REPORT # 19 | November 2013

TRENDLINE
Contingent Worker Forecast and Supply Report

Inside this Issue
Note from the Edito...
DCR National Temp Wage Index
The fourth quarter of the year continues to see an upward trend in temp worker wages. This is...
DCR National Temp Wage Index

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Temp Work for Furloughed Workers

The government shutdown placed approximately 800,000 go...
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The Government Shutdown: A Crisis for Federal Workers

“All employees who were on furlough due to the absence of...
The Government Shutdown: A Crisis for Federal Workers

How have the Markets Responded?

SHUTDOWN
How have the Markets Resp...
The Government Shutdown: A Crisis for Federal Workers
Ongoing Impact on the Economy and Businesses
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The energy industry...
The Government Shutdown: A Crisis for Federal Workers
Impact on the Various States
Using data from the Small Business Admi...
The Government Shutdown: A Crisis for Federal Workers
How much has the Government Shutdown Cost the Economy?
According to ...
The Government Shutdown: A Crisis for Federal Workers
Moody’s Analytics reported a similar number saying that the shutdown...
The Government Shutdown: A Crisis for Federal Workers
While federal employees will receive back pay under the deal, contra...
Temp Workers: Just in Time Workforce
Over the last decade many organizations have become more proactive about their recrui...
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Temp Workers: Just in Time Workforce
“To compete in the future, organizations will need to push talent managemen...
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In Lieu of the Jobs Report…

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“The jobs report is a flashlight into the dense forest of economic information. We’...
In Lieu of the Jobs Report…
Unemployment Insurance Weekly Claims Report
The Employment and Training Administration (ETA), ...
Temp Hiring to Grow in Q4
The holiday season always calls for an increase hiring of temporary workers. As we discussed ear...
World Watch
As a continuation of our article from the October 2013 edition of TrendLine, we explore the trends in temporar...
World Watch
With the holiday season approaching, there is an increased demand
for workers at supermarkets, restaurants and...
Methodology
The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. ...
Methodology
References
http://management.fortune.cnn.com/2013/10/16/lockheed-martin-marillyn-hewson/
http://blogs.wsj.com/...
About DCR Workforce
DCR Workforce is an award winning, best-in-class service provider for contingent workforce and service...
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DCR Trendline November 2013 – Contingent Worker Forecast and Supply Report

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Heading into the end of the year, after a month full of economic uncertainty and fogginess, TrendLine brings you key insights into the temporary staffing industry. Our up-to-date research and in-depth analysis of industry trends ensure that you have a clear reading of what is happening in the world of contingent worker supply and demand.
Inside this issue:
1. DCR National Temp Wage Index
2. The Government Shutdown: A Crisis for Federal Workers
3. Temp Workers: Just in Time Workforce
4. In Lieu of the Jobs Report…
5. Temp Hiring to Grow in Q4
6. World Watch

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DCR Trendline November 2013 – Contingent Worker Forecast and Supply Report

  1. 1. REPORT # 19 | November 2013 TRENDLINE Contingent Worker Forecast and Supply Report Inside this Issue Note from the Editor 1 DCR National Temp Wage Index 2 The Government Shutdown: A Crisis 4 for Federal Workers Temp Workers: Just in Time Workforce 11 In Lieu of the Jobs Report… 13 Temp Hiring to Grow in Q4 15 World Watch 16 Methodology 18 Note from the Editor Heading into the end of the year, after a month full of economic uncertainty and fogginess, TrendLine brings you key insights into the temporary staffing industry. Our up-to-date research and in-depth analysis of industry trends ensure that you have a clear reading of what is happening in the world of contingent worker supply and demand. The DCR National Temp Wage Index focuses on wage trends over the year and analyzes the usage of temp workers and related developments in the economy and job market. This month, we look at plans and predictions for holiday retail hiring, and provide a brief outlook for hiring in 2014. Our feature article this month focuses on the topic on everyone’s mind, the government shutdown and the impact it has had on the economy and the workers. We examine the effect of the shutdown on various parties, and discuss what the shutdown has cost the American economy. Keep an eye out for our exploration of what the end of the shutdown means for furloughed federal workers in terms of pay and compensation. We then shift our focus to look at an emerging trend in recruiting the “just-in-time” workforce. We provide an overview of the concept and how it applies to today’s fast-paced yet hesitant atmosphere. We also discuss the many reasons why temp workers are a perfect fit for this lean recruiting model. “ The government shutdown, besides putting many workers on furlough, also