The temporary staffing industry likes to market itself to job-seekers as a launchpad to permanent employment. Both traditional operators and Alternative Staffing Organizations (“ASOs”) operate under the assumption that temporary jobs increase an individual’s long-term job market prospects by providing job experience, on-the-job skill training, and an introduction to a potential employer.
Yet statistics on the long-term benefit of temporary employment at the lower end of the wage scale are mixed at best. In an article entitled “Temporary Agency Employment: A Way Out of Poverty?”, David Autor and Susan Houseman demonstrate that temporary employment did not improve the chances of escaping poverty over the long-term for a sample of welfare-to-work participants that they followed.[1] These individuals enjoyed a brief burst of additional income in the short-term, only to find themselves back at square one when their assignment ended.
This scenario is unfortunately all too familiar for low-wage job-seekers at labor companies and temp agencies. Add to this the fact that an estimated 15 to 40 percent of participants in government employment programs for low-income individuals go to work in this sector, even though the temporary help industry represents only 2 to 3 percent of the country’s total employment.[2] As a nation, we’ve managed to channel low-income job-seekers into the temporary sector as a band-aid solution, rather than figuring out how to turn these opportunities into a shot at long-term economic stability.
Why is it that most temporary jobs offer little future? For starters, many low-wage temp jobs are – by nature – only temporary. Laborers on a construction project or housekeepers in a hotel may only be needed until the project wraps up or high season ends. Second, traditional temp agencies impose a number of barriers – fees, minimum hours – that reduce employers’ incentives to hire on their workers. (Note WorkSquare’s “no temp-to-perm or minimum hour policy” – our way of encouraging employers to hire on and for workers to put their best foot forward.) Employers often think it more cost-effective to recruit low-skilled workers directly rather than incur fees, particularly when minimal training is required. Additionally, most temp agencies do not have the ability or the will to allow employer feedback in the selection process, leaving employers to gamble on the quality of employees they receive and reducing the likelihood of a successful match.
So, what can be done? How can we better turn temporary assignments into a path to prosperity for low-wage workers? How can we better ensure that temporary jobs result in permanent positions and long-term financial stability? How can we change the industry to incentivize good performance, reduce barriers to contracting between employers and employees, and allow for open access to information on the relative quality of temporary employees? Sounds complicated, but this is all feasible. It requires better tracking of longitudinal employee performance data; the provision of a platform from which employees can market their profiles to potential employers; and the inclusion of employer input in the selection of employees.
Third-party tracking and publication of performance data for temporary employees would enable differentiation among low-wage temp employees. All too often, high and pitiful performers alike have the same long-term job prospects because employers have no information with which to identify high performers, and employees are limited in their ability to effectively document and communicate their work experience and qualities. Differentiation would mean that high performers can be identified and recognized for their skills, work ethic, reliability, etc. (via temp agency and employer feedback), while low performers can also be identified and – ideally – targeted for skills training or other supportive services that can better help them succeed. Critically, employers will have the information they need to choose among an A, B or C team, and the option to pay wages commensurate with the quality of the employees they select.
Providing a standardized online platform for employees to market themselves directly to employers – utilizing the performance data discussed above as well as additional metrics – reduces the role of the staffing intermediary and allows employers and employees to capture value in the form of reduced fees and higher wages, respectively. With an online profile that outlines job history and performance, temporary employees are no longer at the mercy of temp agencies’ sales and matchmaking efforts. Rather, they can make the sell themselves, backed with third-party verified data and references, and market their services to a limitless audience of employers.
Finally, allowing employers to access performance data and play a part in selecting temp or temp-to-hire employees would greatly increase the probability of making a successful and long-term ‘match’ between employer and employee. Hiring managers who are unable to articulate the characteristics are skills that make employees successful within their organization may still be able to recognize these intangibles in candidates’ resume, profile or personal statement.
Yet statistics on the long-term benefit of temporary employment at the lower end of the wage scale are mixed at best. In an article entitled “Temporary Agency Employment: A Way Out of Poverty?”, David Autor and Susan Houseman demonstrate that temporary employment did not improve the chances of escaping poverty over the long-term for a sample of welfare-to-work participants that they followed.[1] These individuals enjoyed a brief burst of additional income in the short-term, only to find themselves back at square one when their assignment ended.
