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U.S. Employment Situation (May 2015)
published by Bruce Steinberg | June 5, 2015

 

 

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Another potential disruption to the staffing industry ...

 

There is little argument that the technology and the internet has disrupted many sectors and industries while simultaneously creating new ones. For example, peer-peer lending is beginning to disrupt the predominate banking model. For the staffing industry, more specifically temporary help services, technology and the internet have generally been a big plus especially in terms of efficiencies and reach. We could write a book's worth of material explaining how technology has helped the entire human capital universe, but if you don't already know this, you could be in the wrong business.

 

Although some technologies have slowly chipped away at parts of temporary help services, the sector has done a good job rising to the challenge and even capitalize on new and merging technologies as well as creating new business models and new services to meet some of those changes. (The sector has also benefited by servicing those technologies with qualified professionals as well as providing direct services and solutions, but we digress.)

 

Just as job boards / employment web sites rewrote the business model for the print media's revenue machine of classified ads, a new type of business model may be emerging that could effectively eliminate one of the temporary help services major operations on both sides of the staffing formula (candidates and client companies).

 

Workpop, currently active only in Los Angeles, specializes in matching hourly and part-time workers and employers. And they do it for free -- both for workers and employers. So how do they plan to make their money? As a start-up, they are still working that out but according to their website they "intend to offer premium services that employer and candidates have the option to pay for."  According to a WSJ blog post, these may include on-boarding of new hires, handling the scheduling of shifts, and probably some background check tools. That all pretty much sounds like many of the selling points that temporary help services salespeople use to sell their services. A major difference is that Workpop does not appear to have any eyes on becoming the employer as the temporary help services industry has vigorously defended for its members. Regardless, this start-up looks to be chipping away at the business model of temporary help services.

 

We addressed this subject earlier this year informing you of a cover story in The Economist magazine about startups that are building systems that match jobs with independent contractors on the fly.

 

And it's not just the temporary help services portion of the staffing industry that could be dismantled. PEOs are facing Zenefits, another California-based start-up with a recent valuation of $4.5B, gives away its cloud-based HR software with its payday coming when its product is used to buy health insurance, choose a payroll provider, or other HR-related product or service.

 

It's no great secret that staffing companies, either internally or via a vendor, have automated many of their processes and even some key competencies. But the danger is that non-staffing companies can develop applications to provide those same services very quickly possibly via an Internet-based business practice of "sunrise product development" in which product development times can be slashed with networks of collaborators passing the work off to another developer eight time zones away, so three days work can be done in any single 24-hour period.

 

We believe temporary help services and all staffing industry executives need to develop a strategy to ameliorate this very real existential threat. As one of our editorial review panelists proffered, "... even if everything could be done online, is there a slot for the expertise and time saving activities of the staffing company?" Our response is as the industry gets mechanized, automatized, computerized, and ultimately marginalized,  this shift can create more opportunities to provide better service as well as more value for customers.

 

What do you think? Are these developments really a threat to the staffing industry and how can staffing companies address it? Let us know what you think and we'll share your comments (anonymously, if you want) in a future post.

 

Did you miss it?

 

Federal Reserve Board's latest Beige Book, which was released two days ago on Wednesday, June 3, had some interesting observations for a wide variety of sectors and industries about job trends and developments on a geographical basis. Although this report is quite voluminous, we pull out passages relevant to as well as specifically about the entire staffing industry universe. Our summation, which includes a link to the full publication, can be found here.

 

 

Strategic Planning Tools ...

Our Temporary Help Services Interactive Data Book tool will enable to view the local (down to the county level) temporary help services trends as well as benchmark your local staffing operation  to discover exactly where you are positioned in the market and if your offices are performing up to the local market.

Then use our Employment Tracking Tool that is designed to assist you in identifying and evaluating new sectors and markets. It examines the overall employment trends by industry in the given market to help determine possibly under-serviced industries to target marketing efforts (as well as what industries to avoid). By doing this, it shows what industries are growing and therefore are in expansion mode making them eager for a wide variety of products and services and likely in need of additional staff.

