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Employment Agencies: The Seventy-Five Percent Solution?

Updated on January 29, 2011
More jobs?  Not really.
More jobs? Not really.

In today’s misleading figures category, recent reports indicate there has been some modest growth in the number of new jobs in America. That’s good. When one drills into the numbers, however, it becomes apparent that while jobs have been added, many of these positions are with employment agencies. And, that’s bad.

Why? Across America, many corporations are creating employment agencies for the sole purpose of “on-boarding” personnel at substantially less cost. When one factors in the reduced cost to the company for benefits, which in some cases are virtually non-existent, the actual savings per “head” could be close to 40%.

Case in point: Cara is an accountant with XYZ Corp. With 12 years tenure, her salary is in the low fifties, and she enjoys a liberal benefits package. That all changes when Cara and many of her colleagues are “down-sized”. Cara signs up for unemployment compensation and registers with several job boards. Among the jobs listed, she sees an opening for an accountant with a company called Labor Flux, which it turns out, is a wholly-owned subsidiary of XYZ Corp. Cara applies, is offered the position, and within a week is back at her old desk, doing the same job as before. At 75% of what she was making previously. And, with few benefits. No holiday pay, no sick leave, no matching 401K contributions.

It gets worse. Aside from the smaller paycheck and benefits package, many of these positions “offer” the following:

* On-call status; one must call in every morning to determine if they’re to report that day. No work, no money.

* Fewer and smaller salary increases.

* Little or no opportunity for advancement.

* Some of these positions are considered contractor status, which means no access to unemployment compensation and other employee rights afforded full-time workers. Also, it’s much easier to “fire” an employee that was never legally an employee.

When the Bureau of Labor Statistics reports new jobs, maybe they should only count these as 75% of a job, because in reality, that’s what they are; same job, three-quarters pay.

For those who’ve been unemployed for some time, these “almost jobs” could be a stepping stone to better things. So, take it. Use it. Learn from it, and parlay it into something better.


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