This scenario is unfortunately all too familiar for low-wage job-seekers at labor companies and temp agencies. Add to this the fact that an estimated 15 to 40 percent of participants in government employment programs for low-income individuals go to work in this sector, even though the temporary help industry represents only 2 to 3 percent of the country’s total employment.[2] As a nation, we’ve managed to channel low-income job-seekers into the temporary sector as a band-aid solution, rather than figuring out how to turn these opportunities into a shot at long-term economic stability.
Why is it that most temporary jobs offer little future? For starters, many low-wage temp jobs are – by nature – only temporary. Laborers on a construction project or housekeepers in a hotel may only be needed until the project wraps up or high season ends. Second, traditional temp agencies impose a number of barriers – fees, minimum hours – that reduce employers’ incentives to hire on their workers. (Note WorkSquare’s “no temp-to-perm or minimum hour policy” – our way of encouraging employers to hire on and for workers to put their best foot forward.) Employers often think it more cost-effective to recruit low-skilled workers directly rather than incur fees, particularly when minimal training is required. Additionally, most temp agencies do not have the ability or the will to allow employer feedback in the selection process, leaving employers to gamble on the quality of employees they receive and reducing the likelihood of a successful match.
So, what can be done? How can we better turn temporary assignments into a path to prosperity for low-wage workers? How can we better ensure that temporary jobs result in permanent positions and long-term financial stability? How can we change the industry to incentivize good performance, reduce barriers to contracting between employers and employees, and allow for open access to information on the relative quality of temporary employees? Sounds complicated, but this is all feasible. It requires better tracking of longitudinal employee performance data; the provision of a platform from which employees can market their profiles to potential employers; and the inclusion of employer input in the selection of employees.
Third-party tracking and publication of performance data for temporary employees would enable differentiation among low-wage temp employees. All too often, high and pitiful performers alike have the same long-term job prospects because employers have no information with which to identify high performers, and employees are limited in their ability to effectively document and communicate their work experience and qualities. Differentiation would mean that high performers can be identified and recognized for their skills, work ethic, reliability, etc. (via temp agency and employer feedback), while low performers can also be identified and – ideally – targeted for skills training or other supportive services that can better help them succeed. Critically, employers will have the information they need to choose among an A, B or C team, and the option to pay wages commensurate with the quality of the employees they select.
Providing a standardized online platform for employees to market themselves directly to employers – utilizing the performance data discussed above as well as additional metrics – reduces the role of the staffing intermediary and allows employers and employees to capture value in the form of reduced fees and higher wages, respectively. With an online profile that outlines job history and performance, temporary employees are no longer at the mercy of temp agencies’ sales and matchmaking efforts. Rather, they can make the sell themselves, backed with third-party verified data and references, and market their services to a limitless audience of employers.
Finally, allowing employers to access performance data and play a part in selecting temp or temp-to-hire employees would greatly increase the probability of making a successful and long-term ‘match’ between employer and employee. Hiring managers who are unable to articulate the characteristics are skills that make employees successful within their organization may still be able to recognize these intangibles in candidates’ resume, profile or personal statement.
These simple measures have potential to revolutionize the low-wage labor market and our country's understanding of the 'Working Poor'. It could make employees increasingly accountable for the quality of their job prospects, while saving employers immeasurable time and money through intelligent and cost-effective recruitment. At a very minimum, the aggregation and publication of low-wage temporary employee data is sure to challenge how our publicly-funded workforce development programs define success and require us to revisit how we can more effectively provide very low-income individuals with a real opportunity for prosperity.
[1] Autor, David and Susan Houseman, “Temporary Agency Employment: A Way Out of Poverty?,” Working and Poor: How Economic and Policy Changes are Affecting Low-Income Individuals, ed. Rebecca Blank, et al. (New York: Russel Sage Foundation, 2006) 312-337.
[2] Ibid.
