Employers throughout the North Bay continue to rely on contingency workers, the result of a slowly rebounding economy that requires increased staffs but still has many companies reluctant to fully pull the trigger on hiring, employment experts said.
Staffing companies have seen orders for workers increase steadily over the year, which is a good sign of the overall hiring activity in the region.
But while there is improvement — jobless rates for Sonoma, Marin and Napa counties beat the June national average of 8.4 percent — there is still some trepidation among employers, indicating a slog toward recovery.
“I think there is still enough uncertainty in the market place that firms are reluctant to make any long-term commitments to employees,” said Robert Eyler, Ph.D., a professor of economics for Sonoma State University and a Frank Howard Allen Realtors research scholar. “There is also a large amount of churn, or hiring within companies by outside companies in terms of cherry-picking, that a lot of firms would rather not make an investment in a worker who may also be mobile.”
The North Bay’s largest staffing company, Sonoma-based Nelson, has seen an increase of about 10 percent over the year in orders from companies seeking immediate help, according to Courtney Dickson, a spokeswoman for Nelson.
“We’ve definitely seen an increase in the North Bay,” she said. “Our North Bay offices are doing very well. We have seen steady growth – a little over 10 percent — in the North Bay year over year with particular gains in clerical placements, light industrial, finance and accounting, wine and beverage and engineering.”
Likewise, Robert Half International said it, too, has seen an increase in hiring for its North Bay office, with particular demand in the finance and accounting field.
“As business activity increases, we’re finding that companies are more open to hiring, both on a full-time and temporary basis,” Regional Vice President Stephanie Vinski said. “As employers have begun to recover from the downturn, they have frequently brought in contingent workers until they can be sure there is a sustained need for additional staff, which helps them avoid the damaging cycle of over hiring followed by layoffs.”
Companies are still relying on such temporary or contingency labor for a number of reasons, including addressing immediate needs while simultaneously avoiding a potentially bad full-time hire, Ms. Dickson said.
“For small and mid-size businesses, I think for them a bad hire is really costly,” she said. “It’s a lot of resources, a lot of time, unemployment insurance — it just puts a big dent in their plans. If you’re starting to do better but still struggling, the pain can be pretty serious.”
Another factor in the steady reliance on temporary labor, Ms. Dickson said, is that employers who are stretched too thin end up getting hit with significant overtime costs if they don’t bring on additional staff.
“The other thing is, (employers) are in a little bit of a pickle – they’re hesitant to hire, but instead their employees are getting hit with overtime,” she said.
Ms. Vinski, of Robert Half, said she expects the use of contingency labor to continue in the near future, but noted that full-time hires will also likely increase.
“We anticipate seeing an uptick in both full-time and contingency hiring as more companies look at ways to market themselves to attract new candidates,” she said. “Companies will always need full-time workers; however, they can use contingent workers to staff more effectively.”
The continued reliance on the contingent workforce, overall, has pluses and negatives, according to Dr. Eyler.
“It is a mixed bag for the economy, and is likely net positive for companies because of the lower, overall cost of labor,” he said. “For the employee, there is less contractual certainty of long-term employment, which can have some effect on spending and major investments — car, home, etc., — by workers who do not have more of a long-term expectation in their employment and income. That can transmit itself to many sectors of the economy as lower expectations and less hiring as a ripple effect.
“The impacts would be less certainty about workers for businesses, and lower overall costs of doing business,” he added. “For workers, there is less in terms of fringe benefits and training that would be invested in a full-time worker. For the larger economy, it is a larger level of uncertainty which can have a larger effect on hiring across a broad set of industries.”
Ms. Vinski noted that employers gain significant flexibility with a contingent work force, a key factor when an employer is hoping to eventually boost staff down the road.
Still, the overall economy is not as stable as employers would like, which makes full-scale hiring less likely.
“It is difficult to plan for five years when you are worried about the next five months, hence the demand for contingent labor,” Dr. Eyler said.
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