OK, I got it wrong, and I have my staffing customer friends to thank for setting me straight. You see, when I first read about the healthcare reform act and its impact on employment costs, I thought ‘price goes up, demand goes down.’ That’s how it works, right?
Yes it does, but what I didn’t count on was what economists call ‘unintended consequences.’ And just what are the ‘unintended consequences’ of Obamacare? Well, as is becoming very obvious to you in the staffing industry, employers are doing whatever they can to work around the law, and one of the easiest ways for them to do it is to turn to staffing services.
Those employers need you. And you know what? Their employees need you, too. Without you, hard-working people are going to be out of a job.
The result on us at TempWorks is, first, that we are seeing the fastest uptick in both customer revenue numbers and demand for our services since 2004. And that demand is spread around a lot more than it used to be. It’s not just for software, it’s for website redesigns, marketing tools, funding, payroll and garnishment processing, and integrated third-party services.
Suddenly tools that traditional employers use — e-Verify, Kenexa, Career Builder, LinkedIn, CareNow, MasterTax — are sought by staffing companies like never before. Sure, we have them built into our software, but now we’re busy making it easier and easier to help our clients get started with them.
Meanwhile we’re upgrading ourselves. We just added 5,000 square feet of office space, recruited 15 new software professionals, installed a new VOIP telephone system, developed a new applicant portal, and built from ground up a new trouble ticket support system.
It’s both a terrific and a terrifically busy time, and we’re grateful to our customers for it.
{ 24 comments… read them below or add one }
I had to read this article three times before I realized it was not meant as sarcasm and a bad joke. Then I noticed the company name, TempWorks. Emphasis on TEMP. Full-time is a different story.
Like or Dislike:
1 
0
Hi Bruce…Yes I could have intro’d this better. Can you give us the full-time perspective?
I’d be delighted.
To begin with, anyone who says they know what the ramifications of Obamacare are going to be does not know what they are talking about. There are still too many unknowns. That said, the following seems to be accurate (thanks to Inc. magazine):
If you have less than 50 employees or 50 FTE employees, the law should not impact you. However, as a staffing agency, if you have a client with 49 employees, odds are they will not make that extra hire.
However, if you have less than 25 FTEs, and their average salary is below $50,000, you might qualify for a two-year tax credit to enable you to buy insurance for them. The good news is that you will then become a more desirable employer and you may want to use a staffing agency to find your new hires. Of course, what will happen after the two years? And, the government also gives tax credits to employers who hire veterans. But the process is so cumbersome that most employers don’t even bother. Will it be the same under Obamacare? Time will tell.
If you have 50 or more employees or FTEs and you offer them insurance, the question is whether or not you pay at least 60 percent of their health costs. If so, the next question is, do any of them pay more than 9.5% of their W2 income on health insurance? If so, the employer has to pay a penalty of up to $2,000, not counting the first 30 employees. So for number 31 to 49, the penalty is in force.
If the employer is not paying at least 60%, they may qualify for a tax credit, but the above mentioned concern is still valid.
The good news is that if you cover 60%, and no one pays more than 9.5%, then you are in compliance with the law and have no worries about penalties.
By the way, Full Time Equivalency means at least 30 hours or more a week, not 40.
And one more thing: If an employee is under 26, they can be covered by their parents insurance. So lets say a company only hires 18 to 25 year olds. Will they be sued for age discrimination?
If you are worried and confused, join the club!
Well-loved. Like or Dislike:
5 
0
Bruce –
You bring up a very interesting unintended consequence… age discrimination. What if certain young people can’t get coverage because their parents don’t have it? Who’s responsible then?
Just curious.
Like or Dislike:
1 
0
Kinzy,
Thanks. My guess is that the individual would no doubt be responsible if the employer did not offer health insurance.
Like or Dislike:
1 
0
Gregg, Like the article. Like any change in a complex system, there will be unintended consequences. Nice to see one of them may be to create opportunity for the staffing industry. Really does say something about what is one key value-add for staffing firms–managing the complexity of evolving “work arrangements” (and I emphasize evolving–not a simply executing a template repetitively).
Good point here: “Suddenly tools that traditional employers use — e-Verify, Kenexa, Career Builder, LinkedIn, CareNow, MasterTax — are sought by staffing companies like never before.” Technology will be a big part of effectively managing complexity of evolving work arrangements in the future.
Like or Dislike:
1 
0
Thanks Andrew. Yes, from my seat the most active area in technology here on out will be integrating well with the constantly evolving cloud services offered by everyone from the government to assessment services to job boards and social media sites.
At Tempworks our motto is that we’ve never met a well written API that we didn’t like.
Like or Dislike:
0 
0
It was and is bad for everyone – and many of us knew it from the beginning. We already see a lot wrong with it. Were I you, I would have stayed out of politics on here completely.