had the impact of keeping economists and analysts in the dark without the monthly Bureau of Labor Statistics (BLS) employment report. In lieu of the jobs report for September 2013, we turned to other sources to provide you with a pulse of the American job market and economy. “If the shutdown lasts a week or longer, as many as 250,000 to 300,000 contract workers could be affected in some way. A week would be like a bad headache. If it’s more than two weeks, they can expect a lot of negative impact.” ~Fernando Galaviz, chairman of the National Federal Contractors Association As the end of the year draws near, we provide you with predictions on temp help employment in the fourth quarter. Look for our graph on planned temporary worker hiring by major retailers to accommodate holiday demand and volume. Finally, we continue to focus on global trends for contingent worker demand, as we explore recent events affecting it throughout the world. Ammu Warrier Ammu Warrier, President Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 1 “
  2. 2. DCR National Temp Wage Index The fourth quarter of the year continues to see an upward trend in temp worker wages. This is mostly due to the mass temporary worker hiring plans for the upcoming holiday season by large retailers such as Amazon, Target, and Toys R Us. Holiday Retail Hiring The National Retail Federation estimates that retailers will hire at least as many seasonal workers as in 2012. This would mean at least 720,000 temp positions and maybe as many as 780,000. “ “ “ “ “ “ Amazon.com intends to add 70,000 full-time seasonal jobs in its warehouses in the U.S., increasing its holiday temporary hiring by 40 percent this year. Additionally, the company plans to hire 15,000 temporary seasonal workers in the United Kingdom. According to the online retailer, seasonal workers earn 94 percent of starting wages of its warehouse workers and are eligible for health-care benefits. Historically, many of the temporary seasonal jobs have led to long-term positions. “So far this year, we have converted more than 7,000 temporary employees in the U.S. into full-time, regular roles and we’re looking forward to converting thousands more after this holiday season.” ~Dave Clark, Vice President of Worldwide Operation and Customer Service at Amazon Wal-Mart Stores plan to hire 55,000 temporary workers for the holiday season, up approximately 10 percent from last year. Toys R Us plans to add 45,000 temp workers to its stores and distribution centers, which is on par with its seasonal hiring in 2012. In comparison, Target is planning on decreasing its seasonal temp hires from the previous year. The retailer plans to hire about 70,000 seasonal workers, down from 88,000 in 2012. Target says that by hiring fewer temporary sales assistants, it is better positioned to respond more quickly to any highs and lows of customer traffic. Challenger, Gray & Christmas Inc, an outplacement consultancy, forecasts that that holiday hiring will not outpace levels from last year, where the number of temporary workers brought onboard reached a 12-year high. “The fact is that retailers are getting smarter about staffing. The era of Big Data has armed everyone with the information they need to more accurately predict the ebbs and flows in sales activity and adjust hiring accordingly.” ~John A. Challenger, Chief Executive of Challenger, Gray & Christmas Inc. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 2
  3. 3. DCR National Temp Wage Index “ Temp Work for Furloughed Workers The government shutdown placed approximately 800,000 government workers on furlough. To help ease some of the pain of being out of a job, several companies worked together to create an online job forum to help furloughed workers find temporary work. The site, unfurlough.us, went live on October 3rd, and as of October 15th, 2013 had 70 different jobs posted. The site was designed to connect furloughed workers with private sector companies in need of temporary help. “ “The longer the shutdown goes on, the more jobs I think we’ll see listed and the more successful freelance work we’ll see being done.” ~Donna Harris, co-founder of unfurlough.us Hiring Outlook 2014 According to KPMG’s 2013 Mid-Market Outlook Survey, businesses are predicting an improved U.S. economy in 2014. Of the respondents, 45 percent added headcount since 2012, and 55 percent plan to increase hires in 2014. The vast majority of executives, 73 percent, said revenues were up from the previous year and 78 percent predict that they will continue to rise in 2014. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 3
