DCR Trendline February 2013 – Contingent Worker Forecast and Supply Report

1. REPORT # 12 | February 2013
TRENDLINE
Contingent Worker Forecast and Supply Report
Inside this Issue
Note from the Editor
Note from the Editor 1
In its second edition of 2013, TrendLine has been reworked to incorporate your comments and
DCR National Temp Wage Index 2 feedback. This new edition of TrendLine focuses on providing you with condensed, concise,
and data-driven pieces designed to provide you with the insights you need to make decisions
Fiscal cliff: Is it on the Solid Ground? 3
and take action. As always, we provide you with perceptive observations into the contingent
Percent change in weekly Wages staffing industry. We continue to analyze contingent demand and supply to bring you predictive
(year-over-year) 4 forecasts of wage trends and market status.
Adoption of social media by Once again, we commence this month’s edition with the DCR National Temp Wage Index,
enterprises: A double-edged sword 10 discussing company’s trend of engaging temporary workers for low-skilled positions. The
second piece in TrendLine follows up on our article in December’s edition entitled “The Fiscal
Applying Unstructured Data Cliff and its Impact on Contingent Hiring”. While our first article on the subject discussed the
Analytics to Customer Feedback Data 12 potential impact due to the changes, this month’s piece focuses on the Fiscal Cliff legislation’s
impact on the job market, and particularly on small businesses.
We next look at changes in weekly wages, year-over year, concentrating first on geography, and
then highlighting trends for temporary workers. We conclude this article with an overview at
the national level, looking at tendencies in unemployment and industry contributions. Look out
for our comprehensive graphs, providing you with visual insights into wage trends.
We then shift our focus on the adoption of social media in companies, providing you with
views in the rounds, pointing out both the positive and negative potential repercussions. Our
concluding article is a continuation of our feature on unstructured data analysis, where we
discuss a relevant application of text mining utilizing customer feedback data.
“
“With cost savings, faster
time-to-hire, access to top Ammu Warrier
talent not locally available, Ammu Warrier, President
and a better product delivered,
85 percent of small business
report in the Elance Global
Business Survey that hiring
online offers a competitive
advantage” ~Darrell Jones,
Editor-in-Chief at Elance
“
Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 1

2. DCR National Temp Wage Index
Recruiters seem to feel that it might be beneficial to companies to hire batches of temporary workers to complete
tasks requiring low-skill manpower, instead of employing a permanent pool of low-wage, low-skill employees. An
example of this can be seen in the design industry, where rather than static creative departments, companies are
outsourcing design and copy work to skilled freelancers.
Apart from a few constraints, contingent workers serve a major portion of demand, which is flexibility in availability
with minimal commitment for other benefits.
“
“The number of temporary and contract workers employed by U.S. staffing firms on an
average business day was 4.3% higher compared with the third quarter of 2011. This is the
11th consecutive quarter of year-to-year staffing industry job growth since the recession
ended mid-2009.” ~American Staffing Association
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3. Fiscal cliff: Is it on the Solid Ground?
With the deficit of $4 trillion income taxes are going up, but only for the rich. However, payroll taxes were hiked for everyone. And
government spending cuts kicked down the road has lead the nation and job market especially towards a uncertain, unclear future.
Reluctance to add workers by the small business owner with less than 500 employees, which roughly constitute half of private
sector employment, has become a worry. Many small business owners expressed concern about the immediate impact of the payroll
tax increase, but they said it would take a while to understand how other aspects of the legislation would impact their bottom line.
The most straightforward negative effect lies in the termination of the payroll-tax holiday that had reduced the employee’s share of
Social Security tax from 6.2 to 4.2 percent of wages. While this isn’t specific to small businesses, the pattern is clear: Payroll-tax cuts
stimulate job creation and payroll-tax increases discourage it. Joel Prakken of Macroeconomic Advisers estimated that the payroll-tax
cut added 300,000 jobs to the U.S. economy. Therefore, doing away with the payroll-tax cap should eliminate 300,000 jobs.
