But that nuclear renaissance is imperiled by an impending shortage of talent with the technical skills and training to operate plants safely and effectively. A recent study by the Nuclear Energy Institute found that more than half of the industry’s workers are older than 47, and that as many as 27 percent will be eligible for retirement over the next five years.
In the face of that potential crisis, Linn State Technical College in Linn, Missouri, has seized the initiative. With the assistance of federal grants and donations of equipment and expertise from the nuclear industry, the two-year school has developed a nuclear technology program that trains students in specialties such as radiation protection, instrumentation and control, reactor operations and quality control. Since Linn State began the program in 2004 with 10 students, enrollment has grown steadily, and this year 71 students are enrolled.
Department chairman Bruce Meffert is quick to share the credit with outside players who played important roles in the growth of Linn State’s program. It was Chris Graham, a consulting health physicist at AmerenUE’s Callaway Nuclear Plant near Columbia, Missouri, who actually conceived the idea of a two-year program for nuclear technicians when he became concerned about the potential talent shortfall.
William H. Miller, a professor at the Nuclear Science and Engineering Institute at the University of Missouri in Columbia, helped provide funding for Linn State from a $4.8 million Department of Energy grant that the university had obtained to improve nuclear infrastructure and education. Additionally, companies in the nuclear industry contributed hundreds of thousands of dollars’ worth of equipment and technical expertise.
“The support from the industry has been particularly important,” Meffert says. “Whether it’s donations or academic help, the industry usually makes sure that I get what I need.”
But Meffert’s and Linn State’s genius has been leveraging that help to achieve ever more ambitious goals. Originally, the program only offered a certification in radiation protection, but this year Meffert added three specialties to the program. Industry demand—and the allure of $50,000-a-year starting salaries for graduates—is so great that by next year, Meffert envisions scaling up the program to accommodate as many as 350 students.
“We had to think hard about the expansion—do we really want to do this?” Meffert says. “But the industry needs this, and the jobs are out there for the students when they graduate.” As Meffert explains, the expanded program provides students with the chance to have the sort of lifetime job security that is increasingly vanishing from the U.S. economy.
“These utility company jobs can’t be shipped overseas,” he says. “They have to generate the power here. And you can stay in the same job for 30 years if you want. There’s really no opportunity like it.”
In recognition of Linn State’s prescience in meeting a critical industry need and creating lucrative opportunities for its students, the school wins the 2008Optimas Award for Vision.
The nuclear technology program began in 2004 with just 10 students. but enrollment is now up to 71, with further expansion planned. It has two full-time instructors and an annual budget of $180,000 that has been augmented by hundreds of thousands of dollars of equipment and technical expertise contributed by nuclear utilities. |
Linn State Technical College offers training in civil, computer, industrial and transportation technology and is one of the only a handful of U.S. educational institutions that train students to work in nuclear power plants. The nuclear program offers specialization in radiation protection, instrumentation, reactor operations and quality control. |
Workforce Management, October 20, 2008, p. 28 —Subscribe Now!
Crisis Could Set Pension Deficit Record, S&P Says
Companies in the S&P 500 could face their largest pension deficit ever because of this year’s financial crisis, according to a new report.
At the end of 2007, S&P 500 companies’ pension plans were overfunded by $63 billion—the highest since 1995, according to the report by S&P analyst Howard Silverblatt. Companies predicted an 8 percent return on assets in 2008, but “any pension fund manager that is even breaking even this year is most likely demanding a bonus,” he wrote.
Pension funds of S&P 500 companies have 61 percent in equity, 28 percent in fixed income, 4 percent in real estate and 7 percent in other investments.
“The U.S. market is down over a third, and that’s good compared to the emerging markets that are down over half this year alone—so that 61 percent in equity may not be doing that well,” Silverblatt said in the report. “When you calculate it all out at the current market returns, or even assuming a nice Q4 rebound, you get a number that is worse than the $219 billion in underfunding reported in 2002.”