  4. 4. “ “ “ “ The Government Shutdown: A Crisis for Federal Workers “All employees who were on furlough due to the absence of appropriations may now return to work. You should reopen offices in a prompt and orderly manner.” ~Office of Management and Budget, Executive Office of the President The United States government underwent a shutdown of over 2 weeks in October of 2013. On October 16, 2013, the Senate passed and sent legislation to the House to avoid a threatened national default and end the shutdown. President Barack Obama signed the bill that ended the 16-day shutdown, allowing federal workers to return to work on October 17, 2013. This bill is a temporary measure that provides a few months of breathing room, extending the debt cushion to February 7th, 2014 with current spending levels authorized through January 15th. However, even with the shutdown over, the impact from the government shutdown has already had a major impact on the country and its workers. In addition to placing approximately 800,000 government workers on furlough, the impact of the shutdown is expected to ripple throughout the economy. According to HIS Inc., a partial shutdown of the federal government costs the United States at least $300 million per day in lost economic output. Bank of America projected that a two-weeklong shutdown would curb fourth-quarter growth by .5 percentage points. “Government spending touches every aspect of the economy, and disruption of spending, more than the direct loss of income, threatens to damage investor and business confidence in ways that can seriously harm economic growth.” ~Guy LeBas, Chief Fixed Income Strategist at Janney Montgomery Scott LLC Gallup’s Economic Confidence Index has dropped 12 points to -34 during the government shutdown. This is the largest decline since Lehman Brothers collapsed in 2008. The survey shows that 67 percent of Americans believe that the economy is getting worse. The weakening of American confidence will have an impact on investments and consumer spending; especially with the peak season of retail trade approaching. In this article, we explore the impact the government shutdown so far and the effects we expect will linger even now that the government has reopened. What Causes a Shutdown? Under the U.S. Constitution, both the Senate and the House of Representatives have to pass a law renewing the government’s authority to spend money every year. If the bill is not passed at the close of the fiscal year (which falls on September 30th) that authority elapses and many government services are suspended. Percentage of Workers Furloughed, by Agency Source: Washington Post Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 4
  5. 5. The Government Shutdown: A Crisis for Federal Workers How have the Markets Responded? SHUTDOWN How have the Markets Responded? The BBC reports that “worries over the US shutdown has hit Asian shares” with Japan’s Nikkei 225 index closing 2% lower, the Hong Kong Hang Seng down 1.5%, Australia’s ASX down 1.7% and South Korea’s Kospi falling 0.7%. However, the Senate deal to keep the U.S. from defaulting on its debt and reopening the government had the stock market soaring the following morning. Impact on the Job Market and Contract Workers • According to a survey by the National Association of Government Contractors, 29 percent of contractors say that a shutdown would cause them to delay planned hiring, and 58 percent said it would have a negative effect on their business. • Lockheed Martin, a giant U.S. defense contractor, put approximately 2,400 workers on unpaid leave at the beginning of the shutdown. • Sikorsky Aircraft Corp. in Connecticut notified 2,000 employees to expect temporary layoffs. These workers, however, were able to retain their jobs after the Pentagon announced that it would bring back 90 percent of its furloughed workers. • BAE Systems, a British defense contractor, placed more than 1,100 employees on furlough. • URS Corp, an engineering company, temporarily laid off about 3,000 employees due to the shutdown. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 5
  6. 6. The Government Shutdown: A Crisis for Federal Workers Ongoing Impact on the Economy and Businesses • The energy industry kept drilling but put approval of new plans on hold. • The industrial sector, vulnerable to shifts in economic temperament, is scaling back. • Automakers, such as General Motors, are concerned that the government shutdown will slow the industry’s growth, which has been strong this year. According to the CEO of Hyundai Motor Co.’s U.S. sales unit, John Krafcik, damage to consumer confidence from the shutdown could reduce October new-vehicle sales by up to 10 percent. • According to a survey by Goldman Sachs Group, Inc., two out of five Americans are curbing spending due to the government shutdown. • BNY Mellon, the world’s largest custody bank by assets, says that its balance sheet has increased by about $10 billion as clients hold onto cash in order to ride out the government shutdown. • Wal-Mart saw a slowdown at stores near government facilities at the beginning of the shutdown. • The District of Columbia, Maryland and Virginia all reported high levels of unemployment claims from federal employees. As of October 15th, unemployment claims from furloughed federal workers numbered 15,500. The Department of Employment Services in Washington D.C. generally receives 30,000 claims a year from all applicants. Maryland received 18,600 claims compared to 3,000 in a normal year. • The Federal Women, Infants and Children food assistance program, which provides for nearly 9 million low-income mothers and their children, has threatened to begin turning away recipients. • The Occupational Safety and Health Administration (OSHA) has stopped inspecting workplaces, while the Food and Drug Administration has stopped food inspection except for meat, poultry, and dairy. • Businesses that require federal permits, such as distilleries, fisheries and hunters, are unable to bring new products to market or apply for permits. Alaskan crab farmers, for instance, have had to push back their opening date, which could have a severe impact on the $400 million business. In 2011, the U.S. Fish and Wildlife Service estimated that the direct hunting-and-fishing-related sales resulted in $86 billion. • Mortgage applications by potential homebuyers fell by 5 percent. • The U.S. dollar fell to an eight-month low versus the Euro and other major currencies. “ “ “If it continues there’s no question that the negative consumer sentiment is most likely going to impact business of all nature – credit, investments, employment, just overall sentiment. No question about that.” ~Muhtar Kent, CEO of Coca-Cola Co. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 6
