We hear a lot about artificial intelligence, alternate staffