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Labor leaning toward short-term

But some say trend is a sign of upturn in economy

When local officials review the area’s economy, they point to job creation as a highlight.

After all, the Fort Wayne metropolitan statistical area saw 4 percent job growth in 2011, almost double the state’s rate.

The study, released in October, found the Fort Wayne MSA is one of only 23 in the country that every month since September 2010 has posted a higher percentage of job growth than the national average. There are 372 MSAs nationwide. Fort Wayne’s MSA includes Allen, Wells and Whitley counties.

The study findings were released by Garner Economics LLC, a consulting firm based in Atlanta. In the 23-month period reviewed, the U.S. averaged a meager 1.1 percent job growth.

What’s often glossed over, however, is that almost 25 percent of that growth has been in temporary jobs, which pay substantially lower wages and typically don’t offer benefits such as health insurance, vacation, paid holidays or sick time.

How it works

Contract workers. Leased employees. Temps. Whatever you call them, they are often seen as a stopgap solution by many business leaders.

As a recession is ending and customer demand starts picking up, many companies are reluctant to commit to permanent employees. That’s especially true if the company endured painful job cuts.

So, instead, the business strikes a deal with an agency to provide workers, who remain on the agency’s payroll but are assigned to client’s workplace. Jobs can be white collar or blue collar.

John Sampson, president and CEO of the Northeast Indiana Regional Partnership, sees temporary jobs as a leading indicator that the economy is picking up.

“It’s a normal part of the business cycle that companies go through,” he said. “People working is always a good thing.”

That’s true, he said, even though low-paying temporary jobs work against the Regional Partnership’s goal of increasing per capita income across the region. The alternative, Sampson said, is those people might not be working at all.

But not everyone equates an increase in temporary employment with a strengthening economy.

John Silvia, chief economist for Wells Fargo, said it’s not as strong a signal of recovery as it used to be.

These days, restaurants and hotels are hiring more part-time workers through employment agencies to avoid having to offer health insurance, the economist in North Carolina said.

Some companies are also worried about higher taxes going into effect in the new year, Silvia said. That uncertainty has prompted some employers to rely on temporary workers rather than add them to the permanent payroll, he said.

Rae Pearson, founder and president of Alpha Rae Personnel Inc., said her staffing firm has seen steady client numbers in the past two years. She’s been in business more than 25 years.

About half her business is headhunting – finding executives with specific credentials for clients who hire the candidates. The other half is contract work – placing the firm’s employees in clients’ workplaces for a limited time.

“We are the employer of record,” she said.

Pearson declined to give current employment numbers, but she’s optimistic about the future. Most of the executives she talks to say business is picking up.

“I see a lot of good things on the horizon when it comes to contract work and seasonal work,” she said.

Defining benefits

Some of the contracts include benefits and some don’t. Pearson doesn’t judge those who omit those perks. She thinks they’re doing the best they can as opposed to taking advantage of workers.

“I feel that most business owners have to run their business the way they feel comfortable,” she said.

But all of Alpha Rae’s employees are offered an insurance package after a 90-day waiting period. They also received paid holidays and vacations.

“For sure!” Pearson said. “Who would work somewhere and not get that?”

“We try to cater our business the way we would like to be treated,” she added.

Of course, Alpha Rae competes for talent with multiple local employment agencies. But in smaller cities, workers who want temporary jobs are often forced to work with companies that don’t pay benefits.

Dawn Hayes and Marie Deter said their only option for local temporary employment has been Pro Resources Staffing Services in Huntington.

The women, who asked to be identified by their middle and last names, said they weren’t paid for vacations, holidays or sick days.

Jennifer Hout, Pro Resources’ regional sales manager, said the staffing company doesn’t offer paid holidays or vacations unless the client’s contract includes those benefits.

The company offers health insurance to all workers without a waiting period, she said. The same benefits are available to workers placed through each of the company’s 17 offices, she said.

Hayes, 50, and Deter, 28, worry that if they speak out about problems they encountered on the job, they will lose future placement opportunities.

The women worked at a Huntington factory, where they believe they were treated differently from other workers, who were directly on the company payroll.

“Temp workers didn’t get away with anything,” Hayes said.

But she felt stuck in the job because she worried that Pro Resources, the only agency in town, wouldn’t place her in another position if she quit – even if Hayes had legitimate complaints about the work environment.

The long haul

Temporary employment keeps workers in a state of limbo – that’s not necessarily short term.

Pearson, who owns Alpha Rae, doesn’t limit how long a client can keep workers employed on a temporary basis. And there are no legal limits, she said.

One worker was placed with General Motors for seven years, she recalled. The woman was eventually hired on as a permanent, union employee, Pearson said.

Some of Pearson’s clients don’t want colleagues and customers to know they’re working on a contract basis. She contacted two who declined to be interviewed for that reason.

The topic isn’t any more popular over at General Motors’ Allen County truck assembly plant.

Mark Gevaart, president of United Auto Workers Local 2209, declined to comment on whether the union would prefer fewer temp workers in the plant.

Temporary workers pay union dues, but the amount is less than permanent hires pay because temps are paid less. Both types of workers pay the equivalent of two hours’ wages per month in union dues, Gevaart said. He represents 3,400 workers.

GM increases its pool of temp workers every summer to fill in for permanent hires on vacation. But the Detroit automaker doesn’t reveal how many temporary workers it employs – or what benefits it offers them, spokeswoman Stephanie Jentgen said.

“Our temporary employees play a valuable role in allowing Fort Wayne Assembly to meet its changing business needs,” was all she could say.

Jentgen, who responded to questions by email, also wouldn’t say whether GM has a limit for how long a worker can remain on temp status.

At a glance

FindLaw, a Thomson Reuters business and provider of online legal information, offers the following facts about temporary employment:
•Temps are typically hired to cover for absent employees – such as those who are on maternity or disability leave – or to fill gaps in a company’s workforce
•Temporary agencies typically charge clients 15 percent to 30 percent more than what they pay the temp employee
•Some temporary jobs may lead to permanent employment – in which case the temp agency might charge a fee
•Temporary employees may work full- or part-time, and may work for more than one agency at a time
•In an economic downturn, temporary employees are often the first to go, making it less of an ideal job for job security

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