Valuation of the Temporary Employment Industry

Corporate Growth Report Weekly, Feb 26, 1996

As businesses continue to downsize to core competency, outsourcing or the use of temporary staff is on the rise and proving to be the perfect “remedy” for investors concerned about the US. economy.

Approximately 90% of U.S. business utilize temporary employees. This sector is expected to continue to be one of the top growth industries through 2005.

According to a recent survey by the global accounting firm Arthur Andersen & Company, an increasing number of companies are employing outsiders or “contingent workers” to handle such central business functions as tax, payroll and pension management.

For some tie now the word “contingent” has been used to connote a variety of employment situations including part-time work, self-employment, employment in the business services industry. They easily do non-core but essential business functions.

Today a very visible population of contingent workers--those employed by the personnel supply services industry--is rapidly outpacing other industries. For example, personnel services employment rose 25 percent between 1990 and 1993, compared with one percent for total employment, according to BLS statistics.

Statistics reveal that approximately 2 million workers are presently employed in the personnel-services industry. A new trend is emerging too. While the number of white-collar professional temporary workers has increased, the faster gains are in blue-collar employment. The share of temporary workers who hold blue-collar jabs grew from 9 percent in 1983 to 23 percent in 1993--evidence that manufacturers have traded hiring and layoffs for the use of contingent workers on a routine basis to meet employment needs.

Not surprisingly, the share of temp workers in “pink collar” or clerical jobs remains fixed at about one-third, with women continuing to corner this sector of the industry. In the mid-90s, men are entering the personnel services industry at a faster rate and gaining share. As a case in point, in 1993 38 percent of all personnel-supply service workers were men, up from 25 percent in 1983, according to data by Segal and Sullivan.