He said the solution to the problem is “large unplanned cash infusions.”
Silverblatt predicts that few companies will remain overfunded, which will result in more disappearing defined-benefit plans.
Filed by Timothy Inklebarger of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Raises Next Year Will Be Skimpiest Since 9-11, Surveys Find
Workers—those lucky enough to keep their jobs, that is—will earn significantly smaller raises and bonuses next year, as companies are quickly revising their compensation budgets to control operating costs.
A large number of corporations will cut pay increases in 2009 to the lowest level in years, according to two surveys released Thursday, October 23, that measure the impact of the economic slowdown on payrolls.
One, from consulting firm Hewitt Associates, found that 42 percent of executives at more than 400 large corporations plan to decrease pay raises by 1 percentage point next year. Salary increases are now projected to average 3.1 percent, the lowest since Sept. 11, 2001.
“It’s not so much that companies are looking to cut costs,” said Ken Abosch, head of the compensation consulting business at Hewitt Associates. “It’s that they’re focused on slowing down the growth of their existing expenses.”
Not surprisingly, perhaps, the retail industry is expected to award the smallest raises next year—2.9 percent—while health-care companies are projected to increase salaries by 3.6 percent, the largest hike in pay for workers in any industry.
A separate survey of large corporations conducted by consulting firm Watson Wyatt Worldwide found that about 30 percent have reduced their pay budgets and expect to boost compensation by only 2.5 percent next year, down from the 3.7 percent increase they had originally earmarked.
While it’s sure to be unwelcome news for many workers, it beats the alternative. Watson Wyatt also found that roughly a quarter of large companies are now planning layoffs next year, while another quarter will institute a hiring freeze.
The employment picture, bleak to begin with, appears to be getting worse: New jobless claims jumped by 15,000 the week of October 12—10,000 more than expected—according to data released by the Labor Department on October 23. Total jobless claims now stand at 478,000, close to the levels in late 2001.
Filed by Mark Bruno of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Survey Workers Want Employer Help With Health Goals
Employees say they would like to improve their health status but need their employers to help them do it, a survey by the Washington-based National Business Group on Health has found.
However, the demands of work, personal life and overall stress levels are keeping them from pursuing their health improvement goals, said employees responding to the survey.
In its survey, the National Business Group on Health found that while 88 percent of employees have taken steps to improve their health within the past year or have been regularly doing so for more than a year, work demands are preventing 47 percent of them from leading a healthier life.
Employees also said they want health care communication targeted to their specific needs and interests, and to learn more about how to save money and get more value from their health plans, the survey found.
When asked to rank their preferred method of communication, 77 percent of employees said they read health-related e-mails; 65 percent indicated they like getting home mailings; and 55 percent said they use their employer’s Web site or intranet. While the vast majority said monthly or quarterly communication would be the preferred frequency for health-related communication, younger workers and men said they would like it even more often.
Employees are becoming more engaged in making active health care choices during annual enrollment, the survey found. Almost three-quarters (73 percent) said they reviewed their health plan options for their 2008 annual enrollment, and of those, 24 percent switched to a different plan. The tools employees found more helpful in making their decision were out-of-pocket-cost calculators, used by 63 percent; enrollment guides, used by 61 percent; and plan comparison tools, used by 60 percent.
More than half (54 percent) of employees said they would take advantage of health-related activities if offered by their employer as a way for them to improve their health, the survey found. Of that group, 59 percent said they would get on-site health screenings; 55 percent would use work-site fitness centers; 53 percent would enroll in a weight management program; 52 percent would participate in a Web-based wellness program; 52 percent would see a work-site health care provider; and 49 percent would work with a health coach.
Almost half (48 percent) of those surveyed said they completed an online health assessment to find out whether they had any health risks based on lifestyle or family history. Of those who completed an assessment, 19 percent said they did so because it was a requirement to enroll in employer-sponsored health care coverage, while 32 percent did so because their employer provided a financial incentive.
