DCR Trendline December 2013 – Contingent Worker Forecast and Supply Report

“ “Welcome to the final month of 2013! The staff at Trendline is pleased to be wrapping up our first full year of publication. It’s been an exciting year in the world of the contingent workforce. In our last issue of 2013 we once again provide you with key insights into the temporary staffing industry. Our thorough research into pivotal trends and current events, along with our in-depth analysis of contingent worker supply and demand, is designed to give you a pulse of the market.

The DCR National Temp Wage Index focuses on wage trends through the course of the year, analyzing the use of temp workers and tracking related developments in the economy. This month, we track the tremendous growth of temporary worker employment over the past year.

After the sixteen-day shutdown of the U.S. federal government, figures are finally starting to emerge on how the economy and unemployment were affected. In a follow-up to our feature article last month, we examine the impact that the shutdown had on production levels, employment, and major companies. Keep an eye out for our graph on job growth for the month of October.

A major topic of interest to those who have a blended workforce is the new extended OSHA protection of temporary workers. We provide a breakdown of the recommendations provided by a coalition of workplace safety groups to OSHA in a recent forum.

Through the year, Trendline was dedicated to providing our readers with information on the most relevant workforce trends that influence and impact the employment of temporary workers. Now at the end of the year, we list the trends we focused on most heavily in 2013, and provide our predictions on trends we expect to see in 2014.

Our concluding article is appropriately a look back at employment changes throughout the year. We divide our analysis by sector to provide you with detailed figures on which American industries and states experienced the most change.

The TrendLine team would like to thank our many readers for sharing your thoughts, questions, comments and feedback throughout the year. TrendLine strives to bring you the latest trends, news, metrics, and analysis to give you a clearer picture of the temporary staffing market. We, as always, encourage you to send us your questions and suggestions on topics that you would like us to investigate further.

On a concluding note, the DCR Market Intelligence Editorial Staff, along with the entire worker-base of DCR Workforce, would like to extend our wishes for a happy holiday season with continued peace, joy, and success in 2014!

Ammu WarrierAmmu Warrier, President

Inside this IssueNote from the Editor

DCR National Temp Wage Index

Post Shutdown Impact and Recovery

OSHA Asked to Further Improve Temp Worker Protections

TrendLine in 2013

A Look Back at 2013: Sector By Sector

Methodology

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“The most serious question going forward is not simply whether or how more full-time jobs return, it’s whether or how part-time and temporary workers become more valuable.” ~ Michael Schrage, Research Fellow at MIT Sloan School’s Center for Digital Business and Author of Harvard Business Review Blogs

REPORT # 20 | December 2013

TRENDLINEContingent Worker Forecast and Supply Report

Note from the Editor

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DCR National Temp Wage Index

“The recouping of the market after the government shutdown combined with the surge in demand for goods and services due to the holiday season promises growth for the engagement of temporary workers.

An interesting sector of growth for temporary work has been in tree plantation. A Bossier City firm will plant 6 million loblolly pines and other trees this winter, relying primarily on temporary workers.

Recent reports show that U.S. staffing companies employed an average of 2.96 million temporary and contract workers per day in the second quarter of 2013, up 1.8 percent from the same period in 2012.

The Society for Human Resource Management (SHRM) expects hiring in the services and manufacturing sector to increase in November on a year-over-year basis. A survey by the institute found that 41.8 percent of service-sector companies were planning to increase hiring in November, while 49.0 percent of manufacturing employers were also planning to expand their workforces.

According to the Staffing Industry Analysts (SIA), the annual revenue of the staffing industry is about $339 billion. The largest market, the United States, accounts for about 27% of total worldwide revenue. By 2014, revenue for the U.S. staffing industry is expected to reach $139.4 billion.

“The temporary staffing industry has seen tremendous growth in the last few years, and this trend has helped shine a light on the importance temporary workers are having on the workplace of the future. We’re seeing a real trend toward temporary staffing as a permanent addition to American business models, and it is through industry leaders and innovators that we’ll see advancements in temporary staffing best practices evolve.” ~Jason Leverant, COO of AtWork Group“

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DCR National Temp Wage Index

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The U.S. Economy

Cumulative Changes in Jobs from 2009

Demand for Temp Workers Increases in Europe

“The economy seems to be heating up faster than people think. It’s incredibly impressive.” ~J.J. Kinahan, Chief Strategist for TD Ameritrade“

“Recent reports show that from July to September, the U.S. economy expanded at a 2.8 percent rate. State and local governments had their highest rate of spending in four years, while exports rose and home construction increased. However, service spending was essentially flat and the cooler summer weather lowered utility spending.