Like or Dislike:
1 
3
Hi A.M.
No politics were intended in the post. I meant it as a yippee-we-may-be-falling-out-of-the-sky-but-we-haven’t-hit-ground rant.
If you think the law is difficult to understand, you should check out the “IRS Examples for Determining Full-Time Status” that was sent to me by my healthcare agent. It goes on to layout 11 different examples of how the law can be interpreted and used for current and future hires in regards to status. The thing that is most worrisome is that most people believe that the law doesn’t go into effect until next year, which is true for the penalty phase, but they are going to use the employee numbers and hours that are currently being worked to determine full time status for 2014. This is going to cause massive migration to using staffing services in order to start hiding the real numbers. It is all confusing and determined by which measurement periond and administrative period your company decides to use as outlined in this article. My hope is that someone truly explains this to the American business owner before it really causes the disturbance that will hamper the growth of the economy. Staffing doing well is great, but not at the expense of the overall economy.
Like or Dislike:
3 
0
Personally, I think Obamacare is the best thing to ever happen to the staffing industry. Our business is up 40% this year and this is not including any of our direct hire placements. Several of our clients have reached out to us about payrolling their employees. Two weeks ago we just onboarded 2,500 employes of a government agency because they did not want to have to deal with Obamacare. Even at a low payroll markup we are making 80K off that one client per month. As such we have shifted our focus to doing only payrolling and DH’s. Temp to hire roles are not a high priority anymore for our staffing firm.
Like or Dislike:
2 
5
James – I congratulate you on your success, but I am extremely worried that a government agency is forgoing dealing with this and paying you an extra 80k a month. Who would you say exactly pays for this government agency? Last time I checked the government is ran with our tax money. I can see why you would think Obamacare is the best thing to ever happen to the industry. I probably would too if I was in your position.
Like or Dislike:
1 
0
James,
I don’t understand how you could make money off of payrolling. Now you are responsible for the ACA health coverage of all 2,500 people you just signed on. Please send me an email, if you can, about how this low markup, low margin business makes sense when we are worried about even our higher markup, higher margin temporary workers and making any money.
Thanks,
Scott
scunningham@tigerinfo.com
Like or Dislike:
2 
0
Hey James. Congrats on the contract. I don’t get why people are down-voting your comment. Isn’t it a good thing that a government agency is carefully managing its own costs?
I thought gov’t employees were exempt from Obamacare.
Like or Dislike:
0 
0
I think it’s fairly well documented now that if we want to generate comments, conversations, or controversy around Staffing Talk posts, just make them about Obamacare.
Unlike some of the other commenters though, I don’t see this as a pro-Obamacare piece, or political, or any type of a final verdict on the initiative, but rather simply as a moment-in-time snapshot of the current situation as seen through the eyes of the owner of one company.
One of the most encouraging things I read in your piece Gregg is not just an increasing demand for software as you point out, but also for other things such as website makeovers and marketing tools.
I can tell you from personal experience that lots of small business owners in this country have been in lockdown mode for some time in terms of any new marketing strategies or tactics, particularly ones that actually cost money.
So for these staffing companies to be coming out of the weeds now, and recognizing some opportunity, and the ability to create ROI with their efforts and expenditures is good news for us all.
Let’s hope that trends line keeps pointing up.
Like or Dislike:
1 
0
I don’t ever respond to blogs or e-articles. Sometimes I will vent in the box, but then erase it and go on to more important things. But I can’t here. This article was challenging to read, and David’s reply sent me over the edge.
With all due respect, David, and to others thinking as you, let’s see how much more bad legislation we can come up with to help out some other businesses that can’t get out of their own way unless the government comes in with more controls that create one opportunity for every 10 disasters it creates.
So, at the expense of so many other companies, and an ever increasing government take over we are rejoicing that this is going to be good for the temp business. Well, Hallelujah!
This is a bad bill. It’s bad for the country, and for anyone in the temp business excited about glory days created by destructive legislation like this, you are short sighted. I would ask you to consider if your excitement is more about you than the catastrophe created in our country by this legislation.
Do I take the business when it comes. Yes, I have to. BUT, I take it while I work against it. And I will continue to. I have met with the Federal Reserve, a House Representative and spoken to many more.
We should all do what we can to see this further power grab of the Feds sent into Hades where it belongs! This bill puts us in a greater nose dive in this country in the areas of healthy employment in America. The administration is not going to stop until all are indebted to it for it’s “philanthropic” policies. I don’t want it’s help, intended or unintended.
Sure, maybe we in the temp biz will be the “temporary” loophole for employers. But just wait. The frog is boiling, and when we all realize it, we won’t have the strength or the power to do anything about it.