After completing an assessment, 51 percent of employees carefully reviewed the personal report they received, 35 percent made lifestyle adjustments to minimize the risks identified, and 22 percent shared the results with their doctor.
Of those who did not complete an assessment, 48 percent said it was not offered by their employer, and 34 percent said they were not aware that online health questionnaires were available to them.
The survey, which was conducted online July 10-21 by Fidelity Investments, included responses from 1,502 employees working full or part time at employers with 2,000 or more employees. The survey was funded by the National Business Group on Health for its members’ exclusive use.
Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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GM Cuts 401(k) Match, Plans More Salaried Layoffs
General Motors is stopping its matching payments to all employees’ 401(k) savings plans, a spokesman said Thursday, October 23. The company also is preparing another round of salaried-job cuts.
GM told employees Wednesday, October 22, about the temporary discontinuation, effective November 1, via a Web-based announcement, spokesman Tom Wilkinson said. GM had matched 401(k) contributions up to the first 4 percent of employees’ income, he said.
The cuts were announced amid new reports that GM will be stepping up efforts to reduce costs beyond the $15 billion in savings and asset sales identified during the summer.
GM is planning to make involuntary cuts in its salaried and contract workforce in response to a deepening slump in U.S. auto sales.
GM, in a letter to executives, said the cuts would start in late 2008 and early 2009.
“Actions are being taken throughout GM’s global operations to address our increasing need to conserve cash,” according to the letter, which was seen by Reuters.
GM is also temporarily stopping its programs helping salaried employees with college tuition and child adoption. The company will stop accepting applicants for that assistance January 1, Wilkinson said.
Although the program cuts will save GM money during a tough financial time, the decisions also remind employees of the need to “tighten their belts,” Wilkinson said. “Everyone needs to watch the cost of everything. Any opportunities to save cash are important.”
GM had stopped its 401(k) matching program “several years ago,” Wilkinson said. The previous cessation lasted about a year.
Meanwhile, union workers at an Ohio plant that GM plans to close in late 2008 have overwhelmingly accepted a deal with the automaker that provides buyouts and a retiree health care trust, a local official said.
Workers at the GM facility in Moraine, Ohio, represented by the IUE-CWA union, voted 993-82 to accept the plant-closing deal, local president Gaylen Turner said.
It was not immediately clear how big a charge GM would take for the plant closing.
Under the agreement, GM agreed to pay $1.6 billion into a health care trust and to offer buyouts of up to $140,000 to the factory workers in exchange for closing the plant.
Filed by Chrissie Thompson of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
‘Thousands of Jobs’ on Block, Merrill Lynch CEO Says
“Thousands” of job losses will take place after brokerage giant Merrill Lynch is taken over by Bank of America Corp., Merrill’s CEO said Monday, October 20.
Most of the job cuts will occur in the information technology, operations and “corporate-functions” areas, John Thain said in an interview with Bloomberg television.
Jobs in the fixed-income and commodities divisions won’t be eliminated after the takeover is completed, Thain said.
“We haven’t mapped it out in terms of actual number of people, but we are committed to saving $7 billion across the combined platforms, and that will be a challenge,” he said. “Between our two companies, it will be clearly thousands of jobs.”
The company has already cut more than 5,000 jobs in the past 18 months, reducing its payroll to about 60,000 in an effort to cut costs amid a bevy of write-downs related to subprime mortgages.
New York-based Merrill had posted $52.2 billion in losses and write-downs related to subprime mortgages as of October 16, according to Bloomberg.
Charlotte, North Carolina-based Bank of America purchased Merrill for $50 billion in September.
Filed by Aaron Siegel of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Citing Safety Concerns, Union Wants Peoples Gas to Add Staff
A union representing Peoples Gas service workers is calling on the utility to hire 1,000 workers to address shortcomings in the handling of gas leaks outlined in a recent report on safety procedures at Peoples.