Reports from the Labor Department show that employers added 148,000 workers in September 2013, and more than one in eight were hired as temporary workers. According to the American Staffing Association, the staffing industry’s stake of job creation is at a 13-year high.

Despite low expectations for the October 2013 jobs report by the Bureau of Labor Statistics (BLS), employers added 204,000 jobs. This far exceeded economist predictions of 120,000 jobs in October. The largest gains were in hospitality, which rose 53,000 in October, and retail, which rose 44,000.

Adecco SA, the world’s largest provider of temporary workers, said that their third-quarter profit rose 61 percent due to higher demand for flexible labor. As the European countries are emerging from recession, the restructuring efforts are driving an increased demand for temp labor. In Spain and Italy, especially, labor reforms are resulting in a growth of hiring. In countries such as France, Belgium and Germany where it is costly to reduce staff, companies prefer to source temporary workers to avoid benefit and pension costs.

Post Shutdown Impact and Recovery

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According to CEO, John Donahoe, the government shutdown came at a particularly unfortunate time, right at the beginning of the holiday shopping season. eBay reported third-quarter earnings that were lower than analyst predictions. Upon the announcement, company shares fell by more than 5%.

CFO Tammy Romo said that while third-quarter earnings were strong, the government shutdown is estimated to have cost the airline $20 million in revenue.

In areas with high concentrations of federal workers, sales at Wal-Mart stores lagged during the shutdown. The company previously expected a growth in net sales of five to six percent for 2013, but has revised these estimates to two to three percent.

The airline felt the impact of the shutdown more than competitors, as Reagan National Airport in Washington D.C. serves as one of their hubs. With business travel for federal workers at a halt, the company saw overall bookings in late September and early October fall by about eight percent.

Sentiments from Various Companies

“Despite all the grumbling out of Washington and from pundits claiming that the partial government shutdown would have significant effects on the economy, the private sector shrugged it off and continued to plow along.” ~FT Advisors economists

“[The shutdown] makes people a little more tentative about spending. It’s not massive, but on the margin, especially people that are trying to make their dollars stretch, they might be a little more conservative.” ~John Donahoe, CEO of eBay

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““PMI Composite Index, 2013

The Purchasing Managers Index (PMI) is a composite index by the Institute for Supply Management (ISM) that reflects the economic health of the manufacturing sector. It is based on five main sub-indexes, including new orders, inventory levels, production, supplier deliveries and employment environment. A PMI of more than 50 indicates expansion of the sector, whereas a reading under 50 represents a contraction.

The ISM reported that the manufacturing PMI in October rose to 56.4 percent from 56.2 percent in September. The services sector, which accounts for the bulk of the U.S. economy, has been grow-ing for 46 months straight, with a PMI reading above 50. A flash estimate in October by Markit Economics was expecting the PMI figure to come in at 51.5 at a 12-month low.

“We are optimistic about a recovery in the manufacturing sector in the second half of the year, and today’s release suggests our optimism is well placed.” ~Thomas Simons, Money Market Economist at Jefferies & Co.“

“

As the year-end and holidays are approaching, researchers and economists are trying to determine if the unanticipated government shutdown of 16 days in October had an impact on the sales and operations of various sectors.

Post Shutdown Impact and Recovery

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During the month of October, when the government was shutdown for 16 days, total non-farm payroll employment rose by 204,000 and the unemployment rate stayed relatively stable at 7.3 percent, up from 7.2 percent in September. The largest employment increases were found in leisure and hospitality, retail trade, professional and technical services, manufacturing, and health care. Among the unemployed, the number on temporary layoff increased by 448,000 (a figure that includes furloughed federal workers).

What Happened to Job Numbers in October?

Job Growth Strong in October (Seasonally Adjusted)

Unemployment Rate, 2010 – 2013 (Seasonally Adjusted)

OSHA Asked to Further Improve Temp Worker Protections

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During a November 2, 2013 forum, a coalition of workplace safety groups urged OSHA to further improve safety and health condition protections for temporary workers. OSHA Assistant Secretary, Dr. David Michaels, was presented with 15 recommendations that ranged from compelling OSHA inspectors to learn how temp workers were trained to requiring employers to provide rosters of workers to OSHA investigators for interview selection purposes.

The recommendations ask that OSHA create a National Emphasis Program in high-hazard industries that have a high concentration of temporary workers, including construction, manufacturing, warehousing, healthcare and transportation.

