An upswing in temporary, flexible and contract employment could be a preview of employment growth in the overall economy.
Staffing is booming!” claims Cindy Neal of Express Employment Professionals, and that’s a good thing for business leaders looking for signs of economic growth. The staffing industry is traditionally a leading employment indicator—“the first to feel the effects of a weak economy, but also the first to recover,” says Steve Simpson of Volt Workforce Solutions. iBi spoke with leaders of four local staffing firms to get their thoughts on current industry trends, the impact of the recession and healthcare reform, the strengths and weaknesses of the Peoria-area labor market, and more.
What trends are you currently seeing in the temporary staffing industry? Does the situation in central Illinois mirror what is happening nationally?
CINDY NEAL, EXPRESS: The staffing industry is forecast to be one of the fastest growing industries in North America over the next several years, if not the fastest. The projection is for 14-percent growth. The staffing industry continues to be a leading indicator of the overall employment market. Express Employment Professionals experienced a 46-percent sales growth in 2010, and sales are up an additional 40 percent YTD in 2011, an indicator of a strengthening employment outlook. Express put more than 294,000 people to work in North America in 2010, while our franchisees report a strong outlook for 2011. Express expects growth in excess of 20 percent in 2011.
DOUG OREAR, MANPOWER: On a national level, the temporary staffing business is doing very well. The current economic situation has brought about an increased demand for contingent or temporary workforces from employers in a variety of industries. Simply put, temporary workers allow employers the flexibility to keep operations running without having to commit to hiring permanent employees that they might have to let go if business doesn’t stabilize or increase. As business does pick up, these temporary workers are often the first offered the permanent jobs when the timing is right. Almost a year into the recovery, we are starting to see more of a conversion from temporary to permanent recruitment, which is very encouraging for both employers and workers.
Here in central Illinois, similar patterns have emerged. Local business has been tentative in their hiring commitments throughout 2010 and used the staffing industry liberally to augment their growth, which came in fits and starts. Business is now faced with the prospect of continued growth, and to maximize their opportunities, they will have to consistently commit to hiring necessary talent. I do not anticipate a dramatic hiring trend—more of a strategic hiring trend with continued staffing service augmentation.
STEVE SIMPSON, VOLT: While there’s continued uncertainty in the economy, we’re seeing increased demand by our clients for contingent/temporary employees as a flexible and realistic way to respond. In central Illinois, we’re seeing our clients turn to us for project-based work, where Volt is providing Statement of Work services, project management and managed staffing programs, in addition to contingent workers. We’re getting requests for specialized talent in engineering, IT, accounting and finance. This aligns with what is happening in other parts of the U.S.
PAT DRAKE, FIDELITY ON CALL: One of the developments in our industry in the past several years has been with Vendor Management Service groups. These companies have contracted with some hospitals as an exclusive supplier, meaning that every part of customer communication went through the VMS. Most of these companies don’t have staff themselves, but facilitate the orders, billings and all communication. Recently, we have seen a major shift, with hospitals returning to a direct relationship with our company. In some instances where the VMS still exists, they have come to trust us enough that they have stepped away from the communication so we can work directly with the hospital. We have also had a sharp increase in the number of contract requests we are receiving.
Nationally, it is projected that the aging baby boomers will set off any number of healthcare booms, and staffing companies that place nurses in hospitals are projected to be beneficiaries. The aging population is also contributing to a growing shortage of nurses. By 2020, the shortfall of demand vs. supply is expected to reach 29 percent.
How has the recession impacted your industry? Do you believe that these changes are permanent?
NEAL: Staffing is booming! The staffing industry is one of the first industries to experience growth coming out of a recession, as employers turn to contract and contract-to-hire employees to cautiously expand. As these companies begin to rehire, we first see a surge in demand for contract workers, which typically turns to permanent hiring as confidence in the economy increases. They want to rebuild their teams, so at this time they are turning to staffing agencies to find a more flexible workforce to handle increasing workloads. We have experienced a dramatic surge in contract hiring and have begun to see an increase in permanent placements as well.
