DCR Trendline December 2013 – Contingent Worker Forecast and Supply Report

REPORT # 20 | December 2013

TRENDLINE
Contingent Worker Forecast and Supply Report

Inside this Issue
Note from the Editor

1

DCR National Temp Wage Index

2

Post Shutdown Impact and Recovery 4
OSHA Asked to Further Improve
Temp Worker Protections

6

TrendLine in 2013

8

A Look Back at 2013: Sector By
Sector

10

Methodology

14

Note from the Editor
Welcome to the final month of 2013! The staff at Trendline is pleased to be wrapping up our
first full year of publication. It’s been an exciting year in the world of the contingent workforce.
In our last issue of 2013 we once again provide you with key insights into the temporary staffing
industry. Our thorough research into pivotal trends and current events, along with our in-depth
analysis of contingent worker supply and demand, is designed to give you a pulse of the market.
The DCR National Temp Wage Index focuses on wage trends through the course of the year,
analyzing the use of temp workers and tracking related developments in the economy. This
month, we track the tremendous growth of temporary worker employment over the past year.
After the sixteen-day shutdown of the U.S. federal government, figures are finally starting to
emerge on how the economy and unemployment were affected. In a follow-up to our feature
article last month, we examine the impact that the shutdown had on production levels,
employment, and major companies. Keep an eye out for our graph on job growth for the month
of October.
A major topic of interest to those who have a blended workforce is the new extended OSHA
protection of temporary workers. We provide a breakdown of the recommendations provided
by a coalition of workplace safety groups to OSHA in a recent forum.

“

Through the year, Trendline was dedicated to providing our readers with information on the most
relevant workforce trends that influence and impact the employment of temporary workers.
Now at the end of the year, we list the trends we focused on most heavily in 2013, and provide
our predictions on trends we expect to see in 2014.

“The most serious question
going forward is not simply whether
or how more full-time jobs return,
it’s whether or how part-time and
temporary workers become more
valuable.” ~ Michael Schrage,
Research Fellow at MIT Sloan
School’s Center for Digital Business
and Author of Harvard Business
Review Blogs

Our concluding article is appropriately a look back at employment changes throughout the
year. We divide our analysis by sector to provide you with detailed figures on which American
industries and states experienced the most change.
The TrendLine team would like to thank our many readers for sharing your thoughts, questions,
comments and feedback throughout the year. TrendLine strives to bring you the latest trends,
news, metrics, and analysis to give you a clearer picture of the temporary staffing market. We,
as always, encourage you to send us your questions and suggestions on topics that you would
like us to investigate further.
On a concluding note, the DCR Market Intelligence Editorial Staff, along with the entire
worker-base of DCR Workforce, would like to extend our wishes for a happy holiday season with
continued peace, joy, and success in 2014!

Ammu Warrier

Ammu Warrier, President

Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 1

“


The recouping of the market after the government shutdown combined with the surge in demand for goods and
services due to the holiday season promises growth for the engagement of temporary workers.

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An interesting sector of growth for temporary work has been in tree plantation. A Bossier City firm will plant 6 million
loblolly pines and other trees this winter, relying primarily on temporary workers.

Recent reports show that U.S. staffing companies employed an average of 2.96 million temporary and contract workers
per day in the second quarter of 2013, up 1.8 percent from the same period in 2012.

The Society for Human Resource Management (SHRM) expects hiring in the services and manufacturing sector to
increase in November on a year-over-year basis. A survey by the institute found that 41.8 percent of service-sector
companies were planning to increase hiring in November, while 49.0 percent of manufacturing employers were also
planning to expand their workforces.
According to the Staffing Industry Analysts (SIA), the annual revenue of the staffing industry is about $339 billion. The
largest market, the United States, accounts for about 27% of total worldwide revenue. By 2014, revenue for the U.S.
staffing industry is expected to reach $139.4 billion.