With an increased reliance on flexible labor by companies, with temp help accounting for 15 percent of job growth nationally over the past four years, it is important to assure worker safety.

1) OSHA should set forth a clear statement of the joint responsibilities of host employers and temporary staffing agencies in complying with OSHA regulations.

2) OSHA should draft a written policy specifying health and safety training requirements for temporary staffing agencies.

3) OSHA should initiate a National Emphasis Program in high-hazard industries that use temporary staffing agencies.

4) OSHA should identify the 20 largest temporary staffing agencies in the high-hazard industries, along with repeat offenders to put together a profile of these agencies.

5) Temporary staffing agencies should be included as part of OSHA’s data initiative so that injury/illness rates are more accurately tracked.

6) All recommended policies and procedures should also be incorporated into the OSHA Field Operations Manual.

7) OSHA should provide consistent training to compliance officers.

8) If OSHA opens an investigation of a worksite employer, it should be standard practice to also investigate if each engaged temporary staffing agency engaged provided proper training in compliance with hazard standards.

9) OSHA should request and be provided a list of all temporary staffing agencies that have placed workers at the facility, including contact information.

10) Employers should be compelled to share with OSHA documents they are providing to workers to determine if they provided essential safety training.

11) Employers on the day of OSHA investigations should be required to provide a roster of all workers employed and their job titles, so that OSHA can select whom to interview.

Recommendations for OSHA

“Temp workers fall through the cracks. From a public health perspective, we need to know where they’re working, who’s injured on the job and how – so we can improve working conditions.” ~Linda Delp, Director of the UCLA Labor Occupational Safety and Health Program““

OSHA Asked to Further Improve Temp Worker Protections

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12) OSHA should include an inquiry as to whether health and safety deficiencies are restricted to one worksite branch or are present in multiple branches.

13) At OSHA’s initiation of worksite inspection, a notice should be issued to temporary staffing agencies informing that retaliation and intimidation are prohibited.

14) At an investigation of a worksite, OSHA should distribute an information card in the language of the workers informing them of OSHA’s role, and their protections and rights.

15) OSHA should partner with non-profit organizations and invite them to discussions with temporary workers offsite. The protocol language for investigators should proactively explaining to workers that if they are not comfortable speaking directly to investigators, a worker center or other organization has offered to meet offsite.  

TrendLine in 2013

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Over 2013 Trendline has covered a vast array of topics. In this article, we list the topics we paid the most attention to this year, and forecast those workforce trends we predict being of importance in 2014.

With more and more CEOs citing talent acquisition and management as their critical concern in 2013 and also for the upcoming year, we have strived to provide further insight into the trends that drive the extended workforce. According to Bryan Peña, Staffing Industry Analysts’ Vice President of Contingent Workforce Strategies and Research, contingent workers make up 13 to 15 percent of the average workforce in most companies, and in some even exceed 50 percent of the overall workforce. With a significant portion of the workforce being contingent, managers find it increasingly imperative to focus on the role of this type of worker.

This year, we largely focused on topics that were of interest to employers, particularly as we expect these subjects to have an impact on the economy, recruiting, and employment in 2014.

1) Occupations with the highest concentrations of temporary workers2) U.S. states with positive and negative growth in temp worker demand3) Utilization of social media for recruiting and hiring4) The growing elderly population and its impact on the economy and productivity5) H-1B Visas and their impact on the U.S. job market6) The unemployment rate 7) The role of big data in recruitment8) The Affordable Care Act (ACA)9) OSHA protections for temporary workers10) International trends for temporary jobs

In 2014, we expect certain new workplace trends to emerge and some major phenomena from this year to continue to grow. As more baby boomers retire and remote work increases, the concept of “work” continues to change. Additionally, the implementation of the Affordable Care Act (ACA) will have an impact on hiring. Here are some of the major workplace trends we recommend that managers pay attention to in 2014:

1) The impact of healthcare on hiring ACA is causing employers to delay hiring in the upcoming year. According to CNNMoney.com, nine out of fourteen economists say that companies are putting off hiring due to healthcare reform.

2) The growth of freelancing Today, 17 million Americans (or one third of the population) are working as freelancers, contractors and consultants. Experts estimate that in six years, freelance jobs will outnumber permanent positions. Employers are increasingly choosing to hire temporary workers in order to save money and find specialized expertise for projects.

3) Changing demographics in the workforceBaby boomers are beginning to retire, with 18 percent expected to retire within the next five years. Additionally, millennials are estimated to account for 36 percent of the American workforce in 2014. With these major shifts in workforce demographics, companies are starting to pay more attention to succession planning and creating new opportunities for younger generations.

