As economy recovers, use of temp workers doubles in Clark County

Clark County companies use temporary workers twice as often as they did a decade ago as the economy has recovered in fits and starts, a sign some employers want a flexible workforce and are hesitant to commit to more full-time hires.

Temps made up only a sliver of the total workforce, slightly less than 2 percent of Clark County’s workers in 2001. That number remains small but has doubled to about 4.2 percent at the end of last year and is about twice the state average.

“Companies in Springfield have converted to temp workers at a much greater rate than average,” said Bill LaFayette, owner of Regionomics, a Columbus-based economics and workforce consulting firm.

Springfield has also seen a spike in the number of staffing agencies that serve those workers locally.

Temporary workers can benefit employers and the economy by offering more flexibility, experts said, and an opportunity to gauge skills before hiring them full-time. It can also provide a foot in the door and flexibility for workers.

But it often also means less job security, lower pay, and little or no benefits.

“Employers obviously like it because they can move their workforce up and down easily and they don’t have to make the stronger commitments that full-time employers make,” said Mike Calabrese, executive director for Opportunities for Individual Change of Clark County, a nonprofit agency that focuses on workforce development. “In terms of the job seeker, they’re usually more interested mainly in the full-time positions.”

Temp workers in Clark County earn less on average than their peers, making about $19,300 a year, compared to $37,000 in annual average pay for Clark County workers in all industries, according to the U.S. Bureau of Labor Statistics.

Garret Stence, of Urbana, said he’s been working as a temp at American Pan, a manufacturing firm in Urbana, for about two months. He’s expecting to be hired full-time, and said working with a staffing agency helped him get hired more quickly and prove himself to his employer. Stence has been working with AM&PM agency.

“If you’re able to get hired on full-time because of a temp service, that just shows you’re willing to be at that job every day,” Stence said.

Finding a balance

Finding the right balance between temporary and full-time employees can be a challenge for companies, said Deanna Nesbit, human resources director for the McGregor Metalworking Companies. The manufacturer uses about 20 temporary workers, although that’s down from as many as 60 a few years ago.

Businesses like McGregor use temps for a variety of reasons, Nesbit said.

Manufacturers often see a sudden boost in business from a client, she said, and temporary employees can allow for a ramp up in production on short notice. It also gives them a chance to observe a worker for a few months before deciding whether to bring them on full-time, Nesbit said.

The company’s Morgal plant on South Yellow Springs Street often receives seasonal business that fluctuates, she said.

“Our customers can send in orders overnight,” Nesbit said. “We have to respond and meet the customer requirements if there’s any way we can, so sometimes it’s just a matter of getting people in here to help us get things done.”

Years ago, nearly all of McGregor’s workers started on a temporary basis before moving into full-time status. But the company has shifted to more direct hiring, particularly for skilled trades.

“There’s a balance of using it,” Nesbit said. “We’ll always probably have some degree of temporary labor we’ll use but we don’t want to use that exclusively.”

Temporary workers are one way employers hedge their bets if they are concerned about a downturn, said Jason Eckert, director of career services at the University of Dayton.

“For employers, they’re under mandates from their board of directors and CEO to watch and limit labor costs,” Eckert said. “A temporary employee is a way of increasing productivity without having permanent headcount added to your books.”

Employers across the region, including in Springfield, have been reluctant to add permanent employees since the Great Recession, said Doug Barry, president of BarryStaff, an employment agency with offices in Springfield, Piqua and Dayton. About 85 to 90 percent of the company’s clients are in manufacturing, but a small amount are also in office/clerical work and management positions.

BarryStaff has long had a presence in Dayton but opened its office in Springfield about a year ago.

“A lot of companies aren’t in the mood to add permanent headcount right now,” Barry said. “A lot of them got burnt in 2007, 2008 and 2009 and they’re still taking a wait-and-see attitude. And a lot of companies are looking for folks who are going to be dependable and this is a way they can get a good look at people for about three months before they decide to bring them onto their permanent payroll.”

