Jul 01, 2013

DCR National Temp Wage Index - July 2013

DCR National Temp Wage Index - July 2013

Despite a volatile economy, the volume of temporary workers continues to increase. This may be partly due to the increasing participation of foreign-born workers, who score high on employability in occupations like production, transportation, material moving, natural resources, construction and maintenance.  

In 2012, the median usual weekly earnings of foreign-born full-time wage and salary workers were $625, as compared to $797 for native-born Americans. These lower wages lead to an easily employable population (16.1 percent of the U.S. civilian labor force population are foreign born), possibly leading to negative or slow growth of wages.

Among the foreign-born workers, Asians had an unemployment rate of 5.7% in 2012, substantially lower than the rates for foreign-born blacks (11.1%), Hispanics (9.1%) and whites (7.1%).  Among native-born Americans, the jobless rates for blacks (at 14.3%) were higher than the rate for Hispanics (11.5%), Asians (6.7%) and whites (6.6%).

Hiring Outlook Positive

According to the latest report from the Labor Department, the United States added 175,000 jobs in May, compared with 149,000 jobs in April. An ADP survey shows that small businesses added 58,000 jobs in May, up from 32,000 jobs in April – though still below the 129,000 per month average at the start of 2006.

Wal-Mart Stores, Inc.: Employment Destination for Temps

To meet weekend sales demand and labor cost pressures, Wal-Mart is hiring more and more temp workers. While the company has opened more stores in recent years, their U.S. staffing has remained relatively flat. A survey by Reuters of 52 Wal-Mart stores found that 27 were hiring only temporary workers, while another 20 were hiring a combination of regular full-time and part-time positions along with temp workers.  The temporary workers are often being hired on 180-day contracts and are paid the same starting pay as other workers. According to company spokesperson, David Tovar, nearly 10% of Wal-Mart’s U.S. workforce is temporary (compared with 1 to 2 percent prior to 2013). Wal-Mart CEO, Bill Simons, confirmed the inclusion of more temp workers in the company’s workforce mix, saying “Their hours flex by the needs of the business from time to time.” Industry experts predict that this hiring strategy will save Wal-Mart money by trimming labor costs and also help to shield them against a potential rise in healthcare costs due to the upcoming health care reform. 

“Hiring temps is one strategy that retailers could use to mitigate the potential rise in healthcare costs due to the new healthcare care law. Another strategy could be employing more part-time workers.” ~Neil Trautwein, National Retail Federation

It remains to be seen if other retailers will follow Wal-Mart’s lead in employing more temporary workers. According to Bureau of Labor Statistics reports, retail employment grew in May of 2013, with 28,000 jobs added, out of which 10,000 were in general merchandise stores.

Ramp Up in High-skilled Temp Workers

Temp workforce employment of high-skilled professions, such as doctors, lawyers and university professors, is also on the rise.

According to Pam Tolbert, Chair of the Department of Organizational Behavior at Cornell University, the number of professionals employed on a contractual basis is rising. Adjunct professors teach and do research at one institution for years but are not eligible for tenure, a permanent position where a professor cannot lose his job for researching a contentious issue.  Tolbert predicts that 40 to 50% of faculty at some institutions is now adjunct.

In the healthcare industry, locum tenens (doctors who work through temp agencies) spending grew 7% to $2.1 billion from 2011 to 2012, according to Staffing Industry Analysts.

3.8 Million Jobs Waiting to be Filled

The Bureau of Labor Statistics reports that there are 3.8 million jobs waiting to be filled, and 40% of them are in the South.  This is well below the pre-recession average of 4.5 million openings a month in 2007.

Research from the National Bureau of Economic Research finds that “recruiting intensity” has been low – employers are posting jobs but not proactively trying to fill them.

Unemployment Stubbornly High

Unemployment is still high at 7.5% in April, which is 11.7 million people, a ratio of 3.1 job seekers for every opening. The New York Times attributes this to a large problem in the labor market where a persistently weak economy causes employers to be hesitant about adding new workers.

Number of Unemployed Workers per Job Posting

DCR National Temp Wage Index - July 2013

Industry Employment Trends

The hiring rate (number of hires as a percentage of total openings), according to BLS figures, remains at 3%. Hiring is greatest in wholesale trade and transportation, warehousing and utilities, professional and business services, education and health services, and health care and social services.

Change in Employment in April to May 2013

change in employement

“When people think of temp workers they think of blue collar, house cleaners, contractors, etc., but in fact the phenomenon is much more pervasive and growing” ~Pam Tolbert, Cornell University.