A surge in hiring of temporary workers in the Miami Valley and Ohio in the last two years indicates that some local companies are expanding, but remain reluctant to bring on permanent employees because of uncertainty about the economy and the future demand for products and services, according to industry experts.
Workers at area temporary-help service agencies accounted for about one-third of U.S. job gains in June, and they accounted for about one-fifth of private-sector job growth in this region in 2011, according to federal labor data. The U.S. staffing industry has added about 776,000 jobs since 2009, more than most sectors.
The growing use of temp workers is rooted in businesses being nervous about economic conditions and wanting to take a cautious approach to growing their payrolls. Temp workers require a smaller commitment than permanent workers, and they cost companies less to hire and let go when their services are no longer needed.
But temporary jobs often lead to permanent ones, and growth in the staffing industry is encouraging because it means that businesses are seeing a greater demand for their output, according to staffing agencies and economists.
“More than one-third of people who start in temporary jobs will land a permanent job from the temporary assignments,” said Kathy Trautman, area manager for Manpower of Dayton Inc., a staffing firm.
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About 12,615 people were employed by temporary help service agencies in 2011 in Butler, Clark, Greene, Miami, Montgomery and Warren counties, according to preliminary data from the U.S. Bureau of Labor Statistics that were not seasonally adjusted. Data for Champaign County were not available.
Temp services payrolls in the region grew 15 percent from 2010 to 2011, after growing more than 17 percent between 2009 to 2010, according to the bureau.
Ohio saw similar growth, and workers employed by temp service agencies increased by 13 percent to 98,885 in 2011 from 87,505 the prior year.
By comparison, the state’s overall private sector last year only saw its workforce grow by 1.9 percent to 4.2 million. In the six-county region, the private sector added only 7,621 jobs last year, compared to 2010, and temp workers accounted for about 20 percent of that growth.
Across the country, temp workers accounted for 25,000 of the 80,000 jobs added in June, according the bureau.
Three years after the recession officially ended, the economy remains shaky and many companies need more workers but are uncomfortable adding permanent employees. Companies are worried about going through the interview and hiring process to only then need to implement layoffs, Trautman said. Layoffs are bad for morale and then can be expensive, especially if employees are eligible for unemployment insurance or severance.
“They don’t want to have to hire, do all the onboarding and then lay a person off again,” she said.
In this uncertain economic climate, many employers want flexibility in their workforces, said Karen Rubenstein, district manager of the greater Dayton area for Kelly Services, a workforce-solutions company.
By using temp workers, businesses can easily adjust to changes in workloads, she said. They can increase staff levels during peak work periods and when there are special projects. They can terminate temp services when orders wane and labor needs shrink.
But even when companies need workers simply on a temporary basis, they still need those workers to have specific skills and talents to fulfill the job duties effectively, Rubenstein said. Staffing agencies often provide free training to employees before they are placed on assignment so they can perform up to the expectations of the job responsibilities. Additionally, staffing agencies have access to a large pool of workers whose skills have already been assessed, and the firms try to place workers who best meet the needs of the employer.
“Companies are looking for very specific skills, and they want people who can basically come in the door with those skills and hit the floor running,” Rubenstein said. “An important part of what we do is offer free training for our employees.”
Carla Palm, 49, of Centerville, secured a permanent, part-time job with a defense contractor after working for the company as a temp. Palm said she left the workforce to raise three children, and when she returned, she had a hard time finding a job, especially one that fit her schedule.
But through Manpower of Dayton, Palm said she was placed at the contractor for a three-month assignment, which turned into six months, and then finally resulted in a job offer. She said her temp position gave her a chance to demonstrate her work ethic and skill set.
“It was just a particular project they needed help with, and that rolled into the need to have someone there,” she said. “At the first place I was placed at, it worked out.”
Temp workers satisfy short-term labor needs while also providing employers an opportunity to evaluate the workers’ performances to identify people with long-term potential, said John Bowblis, an assistant professor of economics with the Farmer School of Business at Miami University.
“It’s a way to test them,” he said. “And it’s a way for businesses to hire people and then hopefully, if the economy stays strong, the temp positions turn into full-time positions.”
About 70 percent of temp workers desire full-time or permanent work, and between 25 to 33 percent of temp positions lead to such employment, according to industry estimates.
Bowblis said working for temp agencies can be especially helpful to people who have not held down a job for an extended period of time, and who need more recent or relevant experience. Many of the unemployed in Ohio have been out of a job for a year or longer. “For people who have been unemployed a long time, it is a mechanism they can use to get back into the workforce,” he said
But Bowblis said the downside for temp workers is they usually are paid less than full-time employees, and they often do not receive health insurance benefits. He said work can be inconsistent, and job security is limited.
Richard Wahlquist, president and CEO of the American Staffing Association, said some staffing companies offer health insurance, vacation and holiday pay. The average temporary worker or contract employee earns about $12 per hour, and some are eligible to participate in retirement plans. Employers pay staffing agencies set fees, and the agencies are responsible for all the personnel costs, including government withholdings such as workers’ compensation and unemployment insurance.
“It’s generally not cost effective to try to replace a full-time worker — when a company has a full-time need — with a temporary employee, because you will have all the costs associated with the employee that the staffing firm is going to include in its bill rate,” Wahlquist said. “The principal reasons companies use temporary workers are flexibility and access to talent.”