ASA Staffing Index Backgrounder

Posted by Jul 5, 2010 @ 9:37 pm

Staffing, Jobs, and the Economy

U.S. staffing companies employ more than two million temporary and contract employees per day—and 11 million over the course of a year, according to the American Staffing Association. The most recent projections of the U.S. Bureau of Labor Statistics show that the U.S. staffing industry will add more new jobs between 2006 and 2016 than just about any other industry. While total U.S. nonfarm employment is expected to increase by 11% in that period, BLS projects nearly twice that rate of job growth—almost 19%—in employment services, which is mostly staffing.

Why is the staffing industry growing faster than the economy? Work force flexibility. Workers want it, businesses need it, and it’s good for the economy.

Jobs, flexibility, a bridge to permanent employment, alternative employment arrangements, training—these are the benefits staffing firms offer today’s workers. Work force flexibility and access to talent—these are the benefits staffing firms bring to businesses. Jobs, labor market flexibility, efficient bridging to permanent jobs, and training—these are the benefits the 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 the staffing 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 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.

Many experts agree—and ASA research confirms—that staffing industry employment serves as a coincident economic indicator and a leading indicator of total U.S. nonfarm employment. The ASA Staffing Index bears watching as a near real-time measure of weekly trends in staffing industry employment and current economic conditions, as well as future overall employment trends. For more information on the importance of the staffing industry to employees, businesses, and the economy, read American Staffing 2009: Looking for Growth, the ASA annual economic analysis of the U.S. staffing industry.

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