“As long as the federal government does not have a plan to reduce spending and address the deficit, small business owners are very
concerned in very close future months that the plan that Congress proceeds with will include tax increases,” said Gregg Thompson, the
state director for the National Federation of Independent Businesses
Mary Brogan, spokesperson for the National Small Business Association, said the lingering national debt could have a chilling effect on
growth as businesses hesitate to take on additional employees or debt. Brogan said the lowered tax threshold impacts a limited but
important group of business owners – those who are more likely to expand and hire new employees. The limit creates a fairness issue
for businesses that pass through income to owners.
But there is some good news…
The Fiscal Cliff legislation extends indefinitely the exclusion from wages for reimbursements of employer-provided educational
assistance and amounts paid by an employer under a qualified adoption assistance program. Under Section 127 of the Internal
Revenue Code, employers may reimburse an employee, tax-free, up to $4,260 for qualified tuition assistance, despite relevance to job.
And under Code Section 137, employers may reimburse an employee tax-free up to $12,650 for expenses related to adoption of a child.
The legislative compromise also includes a remedy for estate tax exception, originally scheduled to drop to $1 million and now
remaining at $5.12 million. After reaching the $5.23 million threshold, the maximum tax rate will rise 5 percentage points to 40 percent.
“Consumers, business-to-business transactions, I think everybody is going to tighten things
up.” ~Mary Brogan, spokesperson for National Small Business Association
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4. Percent Change in Weekly Wages (year-over-year)
Top 10 States
The U.S. average weekly wage
increased over the year by
1.3 percent to $903 by the
mid of the financial previous
financial year. At the county
level, Washington County in
the state of Oregon had the
largest increase in wages per-
cent by 8.5%, which is majorly
driven by the manufacturing
industry.
Bottom 10 States
Of the 328 largest counties,
86 experienced over-the-year
declines in average weekly
wages. Williamson County in
Texas experienced a loss of
17% in wages over the last
year. Within Williamson, total
wages in trade, transporta-
tion, and utilities decreased by
$212.4 million (-30.5 percent)
over the year.
Kitsap County in Washington
had the second largest decline
in average weekly wages, fol-
lowed by Arlington County in
Virginia, Durham County in
North Carolina, and Benton
County in Washington.
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5. Percent Change in Weekly Wages (year-over-year)
Temp at a Glance
Top 10 Niche Market Occupational Opportunity for Temporary Workers
Top 10 Occupations with the Largest Number of Temporary Workers
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6. Percent Change in Weekly Wages (year-over-year)
Top 10 Occupations Most Penetrated by Temporary Workforce
Professional and business services topped the list with Temp and Help services alone managing to obtain an increment of 153k
over the year, and Employment Services increasing by 148k. Continuous increment in contingent workforce was booster for the
employment in total during 2012.
National Overview
Top 10 states (Negative Growth in Unemployment)
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7. Percent Change in Weekly Wages (year-over-year)
Negative growth of employment refers to reduced employment, as seen in the above states. Regional and state unemployment rates
were generally lower in November. Forty-five states and the District of Columbia recorded unemployment rate decreases and five
states had no change.
Among the major worker groups, the unemployment rates for adult women (7.3 percent) and blacks (14.0 percent) edged up in
December, while the rates for adult men (7.2 percent), teenagers (23.5 percent), whites (6.9 percent), and Hispanics (9.6 percent)
showed little or no change. The jobless rate for Asians was 6.6 percent
Bottom 10 States (Positive Growth in Unemployment / Minimal Reduction in Unemployment)
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8. Percent Change in Weekly Wages (year-over-year)
Top 10 States (Change in Employment over the Year, 2011-12)
Over December 2012, major contributors to employments were Health (+45,000). Job gains occurred in ambulatory health care
services (+23,000), in hospitals (+12,000), and in nursing and residential care facilities (+10,000). In 2012, health care employment
rose by 338,000.
In the same month, employment in food services and drinking places rose by 38,000. In 2012, the industry added an average of
24,000 jobs a month, essentially the same as in 2011.
Construction added 30,000 jobs in December, led by employment increases in construction of buildings (+13,000) and in residential
specialty trade contractors (+12,000).
In December, manufacturing employment rose by 25,000, with small gains in a number of component industries. In 2012, factory
employment increased by 180,000; most of the growth occurred during the first quarter.
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9. Percent Change in Weekly Wages (year-over-year)
Bottom 10 States (Change in Employment over the Year, 2011-12)
The civilian labor force for men increased by 275k, whereas women made a significant increase of 1244k over the last year. Employed
population for men increased by 899k, and same increased by 1508k over the year for women.
