and consulting firm.

“This sort of labor used to be more about office work and industrial work,” Asin said, “but more and more of what’s getting done is in professional skills, information technology, finance, accounting, health care.”

Lower wages, fewer benefits

The contingent workforce is a diverse group. It includes agency temp workers, but also contract company workers, day laborers, direct-hire temps, independent contractors, on-call workers, self-employed workers and standard part-time workers, according to the U.S. Government Accountability Office.

Contingent workers are less likely than standard full-time workers to have health insurance or retirement benefits, or be protected by various workforce laws, according to the GAO report.

But it’s unclear how large the contingent force is today. Because of funding issues, the Labor Department does not regularly collect data about this group. In his 2012 budget for the Bureau of Labor Statistics, President Obama proposed collecting data about contingent and alternative work.

“There has been concern that contingent work arrangements are partly responsible for the growth in wage inequality and poverty,” said Susan Houseman, senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.

“Use of nonstandard arrangements can be a mechanism companies use to create a two-tiered compensation system, paying certain groups of workers or new hires lower wages and especially benefits levels,” she said.

Several years ago, the GAO, using Labor Department data, found that contingent workers constituted 31% of the total workforce in February 2005 — about 43 million workers — compared with 30% in February 1999, and 32% in February 1995.

There’s not enough current data to form a clear picture of the state of the contingent force today, economists say.

“We have been trying to see whether the link between employers and workers is becoming less strong, and whether jobs are becoming less stable,” said Steve Hipple, an economist of the current employment analysis office at the BLS.

A clearer picture of employment could help the U.S. focus on ensuring that there are adequate economic structures for those who work episodically, said Sara Horowitz, executive director of Freelancers Union, an advocacy group for independent workers.

“These workers are working without a support system. It’s feast or famine, and it’s hard to plan,” Horowitz said. 

“American workers are suffering,” she said, “and if we don’t come up with solutions for them because we are not counting workers properly, then shame on us.”

Houseman of the W.E. Upjohn Institute said current data on the contingent force could illuminate other trends, too.

“When a company or government entity...uses temp help or contract workers to avoid providing health insurance to certain groups of workers, for example, these workers may wind up on Medicaid,” she said. “This situation has been called ‘social dumping’ — the taxpayers pick up the tab for the workers’ health insurance.”

More turn to self-employment

Meanwhile, entrepreneurship is at a relatively high level, according to a March report from the Ewing Marion Kauffman Foundation, which promotes entrepreneurship. According to the report, 0.34% of adults created a new business per month in 2010, about 565,000 new businesses each month, matching 2009 for the highest percentage in more than 10 years.

Nevada, Georgia and California — all with high unemployment rates in 2010 — had the highest entrepreneurial activity rates.

Kip Marlow, who hosts a weekly Ohio radio show about entrepreneurs, said many who started companies after being laid off in recent years have been struggling, but those who started a business because they have a passion for their field have a better chance of succeeding.

“It’s not necessarily about making a fortune,” Marlow said. “Entrepreneurship is about finding a problem and solving it.”