5% Unemployment = More Leverage for Temp Workers

On the people front in supply chain, the pressures surrounding labor are continuing to mount. With California and New York already enacting $15/hour minimum wage laws and with unemployment hovering at 5% ("perfect employment" according to some economists), companies are starting to see much more pressure on wages and programs designed to attract and retain quality workers.

An article in USA Today talks about the pressure for higher wages, better benefits and even union organizing activities by temporary, part time workers. In speaking with customers around the country, it's not uncommon to hear turnover figures of 25%, 35%, and sometime much, much higher. In addition to that, I often hear about candidate hiring ratios of 6:1 or 8:1—that is only 1 out of 6, or one out of 8, temporary workers actually stay on as employees. The cost of recruiting, hiring, and training can be a huge drain, and these costs often are understated. In addition, productivity takes a huge hit when you consider all of the supervisory time spent on-boarding and training all these temps. The article concludes that many companies are starting to rethink their temporary-worker strategies in favor of going back to full time employees.

We've all heard the stories of a tight labor market, aging population, and more. As these pressures continue to build, we'll see if we reach a tipping point where the cost of having a more well-rounded full-time employee strategy outweighs the pain and costs of constant temporary-worker turnover, lower productivity, and all of the associated costs. Let us know what you see in your operation and in what direction you see the labor strategy heading.