Wages Poised to Rise in U.S. as Paychecks for Temps Get Bigger

[Godhumor]

Source: Bloomberg

Staffing agencies are charging companies more for temporary workers, a possible harbinger of a bump up in salaries for permanent employees later this year.

The bill rate at Calabasas, California-based On Assignment Inc., which places temporary staff primarily in the information technology and health-care fields, climbed 6.3 percent in the quarter ended March 31 from the same time last year, the largest 12-month gain since 2008.

...

Agencies like On Assignment are the first to reflect shifts in wages because demand for their services is more immediate, prompting “real time” changes in fees, Sommer said. By contrast, he said, employers calibrate compensation for permanent workers less frequently, causing those adjustments to lag behind.

The temp labor market is a “canary in the coal mine” for broader gains in wages, Sommer said. “Bill-rate increases are starting in areas where demand is the strongest, like the IT sector. The logical next step is for bill rates to improve more broadly and ultimately be reflected in the wage gains of permanent employees.”



Read more: http://noir.bloomberg.com/apps/news?pid=20603037&sid=a.3XmxKuGUUs

---

Sommer is Tobey Sommer, a staffing analyst.

Anyway, in a previous role I did a lot of productivity and staffing analyses. I can confirm that temp rates are used as a leading indicator for predicting permanent staff changes later in the year/cycle. It might seem an odd metric, but it does have validity.

[Le Taz Hot]

1. But are those increases

passed on to the workers themselves?

[Godhumor]

2. Depends on the agency. This is more news about the indicator for overall wages

Essentially, temp agencies represent a leading indicator as they fill immediate staffing needs. If there is a strong demand for staffing, the agencies charge more per placement (and vice versa in a weak hiring time). Permanent staff usually have scheduled pay reviews that happen either once or twice a year and receive no other consideration. The correlation is that if temp agencies begin charging more for placements it means there is greater demand for those services, which can serve as an indicator that merit pay will, on average, increase in those sectors once review cycles start hitting for permanent employees.

You also tend to see a correlation between temp agency rates and what new hires can demand for salary in the same field.

[DBoon]

3. finally!!

nt

[ixion]

4. "wages poised to rise" is pure speculation (E.g. 'possible harginger')

a phrase that means nothing, really.

[Godhumor]

6. As I said, it is a predictive leading indicator

And it is a good sign. The question will be if this change is limited to IT (where it appears to be starting) or if it will spread. The second question will be if companies actually increase their merit pools when review cycles hit. Even if salaries should go up because of metrics, if companies don't put more money into pool allocation, they really won't go up.

Yes there is hedging in the article, as there always is with predictive tools. We'll see whether the correlation is as strong this year as it was last (Strong correlation last year and the year before when companies froze merit pools and temps were cheap).

[Donnachaidh]

10. yup. Doesn't address the FACT that companies are utilizing temps more to

keep from hiring people on a permanent basis. These companies toss a few bucks more to the temp agencies, and expect a standing room ovation, but they also still save tons of money in -not- paying for benefits for the workers they hire as temps.

Another instance of pure smoke being packaged as *a good thing*. PR stunt. :shrug:

[Godhumor]

11. As I said, this is a widely used metric...hell, I've used it. It has nothing to do with # of temps

Hiring to save money, etc., etc. It is entirely used as a statistical tool. "We have an immediate need to fill in IT. Temp agencies have raised IT prices 6% across the board. These prices have been higher for x amount of time. Therefore, there is more demand for IT people and we will have to pay our own more to keep them. Otherwise they'll be able to go somewhere else."

That's it. It's not a statement on temp use. It is a measurement.

[w8liftinglady]

5. one aspect of temp workers... they generally pay their own health insurance premiums

My employer has used quite a few temporary office workers.They all say paying insurance premiums is not possible with their HUGE wages.(premiums are frequently 400.00/mo and more for a single mother)
When the employee is making 11.00/hr- it ain't happening (up from 10.00/hr)

[Javaman]

7. I haven't gotten a raise in 4 years. I'm not holding my breath...

the proof will be in the paycheck.

[Fuddnik]

8. Temps? Is this a fucking joke or what?

[Godhumor]

9. ...No, it is about leading indicators

As the article and my first reply states--temp staffing prices is used as a predictive indicator for what permanent staffing salaries will look like in the next 1 to 2 review cycles.

Has nothing to do with people working temp jobs, getting temp jobs or using temp jobs. It has everything to do with the price of said temps and what it says about the correct pricing for permanent employees.

[Yo_Mama]

12. Godhumor is right

This is usually a very predictive number.