  7. 7. The Government Shutdown: A Crisis for Federal Workers Impact on the Various States Using data from the Small Business Administration, the Department of Education, and other sources, a report from personal finance site WalletHub reported on states which were most impacted during the government shutdown. States Most Impacted by Government Shutdown States with Most Federal Employees per Capita States with Most Federal Contracting Dollars per Capita Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 7
  8. 8. The Government Shutdown: A Crisis for Federal Workers How much has the Government Shutdown Cost the Economy? According to an estimate from Standard & Poor’s, the government shutdown has cost the economy $24 billion. It has also reduced projected fourth-quarter GDP growth from 3 percent to 2.4 percent. The possibility of a debt default had spooked investors on Wall Street, hiking interest rates. Hundreds of thousands of federal workers bore the burden of the shutdown. Small businesses also suffered from frozen government contracts and delayed business loans. Tourism took hits from closed national parks. “ “ “The bottom line is - the government shutdown has hurt the U.S. economy. In September, we expected 3% annualized growth in the fourth quarter because we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default. Since our forecast didn’t hold, we now have to lower our fourth-quarter growth estimate to closer to 2%.” ~Standard & Poor’s Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 8
  9. 9. The Government Shutdown: A Crisis for Federal Workers Moody’s Analytics reported a similar number saying that the shutdown caused a $23 billion hit to the GDP of the United States, or $1.4375 billion per day. The impact of the shutdown has been particularly hard on Washington, D.C. According to the Mayor Vince Gray’s office: • Regional impact has been $217 million per day in lost/deferred federal and contractor wages (that is 17.6 percent of the region’s economy) • $44 million a week decrease in economic activity • $6 million a week decline in tax revenue • A decrease of 7 percent in restaurant traffic compared to 2012 $2 million less revenue in hotel room bookings compared to 2012. “ “ • “Because it’s happening all at once, so quick, so fast, unplanned; it’s going to hurt. We can absorb it, but it still hurts.” ~Beth Ann Bovino, U.S. Chief Economist at S&P. What the End of the Shutdown means to Federal Workers? The ending of the government shutdown means that furloughed federal workers are returning to work. The deal in Congress includes provisions to provide back pay to workers. The shutdown divided employees into several categories in terms of pay “Exempt” Employees: These are workers who are in functions that were not affected by the shutdown, such as U.S. Postal Service workers whose operations are self-funded or have multi-year budgets. These employees have been receiving regular pay and benefits. “Excepted” Employees: These are workers who have continued to be employed during the shutdown due to the nature of their positions (related to national security, public health, or safety). They have been working unpaid since the shutdown started. These workers have been guaranteed that they will receive back pay once government funding is restored. “Furloughed” Employees: These are workers who were not working and were unpaid during the shutdown. They had no guarantee that they would receive back pay during the period. The retroactive pay provision would apply to them. It is uncertain when the back pay will be distributed though the bill calls for payment “as soon as practicable”. Since agencies use different payroll providers with different pay cycles and pay dates, sorting out the distribution is a cumbersome task for payroll administrators. Many employees filed for unemployment compensation during the shutdown. According to the Labor Department, “If Congress passes legislation that retroactively provides for the payment of salary, states will generally require repayment of any unemployment benefits received. States will advise affected claimants if benefits are overpaid and if so, provide repayment options.” Many of the workers who have applied have likely not yet received payments, as eligible individuals are required to wait a week and then payments are issued within 14 to 21 days after the claim is approved. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 9
