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CEO’s may be slashing jobs, but they’re paying more for temp help

Brian O'Connell on July 8, 2011 Source: Kauffman Foundation

Scratch a healthcare startup owner and chances are he or she will bleed green – that’s what keeping costs down in a business will do to an entrepreneur.

But if you thought you were saving money on staffing by keeping full-time help low, think again. You may be losing more money on temporary help.

At least, that’s the opinion of IQNavigator, which is out with an updated version of its IQNdex that shows bill rates for temporary jobs may be eating into your employment savings.

The Denver-based company provides workforce technology solutions to small businesses. The index is issued quarterly and measures employment patterns among U.S. industries.

The index draws two interesting conclusions on full-time versus temporary help-hires that healthcare entrepreneurs may find useful in their own staffing practices, especially on the technology side of their companies:

Business skills trump “traditional” technology skills: The index shows a “sharp disparity in the bill rate trends of jobs with different skill sets” when it comes to technology staffing. IQNavigator says that it costs more to obtain and keep technology workers who show pertinent, non-technology workplace skills. “Those (workers) requiring a blend of both business and technical skills have shown significantly higher rate increases than more technical IT jobs focused on development and operational tasks,” the index says.

Availability is key for temporary help budgets: The index cites a “strong inverse correlation between the ratio of unemployed workers to job openings.” In addition, the current labor environment jacks up temporary bill rates for business owners “when the job seeker/opening ratio is roughly five or below (or, when five or fewer workers are vying for every job opening).” IQNavigator says that in Q2, 2011, the job seeker to job opening ratio remained below five, which the index concludes is a primary trigger for higher temporary labor costs.

The index estimates that temporary employees comprise about 25 percent of the total U.S. workforce and says that percentage should keep growing. The index explains the uptick in temp help as follows:

The use of non-employee labor has grown rapidly in the U.S. in recent years as companies rely more heavily on temporary workers, contractors, freelancers and other contingent labor to quickly adjust their labor force and cost structure in response to changing business conditions.

IQNavigator also cites procurement industry analyst Jason Busch, who says that temporary help wage rates, which the index pegs at 8 percent annually, is “unsustainable” for U.S. businesses.

With temporary wages eating into company budgets, healthcare entrepreneurs may not be saving as much as they thought on the employment side of the equation. That’s food for thought the next time you decide between a full-time and temporary hire.

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