The recession and the slow economic recovery have left many employers reluctant to make a long-term investment in employees. Instead, many are turning to what is being called the "just-in-time" workforce.
The Associated Press (AP) discusses the growing desire of companies' to match their workforces to their workload in the article "Temporary jobs are becoming a permanent fixture." In the article, Economist Susan Houseman compares this trend to a common production strategy in which manufacturers manage their inventory so they don't have a surplus when demand decreases.
"You have your just-in-time workforce," Houseman said. "You only pay them when you need them."
Here at Top Echelon Contracting, we are noticing this developing into a new workforce model where companies maintain a small core of direct hire employees who are supported by a larger outer ring of contractors. This allows companies to be more nimble, adding contractors to quickly respond to increases in demand or to meet deadlines and just as quickly reduce their workforce when the need passes.
This model is becoming even more popular as the employer mandate of the Affordable Care Act (ACA, also known as Obamacare) looms. The employer mandate will require employers to provide healthcare coverage if they have 50 or more employees. Even though the employer mandate was recently postponed until 2015, many companies are still preparing for it by adjusting their workforces. The just-in-time model allows them to more easily reduce their workforce below the 50-employee threshold.
As a result of these factors, AP reports that the number of contractors has increased by more than 50% since the recession ended. There are now 2.7 million contractors in the American workforce, the most on government records since 1990.
Many workers choose to be contractors, as well, in large part because they feel more secure in contract positions. The recession taught them that there is no such thing as a "permanent job," so many would rather trust themselves to find work than rely on one employer for their livelihoods. And contractors who work though a staffing firm or contract staffing back-office normally have access to the same quality benefits as their direct hire counterparts but enjoy the freedom and variety that direct hire positions often lack.
So with clients and candidates both on board, now is the time for recruiters to embrace the just-in-time workforce, too. By doing so, you can become a more valuable asset to both parties by helping them achieve their goals through contract arrangements.