ILLINOIS GRAPPLES WITH RISE IN CONTINGENT WORKFORCE

March 2, 2017

A bill under consideration in the Illinois legislature is drawing attention to a growing trend in today’s workforce: employers meeting long-term staffing needs by contracting with employment companies and temporary work agencies.

A contract company may handle a range of hiring tasks including recruitment, training, payroll, benefits, and other typical human resources functions. In providing services to its clients, a staffing service company may offer a form of “temporary” work in which a worker is employed by the agency and sent out to its clients on assignments, perhaps long-term.

Temporary employment accounted for 3.4 percent of the total workforce in Illinois in 2015, with 989 temporary staffing agencies operating in the state, according to data from the U.S. Bureau of Labor Statistics.

 

Use of staffing agencies can benefit employers by providing flexibility to meet short-term demand or fluctuating labor needs without investing resources in recruiting, hiring paperwork, onboarding and training. Sometimes, too, a staffing company has capacity to find particular skills or talents an employer requires.

Worker advocates worry that increasing use of staffing companies can put workers in a “permanent temporary” position where they face wage gaps, inadequate training, and job insecurity.

 

“A few decades ago, a worker without a college degree could get a good job. Today, they would go to a temp agency,” Brittany Scott, senior research strategist at the National Economic and Social Rights Initiative, said.

Illinois State Rep. Carol Ammons, D-Urbana, proposed the Responsible Job Creation Act, HB690, in January to ensure staffing agencies offer a living wage, and to increase transparency in hiring practices.

 

“We need good, responsible jobs in the state,” Ammons said in a press conference in Chicago on Thursday, adding that companies’ reliance on temporary jobs has repercussions in the state as low wages mean less money to spend in the local economy, and a smaller tax base to support schools and other services.

 

The bill would require temporary laborers to be paid at the same rate as permanent employees performing the same or similar work, and would require third-party clients of agencies to conduct a job hazard analysis for each job to which a laborer might be sent.

 

The bill, scheduled for a vote in the House Labor Committee on March 8, would also require staffing agencies to report to the U.S. Department of Labor the number of workers they have placed in permanent positions.

 

A 2012 study found that in 1990, office and administrative workers made up 41 percent of the temporary worker population, while blue-collar occupations represented 28 percent. By 2009, those percentages had flipped.

Chicago has half a billion square feet of warehouse space, employing about 150,000 warehouse workers in the region, according to the organization Warehouse Workers for Justice. Companies including Wal-Mart Stores Inc. and Home Depot Inc. have distribution centers in the area.

 

Almost all of these warehouses rely heavily on temporary workers, Ammons said.

However, industrial and warehouse jobs are only a slice of the growing staffing industry.

The U.S. Bureau of Labor Statistics projected in 2013 that the number of jobs in the employment services industry, comprising placement agencies, temporary help services, and professional employer organizations, would increase to almost 4 million by 2022, a 29 percent increase from 3.1 million in 2012.

 

“The demand for information technology, healthcare, and temporary help services is driving the employment growth in this industry,” BLS economist Richard Henderson noted in the release.

In 2016, according to the BLS, the professional and business services sector added 20,900 jobs in the Chicago-Naperville-Elgin metropolitan area, an increase of 2.6 percent. This category, which contains administrative, legal, waste management, employment, call centers, and other types of services, posted the highest gain of any sector during the year.

The Contingent Employment Industry

 

Workers employed through contract firms are part of a demographic known as contingent workers. Holiday retail workers, gig workers, and substitute teachers are all part of the contingent workforce. As the name implies, the prospects for the worker’s continued employment are conditioned on business cycles and demand.

According to the American Staffing Association, approximately 13 percent of temporary and contract employees work in the engineering, IT, and scientific sections.

 

A study of 700 IT leaders by IT staffing agency TEKsystems Inc., which has a location in Chicago, indicated the IT departments among those surveyed were made up of 80 percent full-time IT staff and 20 percent contingent staff; respondents expected the percentage to shift to 76 percent full-time workers and 24 percent contingent staff in 2017.

 

“The volume and depth of contingent hiring is expanding. Forty-three percent of IT leaders report they will increase contingent hiring this year. Because they also report that contingent staff will make up a larger portion of their staff, we can assume those increases will be fairly significant and they will be leveraging contingent staff to a greater degree compared to the previous year,” Jason Hayman, TEKsystems market research manager, wrote in an email.

 

The 2016 rankings by California advisory firm Staffing Industry Analysts show 134 U.S. firms each generating at least $100 million in revenue, for a combined $75.7 billion in staffing revenue. Topping the list is privately held Allegis Group in Maryland with $8.6 billion in staffing revenue and 6.5 percent market share. Milwaukee-based Manpower Group Inc. ranked fourth, with 2.7 percent of the market.

 

Delaware-based Integrity Staffing Solutions, which employs associates for assignments including Amazon.com Inc. warehouses in Joliet and Edwardsville, ranked 11th in the nation. Founded in 1997, the company owns 2 percent of the overall staffing industry market share and reached an estimated $554 million in annual revenue in 2015.

 

“The industrial segment has shown a more pronounced trend of market share consolidation than in any of the other skill segments of the staffing industry,” Staffing Industry Analysts Research Manager Timothy Landhuis said in a release on the rankings.

 

 

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