From June 2011 to June 2012, employment increased in 287 of the 328 largest U.S. counties. Yakima County in Washington, emerged
as the largest increase in employment, with a gain of 8.2 percent over the year, compared with national job growth of 1.8 percent.
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10. Adoption of social media by enterprises: A double-edged sword
Innovation adoption has long been associated as a signal of market leadership and thought leadership. In almost all sectors, this
is borne by firms wanting to maintain their market position, reduce risk, and to offset any competitive advantage to a prospecting
challenger. Even an innovation unlikely to be used could be a deterrent to an alternate business model. Examples include blocking
of automobiles using renewable fuel energy by firms deeply entrenched in conventional oil and gas energy; or squashing a patents
to block use of innovation. It is in such light that one is intrigued by social media’s role, and firms sometimes having mixed feelings
on adopting it. In this article, we attempt to unravel the intricacies of social media adoption by enterprises. While the study can be
generalized to any firm, it is more relevant to companies with direct business-to-consumer dealing.
Should your company have its own blog? Is a Facebook page connecting stakeholders needed? Is it a good idea to take on
consumer complaints on twitter? How about a google hangout for your employees? Companies often end up incorrectly estimating
the usefulness and risks of their decisions when it comes to social media usage. To leverage social media correctly and fully, there
is a level of internal preparation required. This is especially so if senior management is not as familiar with social media. There is
generally a need to balance contradictory views, knowledge levels, and risk appetites of all involved.
Decisions to be Made
A firm may need to decide firstly whether it is worth being on social media. One could have any of the possible reasons- to provide
a platform to employees to connect, to allow customers to provide feedback, to have R&D teams obtain user inputs on beta models,
to connect stakeholders, acquire customers or establish position as thought-leader or merely match up to competition’s presence.
Many companies choose not to be there and this may be acceptable as strategy if consumer expectations from the industry and
competitor’s actions permit it. Often this may mean also an opportunity for new challengers to alter status quo using social media
effectively. In summary, surviving not being on social media platforms may be shortsighted and a strategy relevant and good for the
short-term only.
Once a decision to be on social media is taken, company needs to decide whether to moderate content or allow laissez faire. A
company also has to decide on activity levels. We discuss these options and company strategies regarding social media activities in a
follow-up article in the upcoming edition of TrendLine.
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11. Adoption of social media by enterprises: A double-edged sword
ROI of Social Media
Many enterprises rushed to embrace social media like any other innovation only to discover that it was an animal different
from any innovation they had seen before. All social media is not good social media. Nor is more of social media always
better. A firm opens itself up for scrutiny and may not be rightly positioned or equipped to handle the impact of social
media. How does your firm assess it? We recommend a balanced assessment of both a long-term strategic view and
operational returns in ROI.
Another perspective on the question of to be or not to be on social media is that can you control customers, industry
veterans and public in general from generating content, positive or negative about your firm. Also, can you ignore such
content even if you choose to leave it without response? As possibly BP had to learn after a Deepwater Horizon, enterprises
need to be ready for catastrophic events that may come unannounced. Such risk calculations may not be modeled into
standard ROI templates.
Yet another key decision variable not fully captured in ROI is the signaling importance of being avant garde in innovation
adoption. A market leader or a customer-focused firm cannot ignore social media if competitors are prominent on those
platforms. It is a prisoners’ dilemma as no firm can afford to be perceived as being left behind in adopting an innovation
that is causing a paradigm shift in market dynamics as much as personal space of its customers. Perception is reality and the
medium of communicating such perception, social media in this instance, cannot be ignored.
“
In TrendLine next month, look out for our follow-up article on Social Media Strategy
Options for Enterprises and a feature on Social Media Metrics and Measures.
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12. Applying Unstructured Data Analytics to Customer Feedback Data
Spreadsheet or database driven analysis has been
around for a long time, and last month in TrendLine
we shared what we can do with textual data. Firms can
collect and analyze huge amounts of data from the
web for business insights using a combination of text
mining for extracting unstructured data in combination
with big data for analysis. This month we share another
application, now from internal data sources of a
company, that can trigger some thought and also spawn
new applications.