Nationally and in Ohio, perceptions of a massive shift to a temporary and independent workforce are likely overstated, cautioned Richard Stock, an economist and director of the Business Research Group at the University of Dayton. The largest shift toward temp work nationally began as far back as the 1990s, he said, and has followed a cyclical pattern since.

Temporary workers make up only a sliver of the total workforce, about 2.3 percent in Ohio and about 2 percent in the U.S. overall, according to information from the BLS. Those figures have been relatively stable for years.

“Since 2000, temp work has a very decided cyclical pattern where it decreases in recession as a percent of employment and then increases to about 2 percent of total employment in the recovery,” Stock said. “We have been at about the same level in percent of total employment for the last 24 months.”

Impact on employees

Working for an employment agency offers flexibility to workers, Barry said. If they don’t like a company’s culture, it allows them freedom to find other options.

However those workers often wait longer to — and sometimes never — earn benefits like retirement, paid time off and health insurance.

A research paper produced by the Federal Reserve Bank of Kansas City highlighted the mixed bag temporary employment can have for workers and the economy.

“The growth of part-time and temporary opportunities makes it easier for people to change jobs, enter the labor force or pursue a more flexible schedule, but these part-time and temporary workers might simply be unable to find full-time employment,” the paper says. “Furthermore, part-time and temporary jobs may offer lower overall compensation, so consumption growth could be sluggish and the jobless recovery could be extended.”

Those workers also face no guarantee of a full-time hire and less stability if there’s a downturn.

“As an employer, I have more of a commitment (to a full-time worker),” Nesbit said. “Before I would lay off a full-time worker, I would look at the temporary workforce first.”

Stence, who is now working at American Pan, said he had a better experience with AM&PM than at another staffing firm he used in Texas, although both helped him find work. The Texas firm conducted most of its work over the phone.

“It’s a little better because I was able go in person,” Stence said. “I definitely got into work a lot quicker through this temp service and I’ve been more satisfied with the way they treated their employees.”

Companies like McGregor have also gotten better at managing their workforce, Nesbit said. In the past, the company looked at each building’s needs individually, but now tries to move workers to other plants if possible to avoid layoffs.

“The better that we get at understanding and predicting what our customers’ needs are, the better we’ll be able to plan what our workforce needs are going to be,” Nesbit said.

It’s difficult to pinpoint why temporary work has spiked in Clark County, economist LaFayette said. But it’s clear at least some businesses are relying on those workers much more heavily than in the past.

“The whole point is in some sense it’s gotten more expensive and more complicated to hire permanent workers than it used to be,” LaFayette said. “Workers have higher skill requirements placed on them than they used to. So the cost of getting it wrong is much higher from a standpoint of killing productivity by putting the wrong employee in place. Bringing on a temp is a way to try before you buy.”

A spike in competition

In Springfield, where the size of the temporary workforce has doubled, employment services firms have followed the business. Just a few ago there were only a small number of firms that offered staffing services, said Alex Muller, president of AM&PM, which has been in business for about five years and has offices in Springfield, Piqua and Vandalia.

Companies face tight budgets and have increasingly outsourced recruitment, Muller said. Businesses look to employment services more frequently to sift through a smaller pool of available employees to find the right fit as the unemployment rate has improved, he said.

“So many people wear so many different hats under one company anymore, the time needed to properly recruit and do testing and assessment, companies just don’t have those people on staff anymore to do that,” Barry said. “We’re basically the recruiting arm to get people to their door and let them know they have the basic skills to do the job.”

More employment agencies have stepped in to fill that gap, especially in Springfield.

“A lot of these people are seeing there’s a void to be filled and that’s why you see them popping up,” Muller said.

For employees, it’s important to ask questions and work with a company that has a good reputation, Barry said.

Any time the economy picks up after a recession, the number of staffing firms follows suit, Barry said. He’s seen the same pattern through at least three recessions over his career, as national firms open new offices to get their share of the business.

“On the flip side once you start hitting a recession, the ones that weren’t as strong start to fall off,” he said. “We’re definitely on an upswing in the economy and we’re seeing a lot of staffing companies pop up.”

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