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.
At least one-third of people who start in temporary jobs will land a permanent job from a temporary assignment, according to Sandy Huddelston of The Palmer Group, a Middletown-based staffing service.
Temporary hiring now is “way better” than it’s been since the economy started its freefall five years ago.
“The reason for that is companies get to look at the people and their work and the people get to look at the company and what they offer,” Huddelston said. “A lot of times it works out great for them.”
How quickly or easily they get a temp position can depend on the requirements for the work involved, as well as if an employee already is well-versed in a trade or not, she said.
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.
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.
The amount of workers employed by temp service agencies in Butler County increased by 14.4 percent to 2,943 in 2011 from 2,571 the prior year.
Ohio saw similar growth, with workers employed by temp service agencies rising by 13 percent to 98,885 in 2011 from 87,505 in 2010.
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.
Nationwide, 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 very selective and want good workers but they also want to see their work,” Huddelston said.
Using temporary staffing provides more workforce flexibility during uncertain economic times, said Molly Baker, operations manager for C M Temporary Staffing Services in Hamilton.
“If you’re using a temporary employee, you’re not paying benefits like you would have to if you had a full-time employee,” she said. “You’re not paying the worker’s comp, the state and local taxes on that employee, unemployment, any of that.”
In addition, temp workers allow business to fine-tune the size of their workforce, boosting staffing when things get busy and shrinking staffing when business dwindles.
For the employee, it provides the flexibility to see if they actually like the job while receiving benefits courtesy of the staffing agency.
“It’s not like they’re really taking a loss at all,” Baker said.
The current economic climate is seeing employers enact a hiring freeze on permanent employees until they can get a better sense of whether economic recovery will be a long-term or short-term situation, she said.
“With them not knowing it’s definitely going to be long-term thing they’re sort of hesitant to take someone on because of (having to pay) benefits,” she said. “The cost of that has just continued to skyrocket.”
The surge in staffing in 2007 that preceded the precipitous decline of 2008 and 2009 came as hesitant companies started relying on a temporary workforce before making any long-term hiring decisions, Baker said.
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.”
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