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View from HR: Rise in temp workers creates challenges for employers and job seekers

There is much talk these days about the lack of full-time and “permanent” job openings.

Staffing companies thrive by providing temporary workers. At the same time, employers resist the costs and entanglements of full-time jobs. Economists cannot agree on the problem or the causes of this situation. It just seems that jobs that pay well and have good benefits for people with typical skills are hard to find.

We hear two causes from our member companies: Demand for their product or service is still too low, and/or the cost of hiring full-time workers is too high.

Low or inconsistent demand means it makes sense to staff with temporary and part-time employees. Full-time employees are protected from staffing reductions, while the best temporary workers can be hired later for full-time openings. This is a time-tested workforce strategy in much of our economy.

Calculating costs

Cost is more complex. It has always been a barrier to creating full-time jobs, in some sectors more so than others. Industries that grow rapidly and need hard-to-find skills pay what they have to and simply charge their customers more (or cut other costs). Employers with lower profit margins or flat-lined sales do the best they can.

For some employers, health insurance mandates are a new challenge. Depending on the job, the difficulty in finding skilled applicants and the company’s profit or loss margin, avoiding the cost of that mandate by keeping hours below 30 per week can make sense. This is a common point of strategic discussion among employers.

There are some cautions for employees and employers in the part-time or temporary world:

• The vast majority of temporary workers are joint employees of both the employer and the agency. Both employers usually control the workers. An agency is not an automatic way to avoid health care costs or other liabilities, though the parties can contractually decide who pays which expense (such as workers’ compensation).



• There is no single rule setting a maximum number of days that temporaries remain temporary. The best advice is that if you use temporaries or part-timers to avoid certain costs, be sure you know the rules from each regulator. If it is too good to be true, double-check.



• Year-round use of temporaries, independent contractors or part-timers, alongside a significant base of full-time employees, is a very delicate balance. The perceived and real differences in pay, treatment, communications, job security and growth opportunities may become a major productivity and morale cost. It matters less what someone was told when they were hired and more what they believe is fair a year later.



Applicants seeking full-time employment but considering a part-time slot should ask these questions: How many part-timers became full-time employees in the last 12 months? What factors are used to make those decisions, such as work performance, sales and financial ratios? What jobs have a better chance to become full time? Would additional skills help?

Employers pulling some of these less-than-full-time cost levers should increasingly focus on the complex regulations and our government’s renewed interest in identifying scofflaws. Wherever taxes are avoided or health care costs deflected, there is an interested regulator whose rulings can result in an employer paying out more money than if he or she had used a permanent rather than temporary or part-time employee.

Bruce Clarke, J.D., is CEO of CAI, helping more than 1,000 North Carolina employers maximize employee engagement and minimize employer liability. For more information, visit www.capital.org.

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