“The temporary staffing industry has seen tremendous growth in the last few years, and this trend has helped shine a light on the
importance temporary workers are having on the workplace of the future. We’re seeing a real trend toward temporary staffing as a
permanent addition to American business models, and it is through industry leaders and innovators that we’ll see advancements in
temporary staffing best practices evolve.” ~Jason Leverant, COO of AtWork Group



Cumulative Changes in Jobs from 2009

The U.S. Economy

Recent reports show that from July to September, the U.S. economy expanded at a 2.8 percent rate. State and local
governments had their highest rate of spending in four years, while exports rose and home construction increased. However,
service spending was essentially flat and the cooler summer weather lowered utility spending.
Reports from the Labor Department show that employers added 148,000 workers in September 2013, and more than one
in eight were hired as temporary workers. According to the American Staffing Association, the staffing industry’s stake of job
creation is at a 13-year high.

“

Despite low expectations for the October 2013 jobs report by the Bureau of Labor Statistics (BLS), employers added 204,000
jobs. This far exceeded economist predictions of 120,000 jobs in October. The largest gains were in hospitality, which rose
53,000 in October, and retail, which rose 44,000.

“

“The economy seems to be heating up faster than people think. It’s incredibly impressive.” ~J.J. Kinahan, Chief Strategist for TD
Ameritrade

Demand for Temp Workers Increases in Europe

Adecco SA, the world’s largest provider of temporary workers, said that their third-quarter profit rose 61 percent due to higher
demand for flexible labor. As the European countries are emerging from recession, the restructuring efforts are driving an
increased demand for temp labor. In Spain and Italy, especially, labor reforms are resulting in a growth of hiring. In countries
such as France, Belgium and Germany where it is costly to reduce staff, companies prefer to source temporary workers to avoid
benefit and pension costs.


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Post Shutdown Impact and Recovery

As the year-end and holidays are approaching, researchers and economists are trying to determine if the unanticipated government
shutdown of 16 days in October had an impact on the sales and operations of various sectors.
“We are optimistic about a recovery in the manufacturing sector in the second half of the year, and today’s release suggests our
optimism is well placed.” ~Thomas Simons, Money Market Economist at Jefferies & Co.

The Purchasing Managers Index (PMI) is a composite index by the Institute for Supply Management (ISM) that reflects the economic health
of the manufacturing sector. It is based on five main sub-indexes, including new orders, inventory levels, production, supplier deliveries and
employment environment. A PMI of more than 50 indicates expansion of the sector, whereas a reading under 50 represents a contraction.

“
“

PMI Composite Index, 2013

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“

The ISM reported that the
manufacturing PMI in October
rose to 56.4 percent from
56.2 percent in September.
The services sector, which
accounts for the bulk of the
U.S. economy, has been growing for 46 months straight, with
a PMI reading above 50. A flash
estimate in October by Markit
Economics was expecting the
PMI figure to come in at 51.5
at a 12-month low.

“Despite all the grumbling out of Washington and from pundits claiming that the partial government shutdown would have significant
effects on the economy, the private sector shrugged it off and continued to plow along.” ~FT Advisors economists

Sentiments from Various Companies

According to CEO, John Donahoe, the government shutdown came at a particularly unfortunate time,
right at the beginning of the holiday shopping season. eBay reported third-quarter earnings that were
lower than analyst predictions. Upon the announcement, company shares fell by more than 5%.

“[The shutdown] makes people a little more tentative about spending. It’s not massive, but on the margin, especially people that are
trying to make their dollars stretch, they might be a little more conservative.” ~John Donahoe, CEO of eBay

CFO Tammy Romo said that while third-quarter earnings were strong, the government shutdown is
estimated to have cost the airline $20 million in revenue.

In areas with high concentrations of federal workers, sales at Wal-Mart stores lagged during the
shutdown. The company previously expected a growth in net sales of five to six percent for 2013, but has
revised these estimates to two to three percent.
The airline felt the impact of the shutdown more than competitors, as Reagan National Airport in
Washington D.C. serves as one of their hubs. With business travel for federal workers at a halt, the
company saw overall bookings in late September and early October fall by about eight percent.

Post Shutdown Impact and Recovery
What Happened to Job Numbers in October?

Job Growth Strong in October (Seasonally Adjusted)

During the month of October, when the government was shutdown for 16 days, total non-farm payroll employment
rose by 204,000 and the unemployment rate stayed relatively stable at 7.3 percent, up from 7.2 percent in September.
The largest employment increases were found in leisure and hospitality, retail trade, professional and technical
services, manufacturing, and health care. Among the unemployed, the number on temporary layoff increased by
448,000 (a figure that includes furloughed federal workers).