OREAR: History shows that during times of recession, the staffing industry is usually one of the first to feel an impact, as companies stop hiring and start laying off contingent labor. Conversely, as the recession eases and business starts to improve, staffing companies are the first to feel the energy and demand for business. As the economy improves, businesses want to remain agile, so they continually balance their permanent and contingent workforce levels. The contingent workforce allows employers to seamlessly adjust during the economic recovery by gradually and efficiently rebuilding permanent staff while responding to market demands. This strategy allows companies to manage costs and invest in the critical talent required to drive the business to heightened levels of success.
SIMPSON: The difficult economy of the past couple of years impacted Volt and our industry overall in terms of demand and revenues. As contingent staffing ties directly to the GDP, we’re always the first to feel the effects of a weak economy, but also the first to recover. So, while full-time hiring remains slow, as economic conditions are improving, Volt is seeing increased demand for temporary staffing services, and the staffing industry overall is leading the recovery. Since October 2009, the staffing industry has added almost half a million jobs to the U.S. economy, a 29-percent increase in our industry, while private jobs grew at less than one percent, according to the U.S. Bureau of Labor Statistics. According to our trade group, the American Staffing Association, the slow recovery in full-time hiring is a function of a lack of demand, rather than a permanent change in the economy. As businesses recover from the 2007-2009 recession, we’re seeing that they continue to be cautious in their spending and prefer the flexibility of temporary hiring.
DRAKE: Nationally, medical staffing—especially travel nursing—started to decline in the fourth quarter of 2008. We didn’t start to see a decline until the end of 2009. In 2009, the national nursing companies saw income declines of up to 84.3 percent, with one filing for Chapter 11 reorganization. In 2009, locum tenens (temporary physicians) was the only area that saw growth, and it was the first year that it grew more than travel nursing. In 2009, the PRN side of our business was stronger than the contract side. We grew in 2010, with the PRN side remaining strong and the contract side returning to prominence in the second half of the year. We are projecting growth for 2011.
Nationally, everyone remains cautiously optimistic that the decline in demand will be temporary. The entire healthcare industry is forecasted to grow 22 percent through 2016, in comparison to 11 percent for all other industries. In total, there will be about three million new healthcare jobs. Home healthcare providers are projected to increase 55 percent. Another area of rapid growth is physician assistants.
What changes have you seen in the demographics of those seeking temporary employment?
NEAL: Temporary staffing assignments in the U.S. are roughly 1.7 percent, meaning 1.7 percent of the workforce is on a temporary or contract assignment at any given time. In other developed countries, the rate can be much higher; for example, over 4.5 percent of workers in the U.K. are on a temporary or contract assignment.
Contract employment will continue to become more mainstream in the coming years, and will especially appeal to older workers looking for a glide path out of the workforce, as well as to younger workers focused on enhancing their skills and experience through diverse work assignments.
SIMPSON: Every demographic is represented in our candidate pool, but overall, we’re seeing more members of the baby boom generation seeking work through our models who are highly skilled and with an extensive work history. We’re also seeing more members of Generation Y.
DRAKE: During the past few years, we have seen some untypical candidates enter the field as CNAs or pursue nursing degrees. I recently spoke with a class in central Illinois with quite a few men in it—aged 25 to 60—that were redirecting their efforts to getting CNA degrees, with the thought of pursuing nursing degrees. Typically, nursing has been a profession women have dominated. Layoffs, plant closings and more have sent some men in a different direction. During the same time period, many retired nurses came back into the labor force, as they had to be the breadwinners. Several of our team members were or are in the same position.
What are the strengths and weaknesses of the labor market in Peoria?