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TrendLine in 2013

4) Switching recruiting channelsAs applicants continue to grow more discouraged with online job application platforms and the black hole of resumes, companies are starting to focus on improving candidate experience. Employers are looking for new ways to filter applicants and are using social networks to interact with and screen candidates. Jobvite.com reports that 94 percent of employers used social networks for recruiting in 2013.

5) An increase in active job seekersWorkers are increasingly getting restless with their current jobs, and actively seeking new opportunities. A recent survey showed that 48 percent of millennials conduct job surveys while still at their workplace, and 73 percent of workers are not opposed to looking for a new opportunity before leaving their current employment.

6) The importance of reputationBoth workers and candidates are paying more attention to reputation. Due to the uncertain economy and fear of incurring costs, companies are looking for quality hires, while candidates are judging companies based on their reputations and consumer brands. A CareerBuilder study revealed that 75 percent of job seekers would accept a lower salary to work for a good brand.

Temporary and part-time employment is by far the fastest-growing segment of the American job market. According to the Bureau of Labor Statistics, the number of part-time employees is at a record high of 28 million, while temporary employment has jumped 50 percent since the financial crisis of 2009. Companies are increasingly looking for more flexibility while still aiming to cut their fixed costs by employing a smaller workforce. Managers are shifting their human capital concerns to focus more intensely on productivity.

In the U.S. today, over 58% of firms are willing to employ temp workers at all levels of the workforce.

Independent workers are major contributors to the American economy. This year, independent workers generate nearly $1.2 trillion in total income, up 20 percent from 2012. These workers are also job creators, where in 2013, approximately 25 percent of independent workers hired other temp workers, spending $96 billion and employing the equivalent of 2.3 million full-time workers through contract hiring.

“It’s no secret that organizations are increasingly relying upon contract talent for a variety of critical roles, many of which have significant corporate ramifications. In managing a contemporary contingent-based workforce, executives across the globe must fine-tune their strategies to anticipate a future in which contract talent is an even bigger piece of the corporate puzzle, and look to a series of next-generation concepts and technologies to drive true value out of this complex category, all while building an effective (and deep) framework that supports all avenues of the contingent workforce umbrella.” ~Christopher Dwyer, Research Director and VP of Operations at Ardent Partners

“Average performers – be they bosses or workers – become relatively less valuable over time…If this sounds suspiciously like Pareto’s 80/20 Principle – that’s exactly my intent. The useful oversimplification that 80% of value creation/productivity boosts comes from 20% of the workforce suggest certain ineluctable mathematical outcomes. Let’s be flexible and forgiving and assert that roughly 75% of enterprise value/productivity comes from 25% of the workforce.” ~Michael Schrage, Research Fellow at MIT Sloan School’s Center for Digital Business and Author of Harvard Business Review Blogs

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A Look Back at 2013: Sector By Sector

In 2013 certain sectors of the American economy have seen substantial growth in employment, whereas others have actually reduced their workforces. Mining and Logging and Professional and Business Services hold the top spot for employment growth by percentage in 2013 from 2012, while Nondurable Goods and Government have decreased their number of employees.

To study the employment changes in the past year in greater detail, we have divided year-over-year employment changes by major sectors. We have further mapped this data by state to see which geographical areas were most affected by workforce population changes.

Employment in Major Sectors, Year over Year, 2012-2013

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A Look Back at 2013: Sector By Sector

Year-over-Year Change in Professional and Business Services, 2012 –2013

Professional and business services employment continued an upward trend, increasing by 32,000 workers in September 2013. Temporary help services had an increase of 228,000 workers over the past 12 months, with 20,000 workers added in September 2013. The states with the most significant growth were California and Texas.

Over the last 12 months, employment in Manufacturing has remained stable. Durable goods, supplemented by metal products and machinery, added 64,000 jobs, while non-durable goods employment decreased by 26,000 employees. Michigan was the only state to see large employment growth in the sector, despite in prior years ranking in the top two states for job losses.

Year-Over-Year Change in Manufacturing, 2012 - 2013

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A Look Back at 2013: Sector By Sector

Year-Over-Year Change in Construction, 2012 - 2013

According to data released by the Associated General Contractors of America, construction employment in the last year expanded in 194 metro areas and declined in 88. Alaska, Wyoming, Mississippi, and Louisiana added the most jobs in the sector by percentage, and the largest job losses were in Indiana. In September 2013, employment in construction increased by 20,000, which helped boost the low monthly average of the past six months.

