Energi Personnel's Blog

Staffing Agencies – The Right Stimulus for the Economy

Nick Andriacchi,

National Sales & Marketing Director Damian Services Corporation

Stimulus is probably the most overused word when talking about the economy today. The common belief is that the only stimulus available involves the federal government spending our tax dollars.  But let’s look at one recent return on investment of our tax dollars as it relates to job creation.  

The federal government recently “loaned” General Motors approximately $14 billion dollars in order to keep it solvent.  How many jobs did that stimulus create? 

One week later, General Motors announced layoff’s totaling 26,000 employees as well as discontinuing its Pontiac division.  So much for government stimulus when it comes to job creation.

What we never seem to read or hear is the words “staffing, stimulus and job creation” together.  Staffing industry news tends to be negative.  This is a shame because it’s the staffing industry that encourages or stimulates employers to start hiring again.

It’s important to remember that layoffs happen as a result of a bad economy.   When the economy improves, temporary help workers tend to be hired back before permanent employees.   It is natural and essential that staffing companies are on the front-lines stimulating the hiring process.

The Evolving Role of the Staffing Company

The traditional role of a staffing company is to match the right candidate with the right job.  But its role has evolved.  Staffing companies now perform skills assessments, drug tests and background checks.  They help candidates develop a career path, prepare for interviews, edit and or help write resumes.

“The staffing industry benefits so many individuals” says Pachia Paul of Logic Staffing, an independent staffing company located outside Seattle, WA.  “A great example is the applicant who does not interview well and would be overlooked by a corporate recruiter in an ordinary interview or review of his resume.  The same applicant can shine bright when going through a staffing service because their skills are noticed.  In many instances, those employees are the perfect answer to your clients needs.  Many times, they become a permanent employee!  This is the satisfying piece of what we do.”

Stepping Stone to Permanent Employment

Some argue that temporary jobs are permanent low wage, no benefit type jobs.  This is absolutely not true.  According to American Staffing Association data, approximately 72% of temporary workers find a full-time job in less than a year while working with a staffing company. In fact, laid-off workers often use temporary employment as a bridge to a full-time position. Especially in periods of economic recovery, temporary positions may turn into full-time employment once the employer is ready to hire on a full-time basis.

Changing the Negative Bias

Staffing companies help change the corporate bias from laying off workers to hiring them.  Forces such as unions and government regulations discourage employers from hiring workers.  Why?  Because their discussion ALWAYS revolves around raising costs without an increase in productivity to offset the costs.   Almost any concessions business gives to these two groups typically results in layoffs of workers and continued deterioration of the economy.

The staffing industry offers the exact opposite.  Potential employers have incentives to hire more workers to produce more goods and services.  This helps stimulate the economy. 

When a representative of a staffing company meets with an employer, the discussion revolves around reducing costs while providing additional employees.  Employers have the option of adding or reducing staff levels as economic conditions dictate.  And when businesses have an incentive to spend capital to produce goods and services economic conditions start to improve.  As discussed, staffing companies provide some of those incentives.

Small Business Job Creators

Independent staffing companies are an important component of jobs created by small business. According to the SBA over the last 20 years small businesses have created roughly 3 out of 4 net new private non-farm US jobs.  As they help encourage employers to add staff, these small staffing companies in turn hire permanent internal staff to help fill the orders.  Can we call this a “double shot” of stimulus?

Independent staffing companies have fueled and will help fuel new industries to flourish.  Without the flexible, high quality staff that they provide, these industries would have a hard time growing.  They were the ones that found the “purple squirrels” in the 1990’s that fueled the dotcom boom and established e-commerce as a preferred method of doing business.  Currently, they are the ones that find the employees to fill the many open positions in the medical industry.  Independent staffing companies will also be on the cutting-edge to help staff fledgling industries such as alternative energy.   

During my 17 years working for Damian Services the economy has endured three recessions.  Independent staffing companies have led the way out of recession each and every time.   While large national staffing (like most large businesses) companies cut compensation, close offices and layoff employees, independent staffing companies are out there convincing employers to hire workers.  And as economic conditions improved, our clients actually help grow the market and prospered.  Back in 1992, temporary help represented less than 2% of the workforce.  Today it represents about 5%.