Use of Temporary Workers May Be Permanent Solution for Businesses

It’s been a year since Bob Showalter accepted the first permanent job he’s had in several years, and in that time the senior buyer for Precision Dynamics figures he’s had at least four offers for more temp work. The jobless recovery, it turns out, isn’t truly jobless after all. Companies are instead meeting the increased demands for staffers with temporary workers. The news is a boon not only for those who want to work as temps and for the agencies that supply them but also for the companies that use these workers. “One of the solutions we’re using to solve the workers’ compensation problem is the long term use of temps,” said Paul Stals, president of Terry Hinge & Hardware, a components manufacturer in Van Nuys. Hiring temp workers relieves some of the expense of workers’ comp insurance, providing health benefits and even recruiting and hiring. Better yet, temp workers, because they are often engaged with the stipulation that they may, at some point, be hired as permanent workers, are often more productive than those on the permanent payroll. “We’re seeing it in independent contractors, but we’re also seeing it from temporary workers with the motivation to become full timers,” said Joe Jotkowitz, senior consultant with Communication Development Associates, a human resources consulting firm in Woodland Hills. “They go out of their way because they’re trying to impress.” Although exact numbers are difficult to come by, researchers, company officials and operators of temporary staffing agencies all say temps are increasingly being used to fill openings in a broad range of jobs, from unskilled manufacturing and distribution positions to middle managers. The San Fernando Valley Economic Research Center at Cal State Northridge estimates that about 45,000 or half of the business and professional workers added in the region this year are temporary workers. And temporary staffing agencies report that their business has increased significantly over last year. “It really started going crazy around June,” said Patty Campochiaro, president of Personnel Plus in Granada Hills. “Before that we had more people than jobs, and within a week’s time, it turned around and we had more jobs than people.” For many companies, the decision to hire a temporary worker is based on the uncertainty of the economic recovery, said Daniel Blake, director at CSUN’s Economic Research Center. “It’s common practice, when demand increases and you’re not sure how sustainable it is and you want to hire in an orderly manner, that you first hire temps,” said Blake. But other factors, many specific to California, are also fueling the decision to hire temporary workers. Workers’ comp costs Chief among them is the cost of workers’ compensation. Many companies will not know what effect the reforms instituted in Sacramento will have until next year. But at Terry Hinge, which renewed its workers’ comp policy since the reforms, there has been no change in the cost of the insurance. So Stals began filling openings caused by attrition and those required because of increased business with temporary workers. Of the 70 manufacturing and warehousing jobs at the company, more than 20 are now filled by temporary workers. Because temps are actually employed by the agency that supplies them, companies that use these workers do not bear the cost of workers’ compensation insurance or benefits for these employees. Most temp agencies do not provide benefits such as health insurance or paid holidays to their temp workers, but even when they do, these costs are not borne by the company to which the temp is assigned. Using temp workers also reduces recruiting and hiring expenses. “It’s easier for me because I don’t have to screen them,” said Ellis Voyagis, operations manager at Terry Hinge. “If I need five people tomorrow, I have to place an ad, then I have to wait, then I have to read the resumes and interview these people. I’ll spend a ton of time and effort. And if I go with a temp agency, they’re already ready to go.” Many companies bring in temps with the understanding that if they work out they will be offered a permanent job. The arrangement allows firms to test out potential employees with little risk. “Companies that haven’t hired in a while want that comfort level,” said David Sprinkle, area manager at Ajilon Finance in Woodland Hills, a firm that specializes in accounting workers for all industries. “It’s tough for our clients to get to know a person from an interview, so they bring them on on a temporary basis, and that’s the benefit of going temp.” Temps, particularly when they know they may be considered for permanent slots, have other benefits as well. Chief among them, many say, they are often better workers than the permanent employees. “In some cases, it’s better because you have these people, and because they’re eager to work they come in and they roll up their sleeves and they want to perform,” said Voyagis. “Now the existing employees see these people, and they’re producing more so they have to bump up their productivity. So that’s a great thing.” Drawbacks Some point out that there are downsides to a temporary workforce, particularly if the temp workers must work as a team with permanent employees. Temps may begin to feel disgruntled if they are working side by side with permanent employees doing the same jobs but not enjoying the same benefits. “And if I really want to be a full-time person, but I can’t, it’s hard to be part of the team because I’m a little envious of the permanent workers,” said Judith Blanton, senior consultant with RHR International Co. in L.A. But the drawbacks, most say, are few when compared with the advantages of temporary workers. Besides the cost savings, employers say that they need not worry about terminating temporary workers the way they would if they wish to fire a permanent employee. “I’ve been at companies where we had temps for five years,” said Showalter. “These were big companies that didn’t want to go through the legal hassle of hiring somebody. You take a temp you can get rid of him because you don’t like the way he parts his hair. You hire somebody in the state of California, it’s really hard to fire them.” Increasingly too temp workers themselves are opting for these assignments instead of permanent work. There is no shortage of temporary employment opportunities for them, and for professional workers, the pay is often better on a temporary basis. Showalter, who said he ultimately opted for a permanent job because his wife had planned to quit her job and he needed a position with health benefits as a result, found that he made more money in one year when he worked only six months than he had the prior year as a full-time, permanent employee. Professionals who opt to work as temps often prefer the flexibility of these jobs to the stability of a permanent position, said Jotkowitz. “There’s an understanding of free agency,” Jotkowitz added. “The goal is to do the best work, make the most money and meet the right people, so you can get good recommendations as you move along your career. It’s a rest stop as opposed to a stopping point.”