  10. 10. The Government Shutdown: A Crisis for Federal Workers While federal employees will receive back pay under the deal, contractors will probably not recover their lost wages. Standard & Poor’s warns that the temporary agreement will still have consequences for the economy, as consumers will worry about a repeat of the recent shutdown. This, along with the stall in cash flow, is predicted to affect spending during the holiday shopping season. “ “ “The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed. If people are afraid that government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks.” ~Standard & Poor’s Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 10
  11. 11. Temp Workers: Just in Time Workforce Over the last decade many organizations have become more proactive about their recruiting, developing candidate pipelines and shifting towards a “just-in-time” hiring model. Forecasting human capital needs and having a bench of qualified candidates available upon request offers companies the ability to be agile, fast, and lean in uncertain economy, while providing other benefits such as increased customer satisfaction and employee morale. Temporary workers, by nature, are a perfect fit for an organization looking to build a just-in-time workforce. These skilled workers are available as needed for as long as needed to fill positions that may arise from seasonal demand, innovations, or shifts in business cycles. What is a Just-in-Time Workforce? Just in Time (JIT) is a commonly used production strategy that serves to improve a company’s return on investment by reducing inventory and associated carrying costs. When applied to the creation of a product, natural resources, raw materials and components required to create a finished product that is delivered to a final customer are made available exactly when needed in the production cycle, reducing the need to carry large inventories. A human capital supply chain transforms relationships and data (ad responses, resumes, social profiles) into candidates that are delivered to a final customer, the hiring manager. “ Traditionally, companies have relied on a “reqs per recruiter” planning model for their HR needs. However, in a changing environment, where companies both need workers on demand and want to cut costs, a just-in-time hiring model makes more sense as a planning tool. “ “Companies are looking at increasing employee utilization or do just-in-time hiring. There are lots of operational parameters that companies are looking at.” ~R. Chandrasekaran, Chief Executive of Technology and Operations at Cognizant Technology Solutions. In lean management philosophies, your work-in-process (WIP) is your “unfinished inventory” that is waiting in a queue for further processing. Applying this to recruiting, your candidate pipeline is your WIP inventory. By proactively pipelining candidates (mainlining relationships), recruiters can proactively build WIP candidate inventories that are available just when you need them. These candidates might be active, passive, or not even looking, but are vetted and ready to pursue when an opening arises or their work situation changes. Building a Just-In-Time workforce allows companies to have a pull-based strategy where they can provide hiring managers with candidates that match their needs perfectly, exactly when they need them. It enables companies to react to specific human capital demands with agility and speed. Why are Temps Essential to JIT Workforce? Building a bench of talent that is available just in time requires skilled candidates who are not committed long-term to current positions and are flexible towards the tenure that the type of work requires. Temporary workers are very well suited to this model. The strategic use of contractors can result in access to top talent, as many skilled professionals enjoy working on a project basis, as it allows them to contribute meaningfully to exciting projects and keep their skills current. The cost of temp workers is less due to a lower burden of payroll taxes, benefits and perks. Plus, carrying costs of having non-needed workers on the payroll are eliminated completely. Since temp workers are hired on a contractual basis, there is no reputation risk of layoffs. And when using a contracting firm who is the “employer of record”, many legal risks associated with full-time workers are mitigated. For companies competing in a global market, temporary workers are ideal, as they are increasingly mobile and borderless. Advanced technology for collaboration allows workers and organizations to be unaffected by regional constraints. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 11
  12. 12. “ “ “ “ Temp Workers: Just in Time Workforce “To compete in the future, organizations will need to push talent management beyond the confines of the enterprise wall to include the new extended workforce: a global network of outside contractors, outsourcing partners, vendors, strategic partners and other nontraditional workers.” ~Accenture, 2013 Rise of the Extended Workforce Report A Model Growing in Use Companies are relying more on freelancers to help them deal with the rapid changes and innovations in the global economy. The monthly reports from the Labor Department consistently show that companies are focusing less on longer-term hires and more on filling short-term needs. In effect, employers are turning to a “just-in-time” model for staffing. Various sources show that 20 to 33 percent of the American workforce consists of independent workers, and worldwide, companies are spending an estimated $300 billion per year on contingent labor. In some industries