Productivity, Contracting Help Employers Avoid Increasing Payroll

The United States economy is growing faster than those of other large industrialized nations, according to a recent USA Today article.  So where are the direct-hire jobs already?

Well, according to the article, U.S. companies became so productive during the recession that they have been able to grow in the recovery without increasing their payrolls. In fact, while productivity decreased 3.7 percent in Japan and 2.2 percent in Europe in 2009, productivity doubled in the United States from 2008 to 2009 and again in 2010. 

Why? Well, apparently the severity of this recession scared American employers into making much deeper cuts than nations such Britian, France, Germany, Italy, and Japan.  The result was increased productivity in the States as companies learned to do more with less.

Now as the economy slowly recovers, U.S. companies are reaping more profits as a result of this heightened productivity, giving them little motivation to hire direct. There are still 5.4 percent fewer jobs in the United States as compared to December 2007 while other industrialized nations are adding jobs. While the United States economy is growing the fastest, its job market is the weakest.

The article also points to U.S. company's access to temporary (contract) help as a key reason why they have been able to avoid direct hiring. Temporary hiring is limited in many of the other industrialized nations due to "human resources practices" and union contracts, according to the article.

We have been tracking the surge in contract staffing over the past couple of years, and based on this article and Top Echelon Contracting's own contract placement numbers, it does not appear that this trend will be subsiding soon.

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.

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