In a letter Tuesday, October 21, to the Illinois Commerce Commission, the Chicago Gasworkers Local 18007 of the Utility Workers Union of America urged the utility regulator to require Peoples to beef up its staff. The letter cited an independent safety study by Liberty Consulting Group commissioned at the request of the ICC. The report was made public October 8 at an ICC meeting.
Liberty’s report criticized the way Peoples Gas executed its pipeline safety program and determined that sometimes leaks went unrepaired for too long. The audit called Peoples Gas’ leak backlog “too high” and said that problems were allegedly downgraded before repairs were made, according to Local 18007.
“The matters in the Liberty Report are not new,” John Groenwald, Local 18007’s business manager, wrote in his letter. “Respectfully, we have been sounding the alarm on these issues for several years.”
A representative for Peoples Gas was not available for comment.
Local 18007 called for the permanent hiring of more than 1,000 field workers and service support to “adequately cover emergency, regulator and customer service.”
“Our members are responsible for safe and reliable gas service to every single building in this city,” Jim Gennett, Local 18007’s president, said in a release. “The Liberty report proves we can’t get the job done with a minimal workforce.”
In addition to the mass hiring, the union wants Peoples Gas to implement a recruitment and apprenticeship program to “continually replenish” all skilled emergency response staff and safety-sensitive positions. The union claims that its worker ranks have shrunk in recent years following staff cuts and retirements. The union claims that more than 50 percent of skilled gas workers will retire in the next decade.
Filed by Lorene Yue of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Local Laws on Health Coverage Could Become a Nightmare
When San Francisco’s landmark health care initiative went into effect in January, requiring employer-paid coverage for workers in the city, Doug Slack wondered how his staffing company division could afford it.
The law, which is being closely watched around the nation, requires companies with 20 or more employees to provide health coverage at set rates for qualified workers or pay into a city health fund. For the temporary staffing industry, whose workers typically don’t enjoy company-paid health benefits, the law posed significant challenges. Slack, senior vice president of the northwest U.S. division of Adecco International, worried that the law would send his San Francisco operation into the red.
Under the new law, the global, Swiss-based staffing corporation would be required to contribute $1.76 per hour toward health coverage for its temporary workers in San Francisco who met certain requirements. The law is aimed mostly at lower-paid workers, which, in Adecco’s case, means mostly clerical and office temps. Those positions have much lower margins than professional contract workers. “At $1.76 per hour, it would have taken all of our profits away,” Slack says.
So Adecco did what staffing firms, restaurants and many other San Francisco businesses affected by the new law have done: It passed the buck. Adecco added an extra cost onto client bills to cover the new law, then nervously awaited the reaction.
“It has been a bit of an effort,” Slack says. “But with only a couple of exceptions, we have been able to have our clients view it as a cost of doing business in San Francisco.”
Adecco also managed to find an insurance company willing to provide a health plan for its temp workers who qualify for coverage under the city law.
| “The nightmare for the staffing industry is that we do this with different plans and different states and different cities. Then it becomes an administrative nightmare.” —Doug Slack, senior vice president, northwest U.S. division, Adecco International |
So far, so good. But staffing firms now are waiting to see if locally mandated health coverage that includes temporary workers will get traction elsewhere. What worries companies like Adecco is the idea of other cities adopting their own laws, creating a patchwork health coverage system that might vary dramatically from place to place.
“The nightmare for the staffing industry is that we do this with different plans and different states and different cities,” Slack says. “Then it becomes an administrative nightmare.”
Such a system would affect not just staffing firms but also client companies that make use of contingent labor in different locations across the country.
The San Francisco experience has focused additional attention on the role the nation’s contingent and temporary workforce plays in the issue of health coverage. While the industry as a whole tends to oppose mandated coverage for its workers, there is also growing support for some form of affordable health coverage that temp workers could carry from job to job and city to city. An affordable national plan or health coverage system might benefit not only temp workers but also staffing firms in their quest for qualified contingent workers.
