Temp Agencies Report Flip-Flop From ’90s Downturn
By CHRIS CZIBORR
Things are different this downturn for Orange County’s temporary employment agencies.
Back in the early 1990s, employers laid off regular workers in droves and turned to temp agencies as a less costly source of workers.
This time, temp workers have been on the receiving end of layoffs, with companies reluctant to shed permanent employees, a stark contrast to what took place a decade ago.
“U.S. companies are looking to reduce their temporary workforce more than they ever have in the past,” said Kim Megonigal, chief executive of Irvine-based Kimco Staffing Services Inc. “And that’s kept them from having to release their full-time employees.”
Temp agency officials say they’re seeing the convergence of two factors on their businesses,an upswing in available temps and a slowdown in demand from employers. The result: agencies are filling a higher percentage of requests for temp workers, because there are more temps for fewer jobs.
Greg Palmer, chief executive at Aliso Viejo-based Remedy-Temp Inc., said a year or so ago the temp industry employed about 3.5 million people nationally. Since then, it has shed 700,000 jobs, he said.
During the strong economy, “We were filling 70% of our client work orders,” Palmer said. “Now we’re up to 90%. It’s a function of the unemployment rate,with more layoffs we can find more workers.”
That’s not necessarily a good thing. Even with higher fill ratios, sales at publicly traded temp agencies are down by as much as 30% in the latest quarterly results.
“This tells me there’s some dynamic going on here where companies have had such a hard time finding good people that they’re not as willing this time around to let them go,” Kimco’s Megonigal said. “They’ve let go a lot of the contingent workforce, and that’s one reason why our business is down.”
Here’s another twist. Kimco’s Megonigal said he is having a tough time finding temp workers, even though OC’s unemployment rate has inched up. The catch is employment here still is better than for the state and nation, he said.
“The unemployment rate in Southern California is extremely low, which is totally different than in 1990,” Megonigal said. “In 1990 when we had a recession, we were so flooded with people looking for work that we had to put signs at all our offices saying we weren’t accepting applicants, because we had too many good applicants and no place to send them.”
But officials at other temp agencies in OC aren’t reporting trouble finding workers. That’s the case for the Irvine office of Milwaukee-based Manpower Inc., according to area manager Sue Foigelman.
“There’s always the very unusual combination of skills that sometimes is hard to find, but generally we’re not having problems with availability of staff,” she said.
Remedy’s Palmer said he isn’t having problems finding workers, especially compared to the recent boom years when virtual full employment meant fewer workers for temp orders.
The difficulty Kimco is having shows that many laid off workers found new jobs, Megonigal said.
“Even with the high-tech downturn, a lot of those people were absorbed by companies that still have needs,” he said. “Either it was because there aren’t many dot-coms here compared to the Bay area, or those layoffs were absorbed by other companies.”
In the Bay area, Kimco has been flooded with applicants, Megonigal said.
“But we’re not seeing droves of applicants here,” he said. “We’re still filling client work orders, but it’s proving more difficult than we expected.”
Remedy is struggling in certain skilled categories, Palmer said, with light industrial jobs being easy to fill,a situation similar to Kimco’s. Some call-center and high-end administrative jobs remain hard to fill, Palmer said.
Kimco is filling nearly all of its work orders for accounting and clerical positions, Megonigal said. But the agency only is filling about half its technology work orders, which make up roughly 10% of its temp workforce.
“Although our demand last year was down 15% against the previous year, we’re still having trouble filling orders with quality people across the board,” he said. “So in spite of the recession that we hear about, the job market is still tight.”
Kimco began feeling the downturn in March, with a bottoming in August, Megonigal said. Since then things have remained flat, he said. The agency already has seen an upswing in its clerical business, said Megonigal, who added he expects a rebound soon. n