such as oil and gas, up to 77 percent of the workforce is outside of the core operation. ”For 90%, the decision to hire freelancers is primarily made by individual departments as their demand requires, further confirming the strong need for specialized, short-term labor.” ~Tower Lane Consulting, ‘Surveying the New World of Work’ Report A survey by Elance, conducted by Tower Lane Consulting, found that 60 percent of companies plan to increase their freelance hiring in 2014. According to the survey, “75 percent of companies surveyed used freelancers because they need a wide range of specialized skill sets at different times.” The freelance workforce is booming with nearly one-third of the U.S. workforce (approximately 42 million workers) considered independent workers, according to the Freelancers Union. By 2020, freelancers are expected to comprise 40 percent of the overall workforce. In September of 2013, earnings for freelancers topped $6.8 million, a growth of 72 percent from 2012. Freelancer hourly wages increased by 5 percent, which is ten times faster than traditional wages. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 12 “
  13. 13. “ “ In Lieu of the Jobs Report… “ “ “The jobs report is a flashlight into the dense forest of economic information. We’ve turned the flashlight off.” ~Diane Swonk, Chief Economist at Mesirow Financial. Like many other analysts and researchers, the staff of TrendLine relies heavily on the monthly economic data from the Bureau of Labor Statistics (BLS) to derive our forecasts for contingent worker supply and demand. Due to the government shutdown, the Labor Department did not release its September employment report. With the government now reopen, it is still unclear when and whether the Labor Department will release data on jobs and inflations for the month of September. Similarly, due to the length of time that BLS workers were off the job (and not collecting information), it is unsure if the data reported for the month of October will be skewed. During the shutdown, a secondary source of economic data, the Bureau of Economic Analysis (BEA), which publishes the information on GDP and personal income, was also closed. “At this moment, we are flying blind.” ~Alan Greenspan, former chairman of the Federal Reserve In lieu of the BLS jobs report, TrendLine analysts examined other sources of data to provide you with some key figures on employment. What was expected? The BLS report was expected to show that the economy added 180,000 jobs in September. The employment rate was predicted to remain stable at 7.3 percent. The Producer Price Index (PPI) was expected to increase by 0.2 percent in September. Estimations were that the Consumer Price Index (CPI) also increased by 0.2 percent. Economists believe that average hourly earnings in September increased 0.3% month-over month, and 7.3 percent year-over-year. Experts believe that the U.S. economy continued to generate jobs in September at a pace somewhere between 150,000 and 200,000. HIS Global Insight, a forecasting firm, said that “September employment growth, once the report is released, will come in at 150,000.” ADP Employment Report The ADP Employment Report is sponsored by ADP and shows changes in private sector employment. It does not factor in government or public jobs. For September 2013, the ADP report showed a gain of 166,000 private sector jobs. The report shows that the United States gained many low-paying jobs. The service sector had the most gains, with 147,000 private sector jobs. The goods sector gained 19,000 jobs and professional/business services grew by 27,000 jobs. Within the goods sector, construction had the most growth with 16,000 jobs added while manufacturing gained only 1,000 jobs. “ “The ADP report has improved significantly as a forecasting input for private payrolls over the past year. Therefore, in the event of the employment report is delayed, we will be comfortable relying on the ADP series as a close proxy of September hiring” ~Joe LaVorgna, chief U.S. Economist at Deutsche Bank. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 13
  14. 14. In Lieu of the Jobs Report… Unemployment Insurance Weekly Claims Report The Employment and Training Administration (ETA), part of the Department of Labor, issued a press release on October 3rd, 2013, indicating that the four-week moving average on new claims for unemployment insurance hit a six year low of 305,000 for the week ending September 28th, 2013. Challenger, Gray & Christmas, Inc. Planned Layoff Report The outplacement firm said that companies announced plans for 40,289 layoffs in September. This is 20 percent less than August 2013. The industries with the most job cuts were computer, industrial goods, health care, and insurance. The states with most layoffs include New York, Illinois, Ohio, California, Texas, Oklahoma and Mississippi. ISM Indexes The ISM service employment sub-index fell to 52.7 in September from 57 in August. This suggests that service jobs are growing but at a slowing pace. The ISM manufacturing employment sub-index increased to 55.4 in September from 53.3 in August. This suggests that manufacturing jobs are growing at an increased pace. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 14