Looking at the past 60 years, Financial services as an industry has expanded its share of the economy from 2.5 percent to 8.5 percent of the GDP. Since 2009, Richmond, Virginia, has had a 12 percent growth in financial sector employment. New York, home to the largest banking sector, has seen financial employment drop by 7.4 percent since 2007. With firms looking to cut costs, they are focusing on moving business functions to less expensive locations, thus resulting in less employment in traditional financial centers. In September 2013, financial companies lost 7,200 jobs following a reduction of 5,900 jobs in August.

Year-over-Year Change in Financial Activities, 2012 – 2013

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A Look Back at 2013: Sector By Sector

Year-over-Year Change in Government, 2012 – 2013

In September 2013, the federal government employed 2,721,000 full-time workers - it’s lowest since 1966. The federal government currently employs (in civilian jobs) 2 percent of the employed population in the United States. Members of the armed forces number around 1.4 million. Over the past 12 months, federal government employment has decreased by 94,000. The federal government is continuing to shrink, while state government jobs are growing slowly. State and local jobs are up 0.02 percent with 2,000 jobs in the past 12 months.

Government Jobs Annual Change, 2007 to 2013

Methodology

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The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The wage rates for temporary workers or contingent workforce are based on payments made by staffing firms to these workers based upon hours worked. Data collected from sources such as Bureau of Labor Standards (BLS) and other government sites as well as an internal pool of staffing companies and consultants, is aggregated and classified based on regions and skill categories, to arrive at an aggregate index.

The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with the said baseline and is representative in terms of direction and scale of change. Five years of data has been included to observe seasonal patterns and distinguish seasonality from long-term wage movements. The data and the model has been further refined over last six months.

DCR Wage Index combines the exhaustive data from BLS with practical and more recent developments and data from on-field consultants and clients, to provide timely near-term indications of trends and consistent long-term actionable and objective information.

Source Data

DCR Work Index uses multiple economic variables to ensure the robustness of its forecasts and cross-validation of trends.

Key data sources and parameters of interest included and influencing the index are:Unemployment dataGross Domestic ProductPrime rate of interestNew and seasonal Job openingsNon Form employmentJob OpeningAll ExportAll ImportAverage Hourly Earnings of All Employees Total PrivateAggregate consultant data on job market parameters

Methodology

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References

http://economix.blogs.nytimes.com/2013/10/22/bloated-government-federal-employment-at-47-year-low/?_r=0

http://www.cbsnews.com/8301-505123_162-57610099/government-shutdown-has-lasting-effects-on-u.s-companies/

http://data.bls.gov/cgi-bin/surveymost

http://www.digitaljournal.com/pr/1549036

http://www.thetradingreport.com/2013/10/23/the-permanent-rise-of-temporary-labor/

http://www.forbes.com/sites/joelkotkin/2013/05/31/the-cities-taking-finance-jobs-from-wall-street/

http://www.staffingindustry.com/site/Research-Publications/Daily-News/November-hiring-to-rise-SHRM-report-says-

27826#sthash.0vOVQRzD.dpuf

http://blogs.wsj.com/digits/2013/10/16/ebay-says-shutdown-weighs-on-holiday-shopping/

http://www.huffingtonpost.com/2013/11/07/economic-growth-q3-2013_n_4232329.html

http://www.bloomberg.com/news/2013-11-06/adecco-sees-rising-temp-worker-demand-as-europe-exits-recession.html

http://ohsonline.com/articles/2013/11/05/osha-urged-to-launch-temp-worker-emphasis-program.aspx

http://coshnetwork.org/recommendations-how-osha-can-improve-health-and-safety-temporary-workers

http://www.bls.gov/news.release/jolts.htm

http://info.mbopartners.com/rs/mbo/images/2013-MBO_Partners_State_of_Independence_Report.pdf

http://blogs.wsj.com/economics/2013/10/22/wary-employers-turn-to-temp-workers/

http://www.forbes.com/sites/danschawbel/2013/10/24/the-top-10-workplace-trends-for-2014/2/

http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1413

http://blogs.hbr.org/2013/07/prepare-for-the-new-permanent/

http://money.cnn.com/2013/11/08/news/economy/october-jobs-report/

About DCR Workforce

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DCR Workforce is an award winning, best-in-class service provider for contingent workforce and services procurement management. Our proprietary SaaS platform (SMART TRACK) assists in providing customizable VMS and MSP Solutions to manage, procure and analyze your talent with complete transparency, real-time control, high performance and decision-enabling business intelligence.

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