Managed Labor: Combining the Best of Direct & Contract LaborJuly 22, 2019
A recent Manufacturing Skill Gap Study by Deloitte found that, despite predictions of massive job elimination due to the rise of artificial intelligence (AI), robotics and the Internet of Things (IoT), Deloitte has “…found the reverse—more jobs are actually being created.”
As a result, the labor shortages vexing the manufacturing sector today will only get worse – far worse.
A summary of their findings:
- Job openings have been growing at double-digit rates since mid-2017, and are nearing the historical peak recorded in 2001
- There is a widening gap between the jobs that need to be filled and the skilled talent pool capable of filling them
- The skills gap may leave an estimated 2.4 million positions unfilled between 2018 and 2028, with a potential economic impact of 2.5 trillion
- Further, the study shows that the positions relating to skilled production workers may be three times as difficult to fill in the next three years
Contract & Temp Labor to the… Rescue?
A 2018 Staffing Industry Analysts (SIA) report says “brisk” year-over-year expansion brought the temporary help industry to a record 3.05 million jobs.
“This strong growth in the number of total temporary help services jobs is a positive sign for the industrial segment of the staffing industry, which accounts for roughly half of all temporary workers,” the report says.
That means there are approximately 1.5 million manufacturing temps employed in the U.S. In fact, researchers from Princeton and Harvard have estimated that 94% of the net employment growth between 2005 and 2015 has been “alternative work arrangements” defined as “temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers.”
While this has kept the U.S. near “full employment” status, labor problems persist:
- Why are manufacturers still complaining about labor shortages?
- Why are some plants still not fully staffed even though they use multiple temp agencies?
- How can “temporary staffing” be a permanent solution without creating a co-employment scenario?
- How well do temp agencies take care of the workers they supply – do they reflect the values of the manufacturers utilizing their services?
While it can be advantageous for previewing prospective employees and lead to some good hires, the temp-to-hire model also helps ensure the labor shortages it was supposed to prevent.
The Managed Labor Model
Managed labor staffing has emerged as a compelling alternative to temp staffing in large manufacturing plants, helping to end labor shortages, increase production output and turn red KPIs to green.
Instead of busing temps to your door, managed service providers are responsible for their employees by recruiting, screening, hiring, training, and managing the workers they provide. Managed labor employees are typically 25% more productive than temps—even when these employees previously worked as temps in the same facility.
And though hourly rates are higher than temps, managed staffing typically reduces outsourced labor costs by 30%.