How the Success of Temp Agencies Affects the Economy

staffing industry startisticsIf temp agencies may have seen a growth spurt in recent years (and they have), this increase in short-term staffing solutions suggests the shifting face of the economy, which has spurred an explosion of part-time and temporary employment.

Estimates of the amount of contingent workers in the U.S. can vary widely (often depending on how “contingent workers” are defined), but recent data suggests that roughly a third, and up to forty percent, of American workers are part-time, temporary or short-term contract employees. Forty percent! These high levels of contingent work are not just confined to American shores, either. Since 1985, many European countries have seen declining permanent employment, too.

So what do these trends mean for the economy on the whole, and the staffing firms and temp agencies supplying contingent workers?

The Larger Economic Implications

The shift from permanent employment in the workforce signifies long-term changes in the beliefs once held by American workers. Staying with the same company for an entire career no longer seems to be a viable option. Temporary employment points towards a lack of job security in the labor market, along with diminished benefit packages and the decline of stable and reliable wages and promotional pathways.

Although this trend holds positives for the staffing industry, it can present problems for individuals and the economy as a whole. Temporary jobs often mean lower wages, and also a lack of benefits. Lower wages affect people’s spending ability and limit personal consumption, which can in turn discourage companies from hiring and slow economic growth. The potential for a disadvantageous cyclical economy can easily be set in motion from such a shift.

The Positives For Temp Agencies

However, those of us involved in the staffing industry and working in temp agencies may well be witnessing a business uptick. As companies adjust their staffing levels to deal with whatever competitive forces trigger change, the temping industry is called upon to adapt and provide staffing solutions.

And the figures suggest that temporary employment will continue. Recruiting firm MBO Partners projects that by 2017 there will be 23 million contingent workers, an increase of 6 million workers from the current estimated figures. That suggests a whole lot more business for temp agencies!

Here’s the Challenge

To be lifted in the rising tide of the contingent work boom, we need to avoid the “catastrophe of success.” In other words, we need to develop the capability to meet the demand for contingent workers. Companies no longer have the spending power or the confidence to hire as many long-term and permanent employees. Instead they seek short-term and temporary solutions, effectively sourced and supplied from staffing companies. And you can expect it to continue.

Since the financial crisis in 2008, temporary work has helped reduce unemployment. We’ve also seen a fundamental shift in the nature of employment itself full time long-term employees no longer reign supreme. These shifts stress the importance of the temp agency, and within five years staffing companies may be in the driver’s seat for even more staffing and hiring solutions throughout the economy. It’s the way of the world.