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How COVID-19 Impacted the Temporary Staffing Industry

By January 31, 2022No Comments

We all felt the impact that was (and has been) the havoc COVID-19 wreaks throughout the world. With all the changes and challenges, though, comes opportunities and lessons learned. How has temporary staffing been impacted over the last two years?

Quarantine protocol, social distancing mandates and the status of being “essential” or not all played a role in the rapid decline in hiring permanent or temporary workers. According to American Staffing Association, when the pandemic shut down the country’s operations, employment for temporary workers plunged by nearly 35% compared to the year prior.

Fast forward to the present, and we are learning to live with the “new normal” and so are businesses. Desperate for talent and to keep their company afloat, many leaders are leaning on temporary staffing as the solution to labor scarcity. Temporary workers can play a key role in getting a company through uncertain times.

During the time the government offered additional unemployment benefits, some employers faced the obstacle of finding labor at a pay rate that suited their company. With those benefits, some potential hires were in a better financial situation than if they accepted a minimum-wage earning type job. For some businesses, the answer was to offer more money for the same work. For others, they opted for temporary staffing to meet the demand for talent.

For business to continue, most organizations implemented work-from-home capability, which many have now extended to temporary employees as well. This flexibility has attracted those who prefer to work from home or struggle to find employment nearby. Especially for organizations forced to start from scratch with developing onboarding procedures and training practices for these new types of hires, employers have utilized temporary workers to help bridge the gap and/or find longer-term talent.

We are seeing upward trends for businesses wanting to hire more temporary workers than before- some even building the practice into their organizational structure. With continued uncertainty about what’s around the corner, business owners find it less risky to use temporary workers for project-based hiring. Even if the pay rate is higher for a temporary employee, this approach can save an organization the costs involved in recruiting, training, and potentially terminating permanent workers. Temporary hires can also lead to permanent hires over time, which almost serves as a trial run to determine whether the worker is a good fit for the company long-term or not.

With increasing demand and opportunities comes challenge and uncertainty. Onboarding new employees, whether temporary or permanent, lays the groundwork for acceptable safety practices. New employee orientations are critical to establish and communicate the safety culture of the organization. This is performed at both the staffing firm and placement levels. With increased turnover and hiring, the need for and importance of proper onboarding increases. The potential cost for failing to properly onboard new hires could include increased workers’ compensation claims and rates. Even if your staffing agency doesn’t see a ton of claims, an uptick in the industry may cause your insurance rates to increase if you are insured in the standard market

In a group captive program like PEC, member companies from the same industry with similar risks partner together to insure their similar exposures. For an industry like temporary staffing, it can be difficult to find fair workers’ compensation rates because of their unique exposures. In addition to the bevy of other benefits, the peace of mind PEC members have when it comes to their workers’ compensation insurance program is priceless.

Every insurance captive works a little differently, and this information is for educational purposes only. As licensed insurance professionals, we can provide additional detail and guidance for your specific needs. Contact to get started.

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