This legislation is horrible for America. I am in the temp business and I HATE OBAMACARE, FOR IT IS WRETCHED FOR OUR COUNTRY! To hell with whatever temporary benefit we may think we are getting.
Let us eat, drink and be merry, for tomorrow…..
Oh, God, that we would be delivered from our selfish, “what’s in it for me and the heck with you,” business and personal worldviews.
Well-loved. Like or Dislike:
5 
1
Frank…I don’t know David Gee’s actual views on the subject but I do know him to be generous and unselfish and quite disciplined in his approach to polemics.
My guess is also that similar to what we’re seeing in France (an almost complete about face by the socialist government and the adoption of strong pro-employer legislation) will be repeated here once the negative impact on the unemployed and marginally employed gets conveyed to the administration.
Therefore I see no choice but to be practical and flexible.
Frank,
Thanks for your comments. I think ACA (ObamaCare) is terrible for the US as well. Already it is freezing companies from hiring or making business growth decisions since no one really knows all the facts and how it will impact their business. I was just reading about how small and large companies will cherry pick and keep the healthist with self-insurance while other companies and those who need insurance themselves will have to pay more as a result of this wave of self-insured companies coming. There is always a way around lousy rules just as the rich like Buffett can say his secretary pays more in taxes than he does (and he is willing to give more) but Buffett does not just write a check and send it in, he sues the IRS for some tax issue that gives his company lots more tax breaks. I still would like James to tell us how he will make money with a government payrolling deal when the look back will cause him to pay dearly for those 2,500 new payrollees he is jumping up and down about. – James?
scunningham@tigerinfo.com
Like or Dislike:
1 
0
I think Gregg was aware that he was only addressing the ramifications of health care reform through the prism of staffing business. That’s because the readers of this blog will likely feel those ramifications as well – it’s a staffing blog. This is ONE view, and a narrow one, yes. But isn’t everyone looking at healthcare reform from our own narrow point of view?
For example, you are looking at it from a business perspective. You are wringing your hands for “so many other companies” while “we are rejoicing that this is going to be good for the temp business.”
What if I said that sick people are wringing their hands while insurance companies are rejoicing that they’re profiting so dramatically at someone else’s expense?
The logic in these two arguments is parallel.
I agree that we need to be delivered from the “What’s in it for me and the heck with you” mentality: Not giving everyone access to basic, rudimentary health care is actually just as selfish. So stop pontificating.
But we are not a utilitarian country. What’s good for all is ultimately “catastrophic” if it deals a slight blow to profits.
Like or Dislike:
2 
1
Yes, David has succeeded getting some discussion going by touching the third rail. Personally, I think that Obamacare is a horrific public policy, probably for entirely different reasons than James does. However, though David lures us in emotionally with the bait of his being wrong about Obamacare (I assume his real views on the policy have not changed since last year), his article is really simply about the potential staffing business opportunity that “could” materialize as “unintended consequences.” In particular, he is citing anticipated growth in his own technology business. Certainly the whole policy debate about whether or not Obamacare is good or bad for the country, businesses, the public, special interests is a whole separate discussion which will go on and on. What really interested me about this article was that really asked the question of what is and what will be value that successful staffing firms are able to create in a world that will shocked and rocked by policy, economic, and technology changes in coming years. Will firms simply look at where they can “sweep up” some new short-term profits, a government policy winbdfall? Or will firms uses these early events as ways of thinking about how value can be created for customers in the future?
Like or Dislike:
2 
0
Hey Andrew…This is Gregg. Yes, you’re right on all accounts. Personally, I feel like I did living in the Soviet Union which was that my disagreement with the system is irrelevant to the fact that I need to continue thriving within it. Instead of selling blue jeans, Tang and sticks of gum, this time around will be about helping people dodge a bad law.
Opps—sorry, meant Gregg, not David… (?). I understand. This is kind one of those “nice disruptions” because it yields some new income, rather than evaporating it. I wonder if becuase it is pleasure and not pain, it will not be exploited as an object lesson. I thought the discussion thread initiated by James’ comment above took us further down this healthy path of questioning.
Like or Dislike:
0 
0
I run a small massachusetts temp firm, mostly industrial workers. I pay a fine to the state each quarter for not having a plan for the temps, around $4000 p/q. As far as I know there are no ins companies that will underwrite plans for temp workers. Under the MA fair share plan, which is simular to the up coming Fed plan they take all your hours and use some calculator to determain your full time employee equivalent. Our fine is around $300 per worker per year, if the fed uses the same calculations or some what simular at $2000 per employee I think I’m looking at $100,000. I doubt i can pass that cost along to my customers, i’m already running with no clerical support, she got let go to cover the MA fines. Am I looking at the end of my business?
Like or Dislike:
1 
0