Our latest IQNdex report has revealed some interesting findings. First, contingent labor bill rates remained unaffected in the third quarter despite the record level of hiring of temporary and contingent workers in the US. This is primarily because the number of people seeking jobs remained high as well. But what makes this rate stability even more remarkable is that this “hiring spree” for non-permanent workers is occurring in parallel to a prolonged period of direct employee hiring, as reported in the most recent BLS jobs report.
The Q3 2013 IQNdex also suggests the US is undergoing a fundamental change in the composition of the workforce – placing much greater emphasis on contingent labor. Ongoing economic uncertainty is one factor driving this trend – businesses want to keep flexibility in their cost structure. Increased legal and administrative burden in both hiring and terminating a direct employee is an additional inducement to rely on temps. More recently, the regulatory turmoil surrounding Obamacare has been a further consideration. Together, these market forces have led to an increased reliance on contingent labor by businesses and to record levels of temporary staffing employment.
Bill Rate Trends
The IQNdex report for 3rd Quarter 2013 shows no increase in overall contingent labor hourly bill rates. The Master IQNdex has risen only 0.7% in 2013, evidence of an extended period with little pressure on labor costs.
Highlights among the job sectors:
- IT ended 17 consecutive months of rising rates with a 0.1 % decline from August to September
- Office-Clerical rates dropped 1.5% in the quarter
- Light Industrial bill rates were flat
- Professional-Managerial rates ended 9 months of decline with a modest 0.2% rise
No geographic region varied up or down by as much as one percent.
Contingent Labor Employment Milestones
The federal government shutdown delayed reports, but once released the numbers from the Bureau of Labor Statistics confirmed that each month in the 3rd Quarter set a new record in temporary employment. Total temp workers now number more than 2.7 million. Temp workers constitute 2% of all nonfarm jobs, a level usually seen at the peak of economic cycles (let’s hope we are not there yet!).
Heavy reliance on contingent labor has been a prominent feature of this economic recovery. Since the trough of the Great Recession, 1 million new temp jobs have been created. This represents 16.5% of all net new jobs created by the US economy over the past four years. Economic uncertainty is clearly one reason for the heavy reliance on contingent labor, but businesses also seem to have shifted their hiring paradigm for other reasons as mentioned above. What may have started as a cautious feature during the early months of economic recovery appears to have become a permanent feature of the US labor market.
Download the 3Q 2013 IQNdex Report for more insight and information on US contingent labor market bill rate information by region and job sector.