“Some industry leaders believe that finding ways to extend affordable and portable health insurance coverage to temporary and contract workers would encourage more people to consider employment with a staffing firm and consider staying with a staffing firm for longer periods of time,” says Richard Wahlquist, president and CEO of the American Staffing Association.
In the meantime, staffing companies have gotten some relief from the San Francisco law. Under revised rules, temps must have worked 90 days to qualify for coverage under the law, and they must work an average minimum of 10 hours per week over a three-month period. That has reduced the number of temp workers who qualify for coverage in San Francisco.
The American Staffing Association is urging other cities and states considering San Francisco-like laws to include similar eligibility requirements.
Workforce Management, October 6, 2008, p. 36 — Subscribe Now!
Multinationals Hopping Aboard Managed Services
Staffing management systems, which help plan, analyze and execute temporary and contingent staffing usage, are going global. Despite the messy bankruptcy of a company in the U.S. that raised concerns about managed service providers, the use of these software-driven systems to centralize and control contingent staffing continues to gain popularity with multinational corporations doing business from Europe to the Middle East to Asia.
“Typically, this has been a North American model,” says Stephen Holmes, a vice president of Kelly Services Inc. who heads the firm’s global contingent workforce outsourcing practice. “Now companies are looking to deploy this all over world. We just opened a Dubai operation for the Middle East. We opened an office in Brazil. The appetite continues to grow.”
Multinational staffing companies like Kelly, Manpower Inc. and Adecco International are leading the global charge and are seeing their managed services businesses prosper even as overall demand for contingent and temporary workers slows in the weakening economy. Those big staffing firms are also benefiting from their financial transparency as publicly traded companies, which provide client companies with a measure of extra comfort after the collapse of a major player in managed services.
Two acronyms define the business: MSP and VMS. Managed service providers oversee contingent staffing efforts for a client company. One of the primary tools to accomplish that is a vendor management system, a software program that centralizes the screening, evaluation and use of companies that provide temporary and contingent labor.
Ensemble Chimes Global, the largest provider of vendor management systems, collapsed in January after its parent company, Axium International of Los Angeles, abruptly filed for bankruptcy. Pending contracts and hundreds of millions of dollars in unpaid bills for contingent labor were thrown into disarray.
| “Typically, this has been a North American model. Now companies are looking to deploy this all over the world. We just opened a Dubai operation for the Middle East. We opened an office in Brazil. The appetite continues to grow.” —Stephen Holmes, a vice president of Kelly Services Inc. |
The Ensemble Chimes collapse prompted a broad re-evaluation of the managed services industry. Companies that use managed services responded by placing greater attention on the financial strength of managed service providers and vendor management system firms. Client companies have also pressed for tighter control over the flow of money from clients through managed systems to staffing companies, sometimes asking that payments be held in escrow accounts rather than in VMS company accounts.
Some corporate users of managed services are also looking to large staffing companies to play a bigger role as managed service providers. Rather than develop their own VMS systems, companies like Kelly are partnering with existing technology companies to provide that service as part of an overall MSP offering.
Manpower reports it now offers managed services in 80 countries. “We continue to see increasing demand for us to provide this service, and increasingly on a global basis,” says Jonas Prising, president for North America at Manpower Inc. “This is a U.S. export that does not exist as a solution in other parts of the world.”
The legacy of Ensemble Chimes is that corporations are being more selective in who they allow to run and participate in their managed services programs. That may make it more difficult for enterprising but undercapitalized small companies trying to sell new managed services systems or software from breaking in without a large, financially stable partner like a big staffing firm.
“Customers are being smarter and making sure that individual companies are healthy,” Holmes says. “If you are not financially healthy, you are probably not going to be in the mix.”
Workforce Management, October 20, 2008, p. 34 — Subscribe Now!
Special Report on Contingent Staffing Time of Uncertainty
When the national economy tanks, temporary workers are usually the first to go. Job cutbacks hit quickly and sharply, and the rebound is typically long in coming. But the current economic downturn has been different.
