Temporary workers are leading the jobs growth in the United States. A recent AP investigation found that the “number of temps has jumped more than 50% since the recession ended four years ago to nearly 2.7 million…”
The dependence on “temporary” or “contract” workers can be traced in part to the “depth of the recession and the tepid pace of the recovery.” Employers are nervous about the future. However, there are other forces that make employers hesitate to grow their staff.
Health insurance costs for one.
Last month, for example, the State of Ohio predicted higher health insurance costs in 2014: Health Insurance Costs to Increase Significantly Under Affordable Care Act.
Pension costs for another.
A June 2013 study issued by the University of Michigan,”Cost Shifting and the Freezing of Corporate Pensions” attributes the dramatic changes in the nation’s large pension plans to “the significant increase in pension costs and risks to the employer.”
Allstate Corp. (ALL), the largest publicly traded U.S. home and auto insurer, said it’s cutting some retirement benefits for employees. The insurer provides employees with “both a pension and 401(k) plan. Today, just 30 percent of Fortune 100 companies offer both.”
Unemployment costs for a third.
A July 2013 report by Equifax 2013-07 ETS Tax Intelligence – 2014 Tax Rate Projections predicts continuing hikes in employer tax rates for unemployment:
In 2008, the average state unemployment insurance (“UI”) tax cost per employee was $313. In 2013, the average state unemployment tax cost per employee rose to $535, an increase of 62%. The increase resulted from the need for states to recoup tax revenues to pay UI claims, rebuild trust fund solvencies, and create trust fund reserves for future spikes in unemployment. Meeting these goals will likely cause UI tax costs to remain elevated for the foreseeable future.
As a result of uncertain demand and certain cost escalation, employers are matching their short term growth opportunities with short term staffing, while avoiding long term opportunities that might justify long term investment in employees.