OREAR: There are unique strengths in the local labor market; for example, the healthcare labor pool is vast for this size of a community, but we still need more talent in this industry to keep up with demand. If I had to boil it down to one area, I would say that the strength of the labor market in Peoria is the broad base of manufacturing talent. Unfortunately, this also represents the weakness of our labor market, since manufacturing jobs have been deteriorating over the last decade, with a dramatic loss in the second half of 2008 and throughout 2009. Many of the entry-level positions are not coming back. The displaced manufacturing workforce possessing skills no longer in demand are not adequately trained for the emerging job trends.
SIMPSON: While Peoria ranked 156th out of 343 in a recent study on metro job markets, we believe that Peoria has proven to be a desirable labor market due to the amenities offered in our community in conjunction with our cost of living.
DRAKE: We started in 1994. We operate differently than a lot of temporary employment companies. When we hire a full-time staff member, our goal is to hire quality, qualified CNAs, LPNs and RNs who want to work for us for the long term. If you check our website, you will see a posting for Billie Dircks, who has worked for us for 15 years! That is our goal. We recruit them, treat them properly, keep them busy and they are so satisfied they don’t want to leave. This provides our clients and those residents/patients of the facility with the continuity of care that they deserve. It also helps the facility because they don’t have to repeatedly orient new staff.
Several years ago, you could run an ad and have more responses from qualified candidates than you could use. Today, it is much more difficult to find and hire quality staff members. Peoria, however, is not nearly as difficult as some areas of the state.
In which industries/positions do you expect to see growth in the coming years?
NEAL: Express’ first-quarter hiring trends survey of more than 15,000 current and former clients shows 29 percent of respondents plan to hire for commercial positions, 19 percent plan to add administrative jobs, and 12 percent have plans to hire for engineering positions in early 2011. The survey also reveals that nine percent plan to hire for marketing positions, seven percent plan to hire for information technology, and six percent plan to hire accountants.
CareerBuilder.com found in its annual job forecast survey that more U.S. employers plan to employ contract or temporary workers in 2011 than in the last two years. According to their survey, 34 percent of hiring managers plan to hire contract or temporary workers in 2011, up slightly from 30 percent anticipated in 2010.
OREAR: Manpower is continually researching the market to make assessments about the current needs of employers and what they anticipate their needs to be in the future. In a recent survey to determine the hardest jobs to fill in the United States, Manpower found that engineers, nurses and skilled/manual trades are among the nation’s most challenging positions to fill. In the five years we have performed this research, the same positions appear on the list again and again. Despite the current economic instability and high unemployment, there are still skills that the U.S. workforce seems to lack. In 2010, the 10 hardest jobs to fill, as reported by U.S. employers, were:
- Skilled trades
- Sales representatives
- Nurses
- Technicians
- Drivers
- Restaurants & hotel staff
- Management/executives
- Engineers
- Doctors, other non-nursing professionals
- Customer service representatives, customer support.
This tells us there is a talent mismatch between the skills employers need for growth and the skills of those looking for work. Our workforce needs to be more open to retraining and upskilling for jobs that are in demand. And, our government, business leaders and educational facilities need to take action together to ensure students are being enticed to enter these fields.
SIMPSON: As the economy continues to strengthen, we expect to see growth in manufacturing and technology-related staffing, as well as increasing demand for engineering, finance and accounting, and project management talent in the coming year.
DRAKE: Eight of the top 20 fastest growing jobs are in the healthcare field. Top positions include dental hygienists, home health, personal and home care aides; medical and physical therapist assistants; and pharmacists.
How has recruiting changed from an employer’s perspective?
NEAL: Recruiting is more fluid now than at any time in recent history. No longer do you place an advertisement one day and wait for applicants. Recruiting is occurring 24 hours a day, seven days a week. It’s a marketplace of talent that’s always connected. This can overwhelm the resources of smaller firms and can stretch even the most robust HR departments, creating a great demand for employers to partner with full-time staffing partners.
Just as more organizations turn to specialists in accounting as the tax code becomes increasingly more complex, organizations turn to staffing firms to help them navigate an increasingly challenging employment market.