  15. 15. Temp Hiring to Grow in Q4 The holiday season always calls for an increase hiring of temporary workers. As we discussed earlier in this issue of TrendLine, major retailers are already planning on increasing their staffs in stores and warehouses in anticipation of meeting increased consumer demand and volume. A survey by CareerBuilder found that 39 percent of retail hiring managers plan to hire seasonal workers this year. The National Retail Federation estimates that 720,000 temp workers will be hired, and already almost half of that is comprised of planned hiring by the major retailers in the graph below: Major Hiring of Temp Workers by Retailers According to CareerBuilder’s fourth-quarter 2013 U.S. job forecast, 32 percent of hiring managers plan to bring in temporary staff in the fourth quarter of 2013. Some employers, 22 percent, expect to transition their temporary workers into permanent employees in the quarter. Another survey of 158 hiring managers found that 10 percent of the respondents planned to increase their expanded workforces in Q4. In the manufacturing sector, a report by the Society for Human Resource Management found that 52.3 percent of employers planned to add staff in October. The overall hiring rate in Q4 of 2013 is expected to remain stable with 25 percent of employers planning to add full-time, permanent headcount. Several industries are expected to outpace the national average for companies hiring, including information technology, financial services and manufacturing. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 15
  16. 16. World Watch As a continuation of our article from the October 2013 edition of TrendLine, we explore the trends in temporary worker supply and demand in global markets Japan Robert Walters, the global recruitment consultancy, in October expanded service to businesses in Osaka and Sansai regions to offer temporary, temp-to-perm and fixed-term contract recruitment in addition to permanent recruiting services. The manager of the new team, Teruhiko Hayakawa, says, “by offering contract recruitment services in Kansai, we are able to assist firms with adding resources for seasonal workloads, maternity leave or other long-term absences.” “ India “ Malaysia “ “ Recruitment firm Hays in Japan reports that the recruitment market is active in the country. And recently, Prime Minister Shinzo Abe has vowed to boost employment and raise wages in order to boost consumption and investment. “Overall, the activity level for both jobs and the number of candidates is good. We anticipate the recruitment market will continue to remain active until the end of the calendar year and beyond. If budgets are depleted before the end of the year but departments still need support, we will see a rise in temporary and contract hires” ~Jonathan Sampson, Regional Director of Hays. The employment of a flexible staff is a growing model in India. The Times of India reports that companies across traditional sectors such as retail, telecom, manufacturing, pharmaceuticals, and agriculture are increasingly adopting a flexi-staffing model. The workforce in the flexi-staffing industry is currently 3 percent of total employment, and a recent study predicts that this will grow to 25 percent by 2025. “Generally speaking, flexi-staffing is necessary considering current circumstances. It takes care of sudden and temporary jump in workload, which is the sole purpose of doing it. During the economic downturn, it helps a lot, too. Things get better with their contribution to their contracted company.” ~Bibek Paranjpe, HR Head of Reliance industries. Employers in Malaysia are choosing to hire contract workers as opposed to permanent employees. Due to a slow market, companies are more selective and wiling to hire temporary staff while waiting for the right candidate. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 16
  17. 17. World Watch With the holiday season approaching, there is an increased demand for workers at supermarkets, restaurants and shops. Ulysses Piva, the President of the Union of Employers of Retail Pato Branco, believes that temporary work is a great opportunity for those outside the labor market and for young workers seeking their first job. According to the latest Adcorp Employment Index, the South African economy shed 74,523 jobs in September. The majority was in the permanent job sector. Temporary jobs declined also by 3,424 and agency work only shed 319 jobs over the same period. Brazil South Africa Taiwan The government has faced criticism for employing an increasing number of agency temporary workers in various departments. The number of temp workers increased from 70,000 in 2002 to 570,000 in 2012. Lai Shyh-bao, Chinese National Party Legislator, says that the growth of the employee-leasing industry was a major cause of wage stagnation. Australia The Australian Bureau of Statistics reports show that the number of unemployed workers who have registered with a recruitment firm has grown by 80 percent over the last five years. However, looking for work with a recruitment agency is still the least popular means of job hunting in the country, with only 24% of unemployed jobseekers using this channel. Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 17
