Even as Michigan’s economy continues its gradual recuperation, an underlying shift in the complexion of the workforce reveals that more people are making ends meet by accepting temporary jobs, taking short-term contracts and stringing freelance work together.
The rise of the temporary worker portends a significant shift — in Michigan and across the country — toward a future economy in which fewer people can rely on a traditional, full-time job with benefits from a major corporation and more workers are fending for themselves amid a globally competitive economy.
Although economists have largely credited the auto industry for Michigan’s economic recovery, a closer look at economic data reveals a more nuanced picture. Taken together, about 36% of Michigan’s job gains from 2009 through 2013 came from the temporary staffing sector and self-employment, according to a review of federal jobs data completed by University of Michigan economist Don Grimes for the Free Press.
The implementation of the Affordable Care Act is hastening the trend, making it easier for people to purchase health care insurance on their own and enticing companies to use temporary staffing agencies to fill positions so they can avoid insurance mandates.
What’s more, the Internet is making it easier to work from home, meaning it’s increasingly feasible for people to sever their ties with traditional employers and take on freelance employment.
The change is not altogether worrisome for Michigan workers because it provides more workplace flexibility and freedoms and because temporary positions and contracts often give birth to more opportunities for compensation. More jobs means more money in the pockets of Michiganders and more taxes for the state to pay for social services.
But it’s a concerning trend for low-skill workers with little education who find it difficult to escape the temporary staffing vortex and find more stable employment with higher income. Temp jobs are typically lower-paid positions, involve short-term work and generally don’t lead directly to full-time jobs.
Though the temporary help category accounts for only 2.8% of Michigan’s workforce, it added 45,233 jobs from 2009 through 2013, representing a disproportionate 18.6% of the job gains in the state during that period, according to data drawn from the U.S. Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.
Similarly, the number of Michigan residents who considered themselves self-employed contractors also rose by 18.6% — remarkably, the same percentage as temporary help — during that same time period, increasing by 51,715 jobs, according to U.S. Bureau of Economic Analysis figures. Some of those positions reflect people who are working a regular job and finding work on the side, but the figures indicate that more Michiganders are charting their own path to pay their bills.
The average temporary staffing agency employee in Michigan earned $25,872 in 2013 while self-employed workers reported income of $24,656 — about 45% and 48%, respectively, below the average worker’s wage of $47,131.
“This highlights how the shifting nature of employment has really put a crimp on people’s income,” U-M’s Grimes said in an e-mail.
The trend is generally positive for workers who have been out of a job for some time — and it has contributed significantly to the state’s declining unemployment rate, which fell to 6.7% in November, the lowest level in about nine years.
But it also makes it easier for companies to shed positions quickly when business takes a turn for the worse.
Steve Armstrong, senior vice president and general manager of U.S. operations for Troy-based temp agency Kelly Services, said many employers restructured their businesses after the Great Recession to make their workforces more flexible. In addition, a growing number of companies have reduced their human resources functions and are turning to staffing agencies to handle recruiting, hiring and compensation, he said.
What’s emerging, he said, is a “supply chain” of talent in which companies are hiring outside agencies to fill their job openings.
“They came out of the recession more nimble, more flexible and more focused on their core activity,” he said. “If they can find the full-time talent through another source and they don’t have to have embedded overhead within their own organizations, they’re doing it.”
The trend is not just hitting low-skill industries. It’s also starting to affect high-tech sectors.
High-skilled professional positions such as engineering, scientific research, accounting and software development represented 15.2% of temporary staffing positions in the U.S. in 2011 — up from 12.7% in 2007, according to a December 2012 study by Susan Houseman of the Upjohn Institute for Employment Research and Carolyn Heinrich of the University of Texas at Austin.
Some workers are not averse to temp jobs or contract positions, preferring the flexibility or less-restrictive work environment.
Troy resident Miranda Mayuiers landed an open-ended contract position as a social media and marketing consultant at Oakland Community College in February after Kelly Services recruiters identified her as a potential candidate for the job.
