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Companies Cutting Labor Costs With Increasing Use of Temporaries

April 20, 1986

ALBANY, N.Y. (AP) _ Richard Bever has been through several dozen jobs in the last few years and he expects six or seven more this year.

He is anything but irresponsible, though.

Bever is a career ″temporary,″ a skilled worker who contracts his services as a draftsman to a firm that supplies short-term workers to other companies. By choice, he has spent the last nine years working two weeks to two months at a time for different manufacturers in upstate New York.

Temporary help is no longer mainly an extra secretary brought on during inventory or to cover for vacations, people in the business say. Temporaries, especially in the skilled or high-end of the market, are increasingly being used in place of full-time employees in factories as well as offices.

Bever says that by the time he has finished one job he has another lined up. And, he says, he earns 30 percent to 40 percent more than he would if he worked for a single company.

″I like working on different R&D (research and development) projects and I like seeing how different companies operate,″ Bever said. ″I don’t think I could work for one company drafting one project for the rest of my life.″

To Bever and others like him, temporary service is a challenging new workstyle. To companies, it is a cost-cutting method. To organized labor, it is an abuse of workers.

Whatever the viewpoint, temporary services is a fast-growing trend. In 1975, U.S. companies spent an estimated $853 million for temporary help. In 1985, they spent $6 billion, with about 700,000 people working as temporaries, according to the National Association of Temporary Services, a trade group in Washington, D.C.

In New York state, for example, the number of people on the payroll of temporary service agencies more than doubled over the last decade - from 30,131 in 1975 to 73,008 last year, the state Department of Commerce says.

Raymond Palino, director of research for the department, says growth in temporary services has far outpaced growth in any other sector of the state economy during the period.

Temporaries are used extensively in many fields, including mechancial design, assembly, engineering, as well as clerical work.

Uniforce Temporary Services Inc. of New Hyde Park, N.Y., said a recent survey found that 19 percent of the companies surveyed planned to increase their use of temporary workers. Half the projected increase was in secretarial and clerical work, 35 percent in light industry and 15 percent in data processing.

The primary reason for the growth in temporary services is that a company can improve its bottom line with temporaries, said Robert Risely, chairman of personnel studies at the Industrial and Labor Relations School at Cornell Univeristy in Ithaca, N.Y.

Companies that use temporaries do not have to pay benefits, such as health insurance, unemployment compensation, payroll taxes and pensions, nor do they incur hiring costs for recruiting, screening and training.

Bever, who lives in Duanesburg, N.Y., receives his paychecks from TAD Services, a firm based in Cambridge, Mass. TAD deducts for payroll taxes, but Bever handles his own retirement planning and insurance for his wife and two children.

Risely said that the best part of temporary services for companies is that when business slows down the company can get rid of workers painlessly.

Labor costs amount to 75 percent to 85 percent of total operating costs for most manufacturers, he said.

″The nature of business is up and down,″ he said. ″Use of temporaries allows a manager to cut costs quickly.

″That’s especially important to companies that pride themselves on an image of stability, such as IBM,″ he said. ″IBM balances downturns on the backs of its temporary workers.″

Risley said the majority of the nation’s biggest companies use temporary agencies, with a growing number maintaining their own temporary work forces.

Frank Liguori, president of Olsten Services in Westbury, N.Y., one of the biggest temporary service firms, says that is an efficient use of labor.

Liguori says that during the 1970s U.S. companies lost control of labor costs. He pointed to the auto and steel industries as examples of industries with what he called excessive wages, benefits and job rights.

″You must be able to control labor to stay competitive, ″ he said.

By using temporaries companies can operate ″just-in-time″ staffing, meaning they can add labor when they need it and in the exact amount they need.

But that analysis, says John Zalusky, an economist with the AFL-CIO in Washington, D.C., treats people like raw materials.

Employers who use temporaries as an alternative to full-time employment lack a social conscience, he says.

He contends that many people who offer themselves as temporarie do so because that cannot find full-time work. Temporaries receive lower salaries, fewer benefits and are often ″stigmatized as inferior,″ Zalusky says.

Unions oppose using temporaries in place of full-time workers, but Zalusky concedes they can do little to affect the trend.

Alexander Courtney Jr., president Tri-City Manpower Inc., an Albany-based franchise of the Manpower Inc. temporary service operation, disagrees with Zalusky’s characterization. Courtney says most of his temporaries are people looking for a flexible workstyle, such as housewives or retirees or young workers seeking initial experience.

He said at one time it was true that people turned to temporary work as a last resort. ″During the 1982-83 recession we had Ph.D.’s doing clerical work,″ he said.

Today, though, the stigma is waning, due in part to new demographic and technological changes.

Courtney and industry watchers say that by the end of the decade the demand for labor will outpace the supply in many fields. Already there are shortages of workers with training in word processing and computer operation.

Manpower Inc., based in Milwaukee and the leading company in the field with $1.5 billion in annual revenues, has begun to train temporaries in these fields and is acting as a labor broker to U.S. companies.

A key to the strategy is trying to retain trained workers by providing higher salaries and more benefits. As a result, Courtney says, the temporary labor force is becoming less transient.

Could there come a day when a big percentage of workers seeks temporary work?

Probably not, Courtney says. He says that although career temporaries are increasing, the practice is generally limited by individual preferences.

Bever says job shopping requires independence.

″This is not for someone who feels the need to settle in,″ he said. ″But I wouldn’t have it any other way. I’ll probably always be a temporary.″

End Adv Weekend Editions April 19-20

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