The Temporary Staffing Industry

by Staff - Original publish date: January 18, 2012

In September and October of 2004, U.S. firms topped the 100,000 mark in announced job cuts, according to John Challenger, who heads the Chicago job placement firm Challenger & Christmas. These layoffs do not give much confidence for future business conditions, he added. However, the figures recently released by the Labor Department show positive signs, particularly in the temporary staffing category.

The temporary staffing business has been one of the fastest growing industries in the economy. Since September, the number of temporary workers increased by 87,000, nearly a quarter of the jobs added nationally. Although temporary work positions may be the first to go in bad times, they are also the first to resurface in good times.

The First to Benefit From Growth, and Suffer From Slowing

Many companies turn to agencies to avoid the pain of hiring and firing long-term employees and costly unemployment insurance and workers' compensation. Companies take advantage of the flexible nature of their temporary work force, letting them go in initial cuts and hiring back when needed. They often take on temporary workers who are already familiar with the job responsibilities and company environment.

Since many temp workers are still not granted benefits (much less severance), it is cheaper for the contracting company to hire and fire temp workers at will. After all, that's one of the corporate "benefits" of using a temp work force. This obviously translates into total job insecurity for the worker.

A temporary worker signs on for a job fully aware of the contingency of his or her employment. Staffing agencies are not legally required to find work for temps - they only act as a mediator between potential employees and client companies, creating a group of job seekers in a constant state of flux. However, the industry was created to help companies weather economic ups and downs, matching up a relative workforce with a relative economy. Temps may be first to get the ax, but they're also the first to get rehired. That's the nature of the industry.

Temps Help Companies Weather the Storm

Companies can get a little overzealous with job cuts. Employees perform essential tasks, and when companies go through cutbacks, those tasks still need to be completed. So, what's the answer? Hire temps. "The economic slowdowns have positive and negative effects that balance each other out," said Greg Booth, CEO of Net-temps, an online recruiting agency.

"Businesses are using temp workers rather than full-time jobs as a way of protecting against a drop in their orders," Challenger said. During economic slowdowns, companies have the potential of reporting record profit margins, because they push aggressively on the cost front. Many of them hire temporary workers because they do not want to pay the benefits associated with full-time workers.

For the employer, there are many benefits to hiring temporary employees. The time-consuming process of interviewing and hiring is eliminated, and if the temp employees work is not sufficient, the company need only call the agency to request a different worker.

New and Improved Temporary Workers

The temp industry is no longer for those only seeking entry-level positions. A new market has emerged, taking off during the dot-com boom, when the techies were forming companies faster than they could employ them. These high-class temps are hired for a significant amount of money to solve big problems and then disappear.

Mark Paul of Portland, Ore., has spent the last few years acting as an "interim executive". He's filled roles such as CEO of an Internet company, business manager of a tech school and COO of an automotive information-technology shop. Companies hire temps to handle discrete problems without having to commit to permanent employees.

More recently, there has been a demand for temp CFOs to guide companies through new post-Enron corporate-governance and reporting requirements, Newsweek reports. Salaries can start as high as $150,000 and pass the $1 million mark. Not a bad deal for temp work.