A Kelly Services representative discovered Mayuiers’ profile on social-networking website LinkedIn and got her an interview at OCC, which convinced her to give up a full-time corporate job with benefits to take the contract role.
“I took a risk in going to a contract. I really had to weigh all the pros and cons,” said Mayuiers, who made the move in part because she was able to rely on her husband’s health insurance. “But I thought that the job satisfaction was going to be the difference for me.”
Nicole Betea, a Berkley resident, worked for Kelly Services in several temp positions before landing a full-time job as an office administrator for an international auto supplier in Auburn Hills in October.
Betea acknowledged that many friends are “leery” of temp agencies, but she said they play a positive role for people who need help finding a job.
“I needed another pair of eyes to help me because I’m just one person,” she said. “And having that extra person look for you is just so very helpful because they have a little bit of an ‘in,’ they’ve built the relationships.”
Still, only about 6.8% of temp agency positions nationally lead directly to permanent jobs with the employer, according to the 2012 study.
Of people who accept a temp job as an official tryout for a permanent position — an arrangement called temp-to-hire — about 27% secure the stable job, though that figure rises to 50% of workers in high-skill positions.
Upjohn’s Houseman said in an interview that most employers use temp agencies or contract positions to avoid making full-time hires.
“The large majority of people who work for temporary agencies want a permanent job and they’re taking the temporary job as a stepping-stone, if you will, or a segue into a permanent job because they think it will give them some work experience or maybe they’ll be offered a job by an employer,” Houseman said.
“Does taking a temporary help job improve your prospects for getting that or not? Our answer to that is no. In many cases, people would be better off holding off and waiting for a permanent job or searching for that.”
She said the lion’s share of companies aren’t even considering full-time positions when they add temp workers.
“They’re using them to get a flexible workforce so they can easily flex in and flex up their workforce,” she said. “They’re not primarily using them to screen workers. But when they do, they’re picky. They’re choosy.”
To be sure, many times temp jobs don’t lead to permanent positions because the employees don’t perform well. More than 30% of temp workers are fired or quit, the 2012 study concluded. About 12% had a performance problem because of poor “soft skills,” such as tardiness, unexcused absences and failed drug tests.
Still, Armstrong, the Kelly Services executive, said that an increasing share of employers are hiring temp workers for permanent positions.
“When they find somebody who fits the bill — both on the hard-skill and the soft-skill side — they’re more likely to extend a full-time opportunity quickly,” he said.
One key catalyst expected to accelerate the creation of more temporary jobs and contract workers is the Affordable Care Act. The ACA, commonly called Obamacare, allows individuals to purchase insurance through public exchanges and enables employers to avoid insurance mandates if an employee hasn’t been full-time within the last 12 months.
That means temporary help agencies don’t have to provide insurance for most of their workers. Fewer than 4% of their contractors work more than 1,500 hours annually, a level that would make them full-time.
Some temp agencies have even marketed their ability to help potential clients avoid Obamacare mandates, researchers found.
Armstrong said Kelly Services does not accept contracts with employers that are simply seeking to dodge insurance mandates, but he acknowledged that the arrival of Obamacare is making it easier for companies to shift to contract workers.
Obamacare, he said, will foster “a collateral nimbleness in the workforce,” allowing workers to “move from position to position to position and not be anchored by the need to stay because of health care.”
Kristina Walker, a Redford resident, left her job at a Family Dollar store to launch her own home-based business in January 2012. She contracts with a company called Arise Virtual Solutions to answer customer-service calls for Fortune 500 companies, such as telecommunications providers that outsource their call center needs. She purchases insurance on the Obamacare exchanges.
Walker said most people who work under a similar arrangement answer calls on three- and six-month contracts before transitioning to something else. She said her work-at-home arrangement is beneficial because it allows her to homeschool.
“I definitely believe that you have to create a path for yourself in this economy because the options are sometimes limited,” she said. “Many of these well-known companies may not be hiring at their brick-and-mortar locations, but they are outsourcing or crowdsourcing their work to people who work from home.”