OREAR: This recession has forced employers to make some major changes in their recruiting strategies. Incorporating a contingent workforce into their business strategies has been a significant adjustment, and some companies have adapted to this approach better than others. Due to the fact that many employers reduced their human resource departments as part of the overall cuts they had to make in the past two years, they’ve had to rely more heavily on workforce solutions companies like ours.
SIMPSON: Recruiting technologies have changed dramatically over time, with a majority of job requisitions and resumes being posted online and through social media networks like Twitter, Facebook, LinkedIn and Zynga. Social media and mobile apps are definitely making the transactional side of recruitment faster. And we know these technologies will continue to evolve. But in our industry, a recruiter doesn’t just use technology and job boards to place people. Recruitment is still a people business. Although we may get a similar job description from multiple clients, it’s up to our recruiters to make the right skills match and culture match for our clients. We also place a strong focus on the candidate experience to meet their career goals.
DRAKE: The Internet has drastically changed the way we advertise for and recruit new staff members. In the past, most of our advertising was in print media, and we used both major and targeted job boards. We also searched job boards. As the results of doing this became less and less productive, we implemented some major changes for recruiting. Now we have found that social networking is a good way to find quality recruits. Referrals also work well.
How is the implementation of healthcare reform impacting the industry?
NEAL: There are still many questions about the effects of the healthcare bill. Some concerns are about the bill’s constitutionality and its looming deadline. It’s too early to identify a tactic to approach it, but it could define the staffing industry’s future and have an incredible impact on business. One positive we are seeing is that it may drive bigger companies to look for staffing solutions to help adjust their workforce and keep costs down. Also, smaller businesses with 50 employees or less may turn more to flexible staffing to help maintain their exempt status.
SIMPSON: Analysts in the staffing industry indicate that the biggest impact of healthcare reform will be the “play or pay” mandate, which requires employers to offer health insurance to their employees or pay a fee to the federal government. These fees are scheduled to take effect in 2014, and would apply to large employers who employ more than 50 full-time employees. Because staffing firms are in the business of employing large numbers of workers, this requirement could increase the labor costs of staffing firms dramatically.
DRAKE: Projections are that the increase in the amount of insured people will subsequently increase the demand for care. That will increase the need for healthcare professionals, and ultimately result in increases for medical staffing companies.
Do you think that employers’ perceptions of temporary workers have changed over the last five years?
NEAL: Small businesses are the backbone of the American economy, and 70 percent of our client base is comprised of small businesses. In the aftermath of the Great Recession, we polled more than 9,000 business leaders representing a wide variety of industries regarding stress in the workplace. Thirty-six percent of respondents describe their current work stress level as “very high” and many of them “overwhelming.” Another 49 percent say their stress levels have not decreased in the past year.
Employers see temporary workers as an asset in today’s job market. Flexible staffing can help alleviate that stress that businesses feel by adding additional help and support for core staff. Flexible and supplemental staffing is an efficient option that keeps businesses profitable and can keep them operating much longer. It allows them to add workers when demand for goods and services are high.
OREAR: Yes. This recession has helped employers understand the real value of a contingent workforce. We anticipate employers will incorporate a blended workforce, with permanent and temporary employees, as part of their overall business strategy for years to come.
SIMPSON: Employers’ perceptions are definitely positive today. As the economic recovery continues, businesses see temporary workers as a strategic way to increase their efficiency and maintain their agility to respond to the ebb and flow of the global economy. A new wave of workers is emerging. More contingent workers than ever before are top performers with specialized and sought-after skill sets. These workers look to staffing services as their full time employer to place them in successive contingent positions with dynamic companies. The caliber of talent of these workers makes them a critical component in fulfilling our clients’ requirements in this variable economic climate.
DRAKE: In most of the places we work, we are treated as an extension of their team. Years ago, there was a more antagonistic attitude on the part of the staff in some of the facilities we worked. However, we have become such an established part of the industry—and continually counsel our staff members on their approach and attitude—that overwhelmingly, we are a trusted part of the team. iBi