Unemployment Rate, 2010 – 2013 (Seasonally Adjusted)


OSHA Asked to Further Improve Temp Worker Protections
During a November 2, 2013 forum, a coalition of workplace safety groups urged OSHA to further improve safety and
health condition protections for temporary workers. OSHA Assistant Secretary, Dr. David Michaels, was presented
with 15 recommendations that ranged from compelling OSHA inspectors to learn how temp workers were trained to
requiring employers to provide rosters of workers to OSHA investigators for interview selection purposes.
The recommendations ask that OSHA create a National Emphasis Program in high-hazard industries that have a
high concentration of temporary workers, including construction, manufacturing, warehousing, healthcare and
transportation.

“

With an increased reliance on flexible labor by companies, with temp help accounting for 15 percent of job growth
nationally over the past four years, it is important to assure worker safety.

“

“Temp workers fall through the cracks. From a public health perspective, we need to know where they’re working, who’s injured on the
job and how – so we can improve working conditions.” ~Linda Delp, Director of the UCLA Labor Occupational Safety and Health Program

Recommendations for OSHA

1) OSHA should set forth a clear statement of the joint responsibilities of host employers and temporary staffing
agencies in complying with OSHA regulations.
2) OSHA should draft a written policy specifying health and safety training requirements for temporary staffing
agencies.
3) OSHA should initiate a National Emphasis Program in high-hazard industries that use temporary staffing agencies.
4) OSHA should identify the 20 largest temporary staffing agencies in the high-hazard industries, along with repeat
offenders to put together a profile of these agencies.

5) Temporary staffing agencies should be included as part of OSHA’s data initiative so that injury/illness rates are more
accurately tracked.
6) All recommended policies and procedures should also be incorporated into the OSHA Field Operations Manual.
7) OSHA should provide consistent training to compliance officers.
8) If OSHA opens an investigation of a worksite employer, it should be standard practice to also investigate if each
engaged temporary staffing agency engaged provided proper training in compliance with hazard standards.
9) OSHA should request and be provided a list of all temporary staffing agencies that have placed workers at the
facility, including contact information.
10) Employers should be compelled to share with OSHA documents they are providing to workers to determine if they
provided essential safety training.
11) Employers on the day of OSHA investigations should be required to provide a roster of all workers employed and
their job titles, so that OSHA can select whom to interview.


OSHA Asked to Further Improve Temp Worker Protections
12) OSHA should include an inquiry as to whether health and safety deficiencies are restricted to one worksite branch
or are present in multiple branches.
13) At OSHA’s initiation of worksite inspection, a notice should be issued to temporary staffing agencies informing that
retaliation and intimidation are prohibited.
14) At an investigation of a worksite, OSHA should distribute an information card in the language of the workers
informing them of OSHA’s role, and their protections and rights.
15) OSHA should partner with non-profit organizations and invite them to discussions with temporary workers
offsite. The protocol language for investigators should proactively explaining to workers that if they are not
comfortable speaking directly to investigators, a worker center or other organization has offered to meet offsite.


TrendLine in 2013
Over 2013 Trendline has covered a vast array of topics. In this article, we list the topics we paid the most attention to
this year, and forecast those workforce trends we predict being of importance in 2014.
With more and more CEOs citing talent acquisition and management as their critical concern in 2013 and also for the
upcoming year, we have strived to provide further insight into the trends that drive the extended workforce. According
to Bryan Peña, Staffing Industry Analysts’ Vice President of Contingent Workforce Strategies and Research, contingent
workers make up 13 to 15 percent of the average workforce in most companies, and in some even exceed 50 percent
of the overall workforce. With a significant portion of the workforce being contingent, managers find it increasingly
imperative to focus on the role of this type of worker.
This year, we largely focused on topics that were of interest to employers, particularly as we expect these subjects to
have an impact on the economy, recruiting, and employment in 2014.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)

Occupations with the highest concentrations of temporary workers
U.S. states with positive and negative growth in temp worker demand
Utilization of social media for recruiting and hiring
The growing elderly population and its impact on the economy and productivity
H-1B Visas and their impact on the U.S. job market
The unemployment rate
The role of big data in recruitment
The Affordable Care Act (ACA)
OSHA protections for temporary workers
International trends for temporary jobs

