Why Go Contract?

Jobs, flexibility, a bridge to permanent employment, alternative employment arrangements, training — these are the benefits our industry offers today’s workers. Work force flexibility and access to talent — these are the benefits our industry brings to businesses. Jobs, labor market flexibility, efficient bridging to permanent jobs, and training — these are the benefits our industry brings to the economy.

A 2006 ASA survey of more than 13,000 temporary and contract employees showed that the vast majority of staffing employees see temporary and contract work as a path to permanent employment. And most of those who want a permanent job find one. Meanwhile, many were mostly interested in the flexibility that staffing employment provides. The survey also revealed that staffing employees are more satisfied with their work than the overall U.S. work force. Nine of 10 staffing employees said they would refer a friend or relative to work as a temporary or contract employee.

In 2004, ASA polled 500 businesses that use staffing services. Nine of 10 said it was important to them that “staffing companies offer flexibility to businesses so that they can keep fully staffed during busy times.” The ASA poll also showed that businesses tap staffing companies for quality talent in virtually all occupational sectors, from call centers to factories to medical laboratories.

An economic study published in Decision Sciences journal concluded that increased reliance on temporary staffing “is associated with superior subsequent performance… [and] no increase in systematic risk.” The authors compared firms in a carefully constructed sample and found that earnings (before interest, taxes, depreciation, and amortization), gross margins, and stock returns improved after the increased use of this labor practice.

Another factor that makes our industry an essential component of overall economic health is its positive impact on unemployment. When economists Lawrence Katz of Harvard University and Alan Krueger of Princeton University studied the dramatic drop in unemployment in the 1990s, they concluded that our staffing industry growth was responsible for up to 40% of the reduction. They argued that staffing firms, as labor market intermediaries, improve the efficiency of matching workers to jobs.

Alan Greenspan, former chairman of the Federal Reserve Board, spoke frequently—especially after 2001 — about the importance of financial and labor market flexibility to the U.S. economy. In July 2005, in testimony delivering his last Monetary Policy Report to Congress, he concluded his remarks by emphasizing the notion once again: “Openness and flexibility have allowed us [the U.S.] to absorb a succession of large shocks in recent years with only minimal economic disruption. That flexibility is, in large measure, a testament to the industry and resourcefulness of our workers and businesses.”

Many experts agree that staffing industry employment serves as a coincident economic indicator and a leading indicator of overall U.S. employment.

The growth of temporary help employment corresponds with the overall long-term declining trend in the unemployment rate. The 10-year average unemployment rate has been falling for more than 20 years, and the unemployment rate peaks following recessions have been lower and the troughs in expansions have been shallower, suggesting underlying strength and durability of the economy, according to David Malpass, chief global economist at Bear, Stearns & Co.