See further descriptions of these two strategic planning tools and links to the demos


What will 2022 look like for staffing services?
 

The U.S. Bureau of Labor Statistics recently published 10-year employment projections. These projections are based upon a plethora of criteria including how changes in population demographics will affect the demand for specific goods and services, the types of jobs, and levels of education for workers to fill those jobs.  Our report highlights some of the changes in the direction that both jobs (occupations) and well as employment changes by industry and sector that may be of special interest to staffing industry executives planning for the near-term future.

 

You may be surprised to learn that it appears that light industrial will be a growing sector for staffing services encompassing growing portion of staffing services jobs by the year 2022; office and administrative support jobs, although they will remain a significant part of staffing services jobs, will decline slightly as its portion of the overall mix.

 

Our report on the expected employment projections to the year 2022, which is only eight years away, as they relate to staffing services to assist you in planning for the future. Given the highly analytical nature of our readers and followers, this brief, eight-page report is light on words but heavy on tables and charts. And because we know you are a busy executive, you don't even have to go to the additional step of requesting this gratis and valuable report from us. Just directly download it from here.


 

Looking for more? Check out our podcasts!

Podcasts of the current employment situation will be available by 4:00 p.m. ET, Friday, May 8. The video podcast, which you can start and stop to study the tables and graphs as well as replay individual sections, includes additional data and information.  Watch the video version here or just listen to the audio version here (no special hardware or software required), which also can be downloaded to an iPod or any smartphone.


The "ultimate consultant's consultant."

"Bruce is an invaluable resource to me in working through the strategic planning process with my clients in the staffing industry. Bruce consults with me on each engagement and customizes his deliverables accordingly, exceeding my expectations each time. He expediently gathers and compiles the data I need and delivers it in user-friendly reports which make the analysis portion of my job easy. Because with Bruce's assistance I can make strategy recommendations with confidence and accuracy, my clients benefit greatly in turn. He is the ultimate "consultant's consultant." -- Amy Bingham, Bingham Consulting Professionals View more Testimonials

 

May 2015 Employment Report

Quick recap

 

Overall, a pretty good employment report. Job growth was fairly strong as nonfarm jobs increased 280,000 in May 2015, which was better than the 221,000 rise in April 2015 as well as the 236,000 increase of May 2014. The dismal number for March 2015 was growth of only 119,000.

 

On the other side of the monthly employment situation, the unemployment rate ticked up to 5.5 percent in May 2015 that the U.S. Bureau of Labor Statistics characterized  as "essentially unchanged," which is what they commonly say with changes of 0.1 percentage point either way. But that 0.1 percent increase from April's 5.4 percent was because  the size of the labor force rose by nearly 400,000, and obviously not all of them could find jobs. For more detail about this aspect of the monthly employment situation, see the "Household Survey" section at the bottom of this box.

 

(please note than next month's report will be released on Thursday, July 2.)

 

Jobs Report

 

Total private-sector jobs grew by 262,000 job in May that was clearly better than April's increase of 206,000, which was lower from its initially report last month as up 213,000; a year ago, in May 2014, the private-sector generated 238,000 more jobs.

 

The private Goods-producing sector grew by 6,000 jobs in May after increasing 21,000 in April that had followed a 20,000 decline in March.

  • It should come as no surprise that declines in Mining and logging continued with a drop of 18,000 in May after descending by that 15,000 in April and losing 14,000 in March.

  • The Construction sector grew by 17,000 in May that was clearly not as strong as the 35,000 gain in April, but April's stellar performance was likely due to catching up from the 12,000 weather-related decline on March.

  • Manufacturers appeared picked up the pace a bit with 7,000 more jobs in May after adding only 1,000 in April. Durable goods only added 1,000 in May while Nondurable goods were up 6,000.

The picture in the private Service-providing sector looked much better in May with the addition of 256,000 jobs, which was a nice improvement from the 185,000 job growth of April; a year ago, in May 2014, this sector added 213,000 jobs.