Temporary and contingent jobs have been disappearing again, but for a longer time and at a much slower pace than in previous downturns. Temporary jobs have been stagnant or declining since at least early 2007, a period of contraction that analysts say is unprecedented. Yet the total number of lost jobs to date is still just a fraction of the number cut in previous, shorter setbacks.
The unusual situation has experts in the contingent staffing industry and company officials scratching their heads. They are trying to understand the forces at play and determine whether the staffing industry has managed to engineer a soft landing or if more serious job losses are still to come. Some of the largest global staffing companies are telling investors the outlook for temporary staffing is so unsettled that they are unable to predict how well—or how poorly —they will perform in the next few months.
Part of the uncertainty comes from the continuing disruptions in the national and global economies and the fact that contingent and temporary staffing has yet to undergo what many expected would be a steep drop earlier in the cycle. Indeed, the performance of the U.S. staffing industry has thus far been a tale of two sectors. Demand for skilled, professional workers in fields like health care and technology has remained strong even as cutbacks hit the commercial sector, populated by lower-skilled clerical and manufacturing workers.
“Even in a down economy, some staffing sectors and firms in some parts of the country continue to fare pretty well,” says Richard Wahlquist, president and CEO of the American Staffing Association in Alexandria, Virginia. “Generally, the commercial sector has borne the brunt of the downturn. Professional sectors have, for the most part, held up the best.”
Brief stints for pros
The use of professional short-term contingent workers has been the fastest-growing sector in the contingent and temporary staffing industry over the past few years. The commercial sector, which once accounted for the bulk of temporary and contingent jobs in the U.S., has been overtaken by the professional side, which now accounts for more than half of the overall temporary job count.
Those professional temporary workers are more in demand partly because they are assigned to more important and integral corporate tasks and projects, so companies are less likely to immediately let them go. According to Jon Zion, president of Eastern U.S. operations for Robert Half International, which specializes in professional staffing, the reluctance to cut professional contingent workers has become more widespread in the past few years. Corporations were much more likely during the last recession, in 2001-02, to cancel ongoing projects that used temporary workers rather than let those projects run their course, Zion says.
“A lot of companies realized that when they stopped, it impeded their ability to grow when the downturn ended,” Zion says. This time around, companies are choosing to proceed with projects despite the slowing economy. “They have investments in strategic projects and they are bringing them to conclusion.”
The real test will come once the current round of strategic projects runs out. If the economy remains soft, companies may choose to delay additional projects that use professional contract workers, which could spell trouble for the staffing industry. “Companies have seen bad news long enough to think twice about starting new initiatives that the staffing industry supplies,” says Jonas Prising, president for North America at Manpower Inc., which is based in Milwaukee. “My best guess is that companies are probably going to slow down their use of professional skills.”
How much slower the professional staffing sector gets could be determined not just by the state of the economy but also by the availability of skilled labor, particularly in fields like engineering, technology and health care. The need to find the right skills to fill critical jobs could continue to bolster demand for certain types of professional temporary workers even if the economy worsens.
Tech workers are among those who are most in demand. During the last recession, which was tied to the end of the technology bubble, contingent tech workers were among the first to go. Not so this time around.
“In the current downturn, I have found it very interesting how information technology has prospered,” Zion says. “Maybe tomorrow is another day. But up until now it has been very good.”
Staffing firms hold steady
The combined strength in professional staffing and the gradual decline in overall temporary staffing have proved to be a calming influence on staffing companies. While there has been belt tightening among staffing companies, there have not been widespread cutbacks and staffing office closures. Staffing companies say they are hoping to maintain their office networks so they are ready when the economy revs up again.
“Nobody is pushing any panic buttons,” says Steve Berchem, American Staffing Association vice president. “I’m not hearing alarm bells going off.”
But he adds, “That isn’t to say there hasn’t been an impact.”
