The hiring of temporary employees traditionally augurs the addition of permanent staff. As employers grow more confident about their own needs and the economy, they convert contingent workers to staffers after several months, or bring on other employees.
While that's still the case, staffing firms and company executives say temporary employees are keeping that status longer, in part due to nervousness about the unsettled economy. Also, many businesses are using contractors and other temp workers on an ongoing basis to better meet fluctuating demand and enlist workers with specialized skills for short-term projects. Firms also can save on benefits costs.
Most of the workforces of staffing firm Kelly Services' large clients are made up of contingent workers, says CEO Carl Camden. Many prefer moving among jobs, he says.
Partly as a result, the addition of contingent workers the past two years hasn't consistently led to stronger permanent job growth. The number of temp workers placed by staffing firms is up 20% since June 2010, while total payrolls are up just 2.3%.
Manpower CEO Jeff Joerres says about 30% of the temporary employees his staffing firm has placed this year have been converted to permanent vs. 45% last year. "They're loath to hire because they've been burned too many times" in a halting recovery, he says.
Chris Ellis, owner of Helping Hands Health Care of Cincinnati, recently hired five temporary office workers. While the home care provider normally would convert several to full-time after a few months, Ellis worries the new health care law will force him to pay a larger share of employees' health insurance premiums.
Sophelle, a technology consultant for retailers, recently nearly doubled its temporary staff to 19, while its permanent staff of 55 has risen just 37% the past two years, says CEO Doug Weich. Temporary workers must be experts on certain software for projects, Weich says.