In 2014, we expect certain new workplace trends to emerge and some major phenomena from this year to continue
to grow. As more baby boomers retire and remote work increases, the concept of “work” continues to change.
Additionally, the implementation of the Affordable Care Act (ACA) will have an impact on hiring. Here are some of the
major workplace trends we recommend that managers pay attention to in 2014:
1) The impact of healthcare on hiring
ACA is causing employers to delay hiring in the upcoming year. According to CNNMoney.com, nine out of fourteen
economists say that companies are putting off hiring due to healthcare reform.
2) The growth of freelancing
Today, 17 million Americans (or one third of the population) are working as freelancers, contractors and consultants.
Experts estimate that in six years, freelance jobs will outnumber permanent positions. Employers are increasingly
choosing to hire temporary workers in order to save money and find specialized expertise for projects.
3) Changing demographics in the workforce
Baby boomers are beginning to retire, with 18 percent expected to retire within the next five years. Additionally,
millennials are estimated to account for 36 percent of the American workforce in 2014. With these major shifts in
workforce demographics, companies are starting to pay more attention to succession planning and creating new
opportunities for younger generations.


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TrendLine in 2013
4) Switching recruiting channels
As applicants continue to grow more discouraged with online job application platforms and the black hole of resumes,
companies are starting to focus on improving candidate experience. Employers are looking for new ways to filter
applicants and are using social networks to interact with and screen candidates. Jobvite.com reports that 94 percent
of employers used social networks for recruiting in 2013.
5) An increase in active job seekers
Workers are increasingly getting restless with their current jobs, and actively seeking new opportunities. A recent
survey showed that 48 percent of millennials conduct job surveys while still at their workplace, and 73 percent of
workers are not opposed to looking for a new opportunity before leaving their current employment.

“

6) The importance of reputation
Both workers and candidates are paying more attention to reputation. Due to the uncertain economy and fear of
incurring costs, companies are looking for quality hires, while candidates are judging companies based on their
reputations and consumer brands. A CareerBuilder study revealed that 75 percent of job seekers would accept a lower
salary to work for a good brand.

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“It’s no secret that organizations are increasingly relying upon contract talent for a variety of critical roles, many of which have
significant corporate ramifications. In managing a contemporary contingent-based workforce, executives across the globe must
fine-tune their strategies to anticipate a future in which contract talent is an even bigger piece of the corporate puzzle, and look to a
series of next-generation concepts and technologies to drive true value out of this complex category, all while building an effective (and
deep) framework that supports all avenues of the contingent workforce umbrella.” ~Christopher Dwyer, Research Director and VP of
Operations at Ardent Partners

Temporary and part-time employment is by far the fastest-growing segment of the American job market. According to
the Bureau of Labor Statistics, the number of part-time employees is at a record high of 28 million, while temporary
employment has jumped 50 percent since the financial crisis of 2009. Companies are increasingly looking for more
flexibility while still aiming to cut their fixed costs by employing a smaller workforce. Managers are shifting their
human capital concerns to focus more intensely on productivity.

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“Average performers – be they bosses or workers – become relatively less valuable over time…If this sounds suspiciously like Pareto’s
80/20 Principle – that’s exactly my intent. The useful oversimplification that 80% of value creation/productivity boosts comes from
20% of the workforce suggest certain ineluctable mathematical outcomes. Let’s be flexible and forgiving and assert that roughly 75% of
enterprise value/productivity comes from 25% of the workforce.” ~Michael Schrage, Research Fellow at MIT Sloan School’s Center for
Digital Business and Author of Harvard Business Review Blogs

In the U.S. today, over 58% of firms are willing to employ temp workers at all levels of the workforce.

Independent workers are major contributors to the American economy. This year, independent workers generate
nearly $1.2 trillion in total income, up 20 percent from 2012. These workers are also job creators, where in 2013,
approximately 25 percent of independent workers hired other temp workers, spending $96 billion and employing the
equivalent of 2.3 million full-time workers through contract hiring.


A Look Back at 2013: Sector By Sector

Employment in Major Sectors, Year over Year, 2012-2013

In 2013 certain sectors of the American economy have
seen substantial growth in employment, whereas
others have actually reduced their workforces. Mining
and Logging and Professional and Business Services hold
the top spot for employment growth by percentage in 2013
from 2012, while Nondurable Goods and Government have
decreased their number of employees.
To study the employment changes in the past year in
greater detail, we have divided year-over-year employment
changes by major sectors. We have further mapped this
data by state to see which geographical areas were most
affected by workforce population changes.


