The Alliance for the American Temporary Workforce (AATW) site owner, known on this site as Temp Employees, recently weighed in on the six points I made in Tuesday’s article on staffing agency misconceptions. Before I continue, I would like to make it clear that although we strongly disagree, we appreciate Temp Employees, his perspective, and his willingness to have a dialogue. While this discussion could likely go on forever without either side entirely convincing the other, we at Staffing Talk felt like his points and our subsequent counterpoints deserved an article all its own.
Continuing below, the points made by Temp Employees are in italics right after the numbers, and my comments will follow after that. So, without further ado, here goes!
1) According to the ASA, the average temp assignment is longer than 90 days. And we both know that temp assignments can continue for years. So temp workers, with the same skills and experience, make less. Include the cost of "benefits" like sick days, health insurance, retirement...and the compensation package for a temp is much less.
Sure, some temp assignments can last much longer than 90 days, but the average length, according to the ASA, is three to four months.
At this point, I’d like to as you a few questions. Can you conceive of a scenario where an employer, uncertain about the founding economy, burdensome governmental regulations, fluctuating demand, etc. decides to go ahead and hire a temp where he wouldn’t otherwise hire anyone at all? Could you conceive of this employer keeping the temp longer than anticipated because of said economic situation? If hiring the temp full time isn’t really an option, would you rather the temp be released or continue his assignment as a temporary?
2) Yes, new workers are at greater risk. But, that doesn't account for the full increase. And a meeting (or two) from the ASA does solve the problem. Temp workers are treated differently and trained less. That's the recipe for disaster.
It doesn’t? What data do you have to support this? I’m not saying you don’t have any, but I would certainly like to see it. My point was this is something staffing agencies, including ours, take very seriously because you’re right, it IS a recipe for disaster. A large workers compensation MOD will put us out of business faster than you can say ‘lock out tag out,’ so you can bet your hard hat we’re making sure our clients maintain a safe workplace.
You can dismiss my comments about ASA safety seminars all you want, but what you don’t realize is this is a huge deal in our industry. In fact, if we hear about one of our clients treating temps differently regarding safety or giving them less training than full time staff, we would FIRE that client. We’ve done it before and we wouldn’t hesitate to do it again!
3) Temps have fewer legal protections. Take for instance how pregnant temps have lost their jobs despite the FMLA protection they thought they had. Is making it easier to fire workers not is a selling point for the temp industry?
In the case mentioned, the agency should have requested that the client reinstate the worker. This is certainly something we would practice in this situation. As I said before, the laws apply to us as well!
4) For a minimum wage job the billing rate is often even more than 50% the pay rate. Overall, what would you say is the average spread? You offered no data to refute ours.
‘Our’ data? Where is your data? I can’t speak for other agencies, but our minimum wage jobs don’t bill anywhere close to that rate! I could possibly see a truck driver or some other high risk position (workers comp is really the driving factor for agency rates, by the way) commanding that kind of markup, but most of the rates I’ve seen fall anywhere from the 20s to the low 40s, depending, again, on risk. (Granted, this is clerical and light industrial in a specific area of the country.) By the time we pay FICA, MED, FUTA, SUTA, and workers compensation, there really isn’t as much left as you think!
It bears pointing out that you failed to address my point about industry competition. Wouldn’t you agree that it stands to reason that fair competition would keep rates from getting out of control? You and other anti-staffing activists (including the author of the ‘fee splitting’ article you cite on your website) seem to think that publishing rates would somehow help, but all that would do is allow the largest staffing agencies to pick and choose where they want to lowball, eventually driving out all competition – then they would be free to charge any rate they want!
Right now, any HR manager in the country has at least a dozen different agency proposal rates on his or her desk. They may not always necessarily pick the lowest one, but rate is definitely a key factor in their decision. Again, any agency that charged those kind of rates wouldn’t survive long in the free market. (‘Free’ market being the operative word… what is it that activists and government bureaucrats seem to have against free markets?)
5) Yes, "fee splitting" by definition refers to an outdated and illegal practice. The academic article you skimmed is making the argument that in principle it is still happening today and makes the point we should still use the phrase. Workers make less, and in turn employers and agencies profit - that's the heart of the definition of "fee splitting" and why we agree with the author and use the phrase.
The author is assigning entirely too much blame to staffing agencies for wage depression. The ‘fee splitting’ comparison is unfair and absurd. What happens today is absolutely nothing like the illegal fee splitting of the past. In fact, there is really no way to tell what wages would be without agencies. Companies would have to hire more people in HR, but those people aren’t making widgets. Companies would likely hire less production and low-skill people because of the sluggish economy, which means less product going out despite the extra overhead. Fewer workers making less product equals less money going to businesses, which equals even less people hired. You see, it’s really a vicious cycle.
Additionally, activists grossly exaggerate our profits. We survive on volume, not any one worker. To the employees who sign up and work with us, even if the rate were a bit less at first than it would otherwise be (again, this is arguable), the opportunity to prove oneself on a job they possibly wouldn’t otherwise be able to find is worth it.
Would you not agree that the recent growth of staffing agencies is a product, at least to some degree, of today’s economic uncertainty? If so, would you choose to do away with all staffing agencies along with the jobs they help provide? If you haven’t read this article yet, please do so and consider the implications.
6) This is your straw man. Obviously the "service" is providing temp workers. But we're referring to the legal tradition in the United States with regard to how "employer" has been defined. Temp agencies do not own production facilities, machinery, equipment, inventory, or goods, or direct the work process. Workers and client business are the ones who create goods and provide services using the traditional definition.
Then why say we provide no product or service? We consider ourselves an extension of HR. We are the hiring managers for the small business owner who doesn’t have the time or the knowledge to deal with HR matters, the ‘professional screeners and people readers’ for small, medium, and large companies who depend on us to focus on what we do so they can focus on making their businesses successful. Today’s companies outsource anything and everything, from janitorial services to the very products they make. Why would the existence of our niche be any different? Just because we are a separate company doesn’t mean we don’t have an important contribution to make.