“Shallow methods work extremely well… except when they don’t. Language is replete with
underlying structure.” ~Philip Resnik, University of Maryland
One key source of textual information is the customer helpdesk. Many enterprises employ tens of thousands of call center
employees to service customer for technical support, sales ordering, complaints and other needs. They capture a goldmine
of customer insights that remain locked in transactions but never reach the higher value functions like product designers,
SCM planners and sales teams. Even if it were to be available, the problem would be akin to looking for a needle in haystack,
given the quality of such data. Customer feedback could be on a continuum from ridiculous to sublime and being textual it
has to be read, understood, inferred and used. Furthermore, it has to be aggregated in a manner to tap wisdom of crowds,
and not just individual. It is here that structured data mining can efficiently read and classify data based on structured data
analysis algorithms.
For example, a computer manufacturer when launching a new line of laptops, was keen to know how the product was
received in market so that it could fine-tune future campaigns of promotion in other geographies. It had a launch with much
fanfare, and trended on twitter too on the day of the launch. The volume of feedback exceeded the expectations due to a
hyped promotion as also some unexpected problem with the microprocessor cooling in the product.
What was remarkable about the analysis was the quick identification of top problems, top positives, and demographics of
target market, that were quickly derived from unstructured data. The product team could latch onto some transparent, live
feedback and guide the call center to proactively reach out to the customers even as they made changes to the product
“
usage literature and design.
“The role of NLP [Natural Language Processing] is not “understanding”. It’s helping people
do useful things with language.” ~Philip Resnik, University of Maryland
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13. Methodology
The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The
wage rates for temporary workers or contingent workforce are based on payments made by staffing firms to these
workers based upon hours worked. Data collected from sources such as Bureau of Labor Standards (BLS) and other
government sites as well as an internal pool of staffing companies and consultants, is aggregated and classified based
on regions and skill categories, to arrive at an aggregate index.
The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with
the said baseline and is representative in terms of direction and scale of change. Five years of data has been included
to observe seasonal patterns and distinguish seasonality from long-term wage movements. The data and the model has
been further refined over last six months.
DCR Wage Index combines the exhaustive data from BLS with practical and more recent developments and data from
on-field consultants and clients, to provide timely near-term indications of trends and consistent long-term actionable
and objective information.
Source Data
DCR Work Index uses multiple economic variables to ensure the robustness of its forecasts and cross-validation
of trends.
Key data sources and parameters of interest included and influencing the index are:
Unemployment data
Gross Domestic Product
Prime rate of interest
New and seasonal Job openings
Non Form employment
Job Opening
All Export
All Import
Average Hourly Earnings of All Employees Total Private
Aggregate consultant data on job market parameters
References:
“
http://www.newsobserver.com/2013/01/07/2586891/beyond-the-cliff-a-tricky-path.html#storylink=cpy
http://www.entrepreneur.com/article/225433
http://data.bls.gov/cgi-bin/dsrv
http://www.staffingindustry.com/row/Research-Publications/Research-Topics
http://blog.adeccousa.com/what-the-rise-of-the-temp-workforce-means-for-hr-and-internal-recruiters/
http://www.bls.gov/news.release/laus.nr0.htm
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14. About DCR Workforce
DCR Workforce is an award winning, best-in-class service provider for contingent workforce and services
procurement management. Our proprietary SaaS platform (SMART TRACK) assists in providing customizable VMS
and MSP Solutions to manage, procure and analyze your talent with complete transparency, real-time control, high
performance and decision-enabling business intelligence.
DCR Workforce serves global clientele including several Fortune 1000 companies. Customers realize greater
efficiencies; spend control, improved workforce quality and 100% compliance with our services.
For more information about DCR Workforce and its Forecasting Toolkit (Rate, Demand, Supply and Intelligence)
including Best Practice Portal, visit dcrworkforce.com
For more information call +1-888-DCR-4VMS or visit www.dcrworkforce.com
Public Relations:
Debra Bergevine
508-380-4039
7815 NW Beacon Square Blvd. #224 Boca Raton, FL 33487
debra.bergevine@dcrworkforce.com | sales@dcrworkforce.com | marketing@dcrworkforce.com
www.dcrworkforce.com | blog.dcrworkforce.com
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