Daily Gains Letter

How You Can Profit from This Trend in the Labor Market

By for Daily Gains Letter |

Temp Workers a Benefit to Your PortfolioCompanies like ManpowerGroup Inc. (NYSE/MAN) and others in the staffing and outsourcing industry are set to earn big profits as the emerging trend of temporary workers continues to grow in the U.S. economy.

In the aftermath of the financial crisis, a significant number of people in the U.S. economy were let go from their jobs. The reason was simply because companies didn’t have customer orders to fill, so they had no other options than to reduce their labor force to cut expenses. The unemployment rate in the U.S. economy reached 10%, and there were worries that it wouldn’t ever get back to its historical normal range.

But now we are seeing the jobs market in the U.S. economy slightly improve. The unemployment rate has come down a little—though it’s still high—to 7.6% in June.

In the midst of all this, a new phenomenon has emerged: the rise of temporary jobs. And it has not really been discussed in the mainstream media.

Consider that in June, there were 2.68 million individuals in the U.S. economy working in the temporary help services sector. You may know temporary help services by their more common names: placement agencies, employment agencies, or temp agencies. (Source: “Professional and Business Services: Temporary Help Services,” Federal Reserve Bank of St. Louis web site, July 5, 2013, last accessed July 10, 2013.)

The number of individuals in the U.S. economy working through a temp agency has been increasing, and in June it reached its highest level since 1990. In the first half of this year alone, the number of Americans working for temp agencies has increased almost four percent, from 2.58 million. Since January of 2009, this number has increased more than 36%, from 1.96 million. (Source: Ibid.)

That, of course, will lead to companies that specialize in staffing making more money.

It’s important to understand how temp agencies operate. When an individual is hired by a temp agency to work for a firm, the firm provides the temp agency with compensation. The temp agency then takes a certain cut and gives the remainder to the employee.

And temp work will increase in the near future. Businesses in the U.S. economy are still under pressure and trying to cut their expenses to improve their profitability. When they hire a temporary worker, they don’t have to give them benefits, which can save them a lot of money.

According to the American Staffing Association, in the first quarter of 2013, employment agencies in the U.S. employed approximately two percent of the workers in the U.S. economy. This has increased 2.9% from the same period a year ago. Looking at the monthly differences, the number of people working for placement agencies in June was up 6.7% from a year ago. (Source: Chumley, C.K. “New U.S. economy: Part-time and temp job markets explode,” The Washington Times, July 9, 2013.)

The time to profit from the boom in temporary workers is now. The signs from the U.S. economy point to companies using more and more temporary workers.

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