CWS 3.0: July 9, 2014

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Your Temp Worker Usage Breaks Records

Contingent workforce managers’ domain is expanding.

The temporary penetration rate — the percentage of the U.S. workforce who are temporary workers — hit another record in June, according to seasonally adjusted data released last week by the U.S. Bureau of Labor Statistics.

June’s temporary penetration rate reached 2.07 percent, and marked the seventh month of record-breaking rates. December’s rate was 2.02 percent.

“The domain is most definitely growing,” said Bryan Peña, Staffing Industry Analysts’ vice president, contingent workforce strategies and research. “I think that role of the contingent workforce in the company’s strategy is certainly going to get even more important.”

Companies remain reluctant to hire traditional, full-time workers as the economy still struggles to improve and the Affordable Care Act has created uncertainty, Peña said. As a result, companies continue to bring in temporary workers.

The increasing rate also highlights the value of a labor strategy that incorporates all labor types, not just full-time hires.

Prior to December, the previous high was 2.01 percent set in April 2000 prior to the dot-com bust. The penetration rate rose again after the bust, but the Great Recession sent it back down to a low of 1.34 percent in 2009.

The U.S. penetration rate is comparable to other countries. A report by Ciett, the International Confederation of Private Employment Agencies, indicated Europe had an average penetration rate of 1.6 percent in 2012 (the most recent number) excluding Russia. However, the average rate was 9.2 percent in South Africa and 2.9 percent in Australia. The penetration rate in Japan in 2012 was 1.4 percent. However, Ciett’s calculations could differ from other calculations.

The share of contingent workforces in the U.S. could rise further. A survey of executives at large U.S. companies that buy staffing found, on average, 18 percent of their workforce was contingent and that would rise to 20 percent by 2016. The higher percentage includes the use of other types of contingent workers in addition to temporary agency workers — such as statement-of-work consultants. The survey also included only companies with 1,000 or more employees and included all types of contingent workers — including temporary workers from staffing firms, statement-of-work workers and others.

“The world of employment is changing — radically and rapidly,” said Jon Osborne, vice president, strategic research, at Staffing Industry Analysts.

“It’s not just that we see an expansion in usage of contingent labor, and in agency temporaries, it’s that a preference cascade is occuring on both sides of the employment fence,” Osborne said.  “On the one hand, employers are working their way up the learning curve, getting more comfortable with contingent labor and getting better at using it; and on the other, workers are warming up to the idea of freelancing, temping, trying out new terms of employment. Even so-called permanent jobs are becoming less permanent, as worker tenure is declining. The Internet is playing a role in this, as are the Great Recession and subsequent weak labor market. Contingent and temp usage will continue to be volatile areas, of course, going up and down with the economy, but there is an underlying secular trend that is, for the moment at least, inescapably upward.”

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Monument Consulting

Scott Green10/07/2014 3:52 pm

Are more details available on the survey you referenced near the end of the article? The 18% headed to 20% statistic is quite interesting if the survey is credible and publicly available.


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