  • Hiring in the Retail trade sector picked up with the addition of 31,400 jobs in May after adding 13,300 in April; a year ago, in May 2014, it added 10,600 jobs.

  • The Wholesale trade sector reversed direction with an increase of 4,100 jobs in May after cutting 2,300 jobs in April; however a year ago, in May 2014, this sector added 6,500 jobs.

  • The pace of hiring picked in the Transportation and warehousing sector with an increase of 13,100 jobs in May after adding 10,800 in April; a year ago, in May 2014, this sector increased by 20,200 jobs.

  • Financial activities employers added 13,000 in May after increasing by 8,000 in April; a year ago, in May 2014, they grew by 9,000.

  • The Professional and business services sector added 63,000 more jobs in May that was a little weaker from April's growth of 66,000 but still much better than a year ago, in May 2014, when this sector increased by 54,000 jobs.  Computer systems design and related services added 10,300 jobs in May that was incrementally weaker than the 10,700 it added in April.  Management and technical consulting services experienced an increase of 7,000 after adding essentially the same amount, 7,100, in April; however, Architectural and engineering services added 4,500 jobs in May that was clearly at a higher pace than the 2,300 it added in April.

  • The Education and health services sector added a total of 74,000 jobs in May with the sector's highly seasonal Educational services sub-sector contributing 16,700 more jobs of those new additions. Home health care services was up by 8,400 in May, which was much healthier than the 3,500 it added in April.

  • The party picked up again in the Leisure and hospitality sector with 57,000 more jobs in May (coincidentally, the same amount it added a year earlier in May 2014)  after growing by only 10,000 in April.

The total number of Government jobs was up 18,000. The federal government was up by 3,000, State government was flat; and Local government added 15,000 jobs.

Temporary Help Services Roundup

 

Temporary help services continued to recover quite nicely from the declines of January  and February.

 

In May, the 2,903,100 temporary help services jobs were due to a gain of 20,100 jobs, which was improved sequential growth of 0.7 percent  and 5.8 percent year-on-year growth. Conceivably, temporary help services could top 3,000,000 by year's end.

 

And temporary help service's market share -- that is its portion of all jobs -- jumped to 2.05 percent in May, which was a 0.0102 percentage  point rise (a relatively large jump) from March's 2.04 percent. May's 2.05 percent market share (bringing it out a few decimal points, it was 2.0491) was  is the highest it's ever been, which was the same statement we said last month about this metric for April 2.04.

 

For a chart of temporary help's growth from January 1991 to May 2015 and comparing its trend to total employment, click here.

 

(if the chart is unclear, click on it  to open in a browser window)

 

Click on chart to open in a new browser window.

Household Survey

 

May's 5.4 percent unemployment rate was 0.1 percentage point higher than April as the result of positive movement in its underlying components.

 

Although there were 272,000 more employed persons in May, the labor force expanded by 397,000 which resulted in the number of unemployed persons increasing by 125,000 while there were 208,000 fewer people not in the labor force. In other words, although a lot of people found jobs in May, a lot more people entered and reentered the labor force, so the unemployment rate incrementally rose. This is not an unusual, nor unexpected, development. As jobs become more plentiful, people who were sitting on the sidelines -- and therefore not considered part of the labor force so they are not considered as unemployed -- jump into the job pool causing the unemployment rate to rise.

 

The employment-to-population ratio was rose to 59.4 percent in May, up from 58.9 percent a year earlier. The labor force participation rate incrementally rose as well to 62.9 percent in May from April's 62.8 percent that was the same as year ago, in May 2014, when it was also 62.8 percent. The number of discouraged workers continued to trend downward in May with 563,000 that was a decline from the 697,000 in May 2014.

 

BTW, we maintain an updated table of many major employment as well as other economic indicators here or here for the mobile version.


NEXT EMPLOYMENT REPORT -- THURSDAY, JULY 2, 2015

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