From The Seattle Times, 9/19/04:
http://seattletimes.nwsource.com/html/businesstechnology/2002039577_temps19.html
Employers shifting to overtime pay, temporary workers
By Art Pine
Bloomberg News
An East Coast company, Virginia Panel, is boosting overtime and hiring
temporary and part-time workers to avoid adding full-time employees.
Two years ago the company considered these to be stopgap measures
until the economy improved.
Now they're permanent.
"Global competition is forcing everybody to do whatever they can to
hold costs down indefinitely, and with this, not only is it cheaper,
but you can expand and contract your work force as you need to," said
Chief Financial Officer Trigg Copenhaver, whose Waynesboro, Va.-based
firm makes electronics-connection panels.
Staffing practices that were considered temporary fixes in the early
1990s now are woven into how businesses operate, said Peter Cappelli,
a professor at the Wharton School of Business at the University of
Pennsylvania.
About one-tenth of Toyota's U.S. production labor force is made up of
temporary workers; retailers Best Buy and Sears are transferring
hundreds of workers from their payrolls to outside contractors.
The shifts in hiring strategy contributed to weakness in the labor
market since the 2001 recession, said Cappelli, director of Wharton's
Center for Human Resources.
There are 24.2 million part-timers in today's work force of 131.5
million people, up from 23 million when the expansion began in
November 2001; the number of temporary workers rose 309,000 to 2.6
million.
"Nobody wants to be faced with the fixed cost of maintaining a large
full-time work force if business suddenly falls off — it's easier to
hire and fire this way," he said.
"I call them 'just-in-time' employment practices," said Jared
Bernstein, senior economist at the labor-backed Economic Policy
Institute in Washington, D.C.
He likens the trend to the inventory-management procedures companies
began using in the 1980s, by ordering parts and supplies only as
they're needed.
The rise in just-in-time staffing has been propelled by pressure from
stockholders to turn profits even when demand falls off and, second,
by rising costs of hiring full-time employees, particularly in
benefits such as medical insurance, said Sylvia Allegretto, another
Economic Policy Institute economist.
More conservative
"Chief financial officers have an aversion to adding Social Security
numbers to the payroll," said James Gelly, chief financial officer of
Rockwell Automation, the largest maker of factory-automation
equipment.
"They've become more conservative as their costs have risen."
Temps are generally paid lower wages and don't get company benefits,
and saving such costs, even for a short period, helps profit, Virginia
Panel's Copenhaver said.
"You can expand and contract your work force as you need to, without
incurring the stigma of laying off permanent workers," he said.
Slow job growth
Because some companies now hire only when they must, "job growth is
likely to be slower than it was in the 1990s, and a lot more volatile
as well," said Sun Won Sohn, chief economist at Wells Fargo.
At some companies, there can be a potential payoff for temporary
workers -- a permanent job.
Toyota employs some 2,500 temporary or part-time workers in its
25,000-person U.S. production unit and plans to maintain that
practice, spokesman Dan Sieger said.
"We can see if they're good for us, and they can see if we're good for
them," he said.
"When we do hire full-time workers, it always comes out of the
variable work force."
Companies have also saved money by using contract work -- hiring
outsiders to perform specific functions such as running payrolls or
maintaining computers.
This so-called outsourcing of work can go to outside companies in the
U.S. or abroad, and sometimes involves keeping workers in the same job
and at the same desk -- but with a new employer.
Using just-in-time hiring has drawbacks, Virginia Panel's Copenhaver
said.
Not all temp or part-time workers are as productive as full-time
workers, so the company makes sure to staff its "core-competency" jobs
with full-timers.
Just-in-time staffing also isn't always cheaper, said Barry Asin,
chief industry analyst for Staffing Industry Analysts, a
data-gathering and publishing firm.
Highly skilled temp workers may rate high wages; others require
training that is a cost to the employer.
__________________________________________________________
When they say new jobs were "created", factor this in.
Harry
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