Year-over-Year Change in Professional and Business Services, 2012 –2013

Professional and business services employment continued an upward trend, increasing by 32,000 workers in
September 2013. Temporary help services had an increase of 228,000 workers over the past 12 months, with 20,000
workers added in September 2013. The states with the most significant growth were California and Texas.

Year-Over-Year Change in Manufacturing, 2012 - 2013

Over the last 12 months, employment in Manufacturing has remained stable. Durable goods, supplemented by metal
products and machinery, added 64,000 jobs, while non-durable goods employment decreased by 26,000 employees.
Michigan was the only state to see large employment growth in the sector, despite in prior years ranking in the top
two states for job losses.

Year-Over-Year Change in Construction, 2012 - 2013

According to data released by the Associated General Contractors of America, construction employment in the last
year expanded in 194 metro areas and declined in 88. Alaska, Wyoming, Mississippi, and Louisiana added the most
jobs in the sector by percentage, and the largest job losses were in Indiana. In September 2013, employment in
construction increased by 20,000, which helped boost the low monthly average of the past six months.

Year-over-Year Change in Financial Activities, 2012 – 2013

Looking at the past 60 years, Financial services as an industry has expanded its share of the economy from 2.5 percent
to 8.5 percent of the GDP. Since 2009, Richmond, Virginia, has had a 12 percent growth in financial sector employment.
New York, home to the largest banking sector, has seen financial employment drop by 7.4 percent since 2007. With
firms looking to cut costs, they are focusing on moving business functions to less expensive locations, thus resulting
in less employment in traditional financial centers. In September 2013, financial companies lost 7,200 jobs following a
reduction of 5,900 jobs in August.

Year-over-Year Change in Government, 2012 – 2013

In September 2013, the federal government employed 2,721,000 full-time workers - it’s lowest since 1966. The
federal government currently employs (in civilian jobs) 2 percent of the employed population in the United States.
Members of the armed forces number around 1.4 million. Over the past 12 months, federal government employment has
decreased by 94,000. The federal government is continuing to shrink, while state government jobs are growing slowly.
State and local jobs are up 0.02 percent with 2,000 jobs in the past 12 months.

Government Jobs Annual Change, 2007 to 2013

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


Methodology
References
http://economix.blogs.nytimes.com/2013/10/22/bloated-government-federal-employment-at-47-year-low/?_r=0
http://www.cbsnews.com/8301-505123_162-57610099/government-shutdown-has-lasting-effects-on-u.s-companies/
http://data.bls.gov/cgi-bin/surveymost
http://www.digitaljournal.com/pr/1549036
http://www.thetradingreport.com/2013/10/23/the-permanent-rise-of-temporary-labor/
http://www.forbes.com/sites/joelkotkin/2013/05/31/the-cities-taking-finance-jobs-from-wall-street/
http://www.staffingindustry.com/site/Research-Publications/Daily-News/November-hiring-to-rise-SHRM-report-says27826#sthash.0vOVQRzD.dpuf
http://blogs.wsj.com/digits/2013/10/16/ebay-says-shutdown-weighs-on-holiday-shopping/
http://www.huffingtonpost.com/2013/11/07/economic-growth-q3-2013_n_4232329.html
http://www.bloomberg.com/news/2013-11-06/adecco-sees-rising-temp-worker-demand-as-europe-exits-recession.html
http://ohsonline.com/articles/2013/11/05/osha-urged-to-launch-temp-worker-emphasis-program.aspx
http://coshnetwork.org/recommendations-how-osha-can-improve-health-and-safety-temporary-workers
http://www.bls.gov/news.release/jolts.htm
http://info.mbopartners.com/rs/mbo/images/2013-MBO_Partners_State_of_Independence_Report.pdf
http://blogs.wsj.com/economics/2013/10/22/wary-employers-turn-to-temp-workers/
http://www.forbes.com/sites/danschawbel/2013/10/24/the-top-10-workplace-trends-for-2014/2/
http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1413
http://blogs.hbr.org/2013/07/prepare-for-the-new-permanent/
http://money.cnn.com/2013/11/08/news/economy/october-jobs-report/


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
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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

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