  18. 18. Methodology The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The wage rates for temporary workers or contingent workforce are based on payments made by staffing firms to these workers based upon hours worked. Data collected from sources such as Bureau of Labor Standards (BLS) and other government sites as well as an internal pool of staffing companies and consultants, is aggregated and classified based on regions and skill categories, to arrive at an aggregate index. The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with the said baseline and is representative in terms of direction and scale of change. Five years of data has been included to observe seasonal patterns and distinguish seasonality from long-term wage movements. The data and the model has been further refined over last six months. DCR Wage Index combines the exhaustive data from BLS with practical and more recent developments and data from on-field consultants and clients, to provide timely near-term indications of trends and consistent long-term actionable and objective information. Source Data DCR Work Index uses multiple economic variables to ensure the robustness of its forecasts and cross-validation of trends. Key data sources and parameters of interest included and influencing the index are: Unemployment data Gross Domestic Product Prime rate of interest New and seasonal Job openings Non Form employment Job Opening All Export All Import Average Hourly Earnings of All Employees Total Private Aggregate consultant data on job market parameters Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 18
  19. 19. Methodology References http://management.fortune.cnn.com/2013/10/16/lockheed-martin-marillyn-hewson/ http://blogs.wsj.com/corporate-intelligence/2013/09/30/business-and-the-shutdown-the-oil-drilling-show-must-go-on/ http://blogs.wsj.com/corporate-intelligence/2013/09/30/business-and-the-shutdown-will-the-steel-industry-buckle/ http://www.gallup.com/poll/165287/weekly-drop-economic-confidence-largest-2008.aspx http://www.bloomberg.com/news/2013-10-15/two-out-of-five-americans-cut-spending-amid-government-shutdown.html http://www.reuters.com/article/2013/10/16/us-usa-fiscal-companies-idUSBRE99F0JT20131016 http://www.usatoday.com/story/money/business/2013/10/01/shutdown-employment-impact/2903241/ http://www.washingtonpost.com/blogs/federal-eye/wp/2013/10/16/what-ending-the-shutdown-would-mean-to-federal-employees/ http://www.washingtonpost.com/politics/federal_government/feds-seeking-unemployment-checks-show-harsh-impact-of-government-shutdown/2013/10/15/beb0c712-35bf-11e3-8a0e-4e2cf80831fc_story.html http://swampland.time.com/2013/10/17/heres-what-the-government-shutdown-cost-the-economy/ http://www.businessinsider.com/sp-cuts-us-growth-view-2013-10 http://www.huffingtonpost.com/2013/10/16/government-shutdown-cost_n_4110818.html http://www.staffingindustry.com/site/Research-Publications/Daily-News/Mid-market-survey-finds-55-will-hire-in-2014-27404 http://www.thehindubusinessline.com/industry-and-economy/info-tech/justintime-hiring-catching-on/article5157197.ece http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise-contingent-workforce/ http://abcnews.go.com/blogs/politics/2013/10/the-costs-of-the-government-shutdown/ http://www.theguardian.com/world/2013/sep/29/us-government-shutdown-services-affected http://www.washingtonpost.com/wp-srv/special/politics/2013-shutdown-federal-department-impact/?hpid=z1 http://www.opb.org/news/article/npr-economists-fear-flying-blind-without-government-data/ http://www.bizjournals.com/charlotte/news/2013/10/04/latest-shutdown-casualty-us-jobs.html http://www.businessinsider.com/september-jobs-report-2013-10 http://www.cnbc.com/id/101078713 http://www.staffingindustry.com/site/Research-Publications/Daily-News/Mid-market-survey-finds-55-will-hire-in-2014-27404 http://www.businessinsider.com/freelance-workers-jobs-pay-are-rising-2013-10 http://www.forbes.com/sites/elainepofeldt/2013/09/24/will-your-next-job-be-a-freelance-one/ http://www.usatoday.com/story/money/business/2013/10/01/shutdown-employment-impact/2903241/ http://www.staffingindustry.com/row/Research-Publications/Daily-News Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 18
  20. 20. About DCR Workforce DCR Workforce is an award winning, best-in-class service provider for contingent workforce and services procurement management. Our proprietary SaaS platform (SMART TRACK) assists in providing customizable VMS and MSP Solutions to manage, procure and analyze your talent with complete transparency, real-time control, high performance and decision-enabling business intelligence. DCR Workforce serves global clientele including several Fortune 1000 companies. Customers realize greater efficiencies; spend control, improved workforce quality and 100% compliance with our services. For more information about DCR Workforce and its Forecasting Toolkit (Rate, Demand, Supply and Intelligence) including Best Practice Portal, visit dcrworkforce.com For more information call +1-888-DCR-4VMS or visit www.dcrworkforce.com Public Relations: Debra Bergevine 508-380-4039 7815 NW Beacon Square Blvd. #224 Boca Raton, FL 33487 debra.bergevine@dcrworkforce.com | sales@dcrworkforce.com | marketing@dcrworkforce.com www.dcrworkforce.com | blog.dcrworkforce.com facebook.com/DCRWorkforce linkedin.com/company/dcr-workforce twitter.com/DCRWorkforce © 2013 DCR Workforce, Inc. All Rights Reserved. DCR Workforce and Smart Track are Registered Trademarks. CCO — 082912 Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 19

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