One of the puzzling aspects of the current downturn is that while the number of lost temporary jobs has been modest, the total still represents the brunt of overall job losses in the economic slump. Staffing Industry Analysts, a research and consulting organization, has been closely tracking the temporary staffing sector and comparing the current situation with earlier economic downturns.
In a recent report on its findings, the Los Altos, California-based company noted that the U.S. shed 370,000 temporary jobs in 2001 as a result of the last economic slump. That total represented 22.7 percent of the total 1.6 million jobs lost in 2001. By comparison, the U.S. lost 189,000 temporary jobs from January to July 2008. But the latest staffing cuts represented 40.8 percent of the 463,000 total jobs lost in the U.S., an indication that the temporary sector has been hit with an even bigger share of overall job losses this time around.
| “Talent that moves around is what is in demand. … We have clients that are coming to us to help get contingent labor from one place to another, to the extent that laws allow you to do that.” —Lance J. Richards, global practice leader for HR, Kelly Services Inc. |
Andrew Steinerman, an equity analyst who covers staffing companies for JPMorgan, has been mulling the conflicting signs in the contingent labor force for months. In his most recent report in early September, he noted another worrisome sign. The U.S. typically shows an increase in temporary hiring in August compared with July. But Steinerman says temp jobs instead were showing declines in August. The downward trend was troubling, he says, and suggested a continuing decline in temporary staffing during the second half of 2008.
Barry Asin, chief analyst of Staffing Industry Analysts, says that while the outlook for the rest of the year is still too murky to predict, he says evidence of a recovery has yet to appear. As Asin points out, one of the reasons temporary staffing is so popular with U.S. corporations is because of its flexibility. Companies can use temporary help to expand or shrink staffing levels to respond to economic conditions without the complications of hiring and firing permanent employees.
The gradual rate of temporary job loss suggests that companies have been making much more strategic and careful use of contingent staffing than in the past. A more sophisticated and measured approach to temporary staffing can help companies avoid hiring too many temporary workers too quickly during an economic expansion, and the same principles can be used to gradually reduce temporary staffing when the economy starts to cool.
“After the last downturn, we didn’t have a big a ramp-up,” says William Grubbs, COO of Fort Lauderdale, Florida-based staffing firm Spherion Corp. “Our clients have been using temps a little bit more strategically and are managing their workforces better than in the past.”
During the 2001-2002 recession, the nation’s temporary workforce saw several months of double-digit drops before the sector started to recover; there has yet to be a double-digit loss in this down cycle. Steinerman notes that the U.S. has lost about 10 percent of its temporary workforce since the employment peak in December 2006. But that’s only about half as big a decline as occurred during the 2001-2002 slump.
International picture
Earlier this year, some large multinational firms were able to offset temporary labor weak spots in the U.S. with gains in other global markets, including parts of Europe. Those revenues, combined with the continued strength in U.S. professional staffing, helped bolster the bottom lines of many global staffing companies at the start of 2008.
But soft spots have started popping up around the globe in temporary staffing, and global staffing corporations were reporting weakening profits this summer. The one bright spot is the continuing global demand for certain hard-to-find professional contract workers such as nurses and engineers. Global staffing companies that are able to locate the right workers and effectively move them across borders to fill crucial temporary jobs are finding a ready market.
“Talent that moves around is what is in demand,” says Lance J. Richards, global practice leader for human resources consulting at Troy, Michigan-based Kelly Services Inc. “We are seeing mobility from around the world. We have clients that are coming to us to help get contingent labor from one place to another, to the extent that laws allow you to do that.”
While staffing companies look for opportunities in areas such as health care, technology and international talent mobility, they are also keeping a close watch on trends in U.S. temporary staffing, looking for any sign of a turnaround.
“The silver lining is that at some point, we will reach rock bottom,” says Manpower’s Prising. “Since we have been in this for quite some time, you could argue that rock bottom can’t be that far away. Of course, that is just a hope and nothing else.”
Workforce Management, October 20, 2008, p. 33-37 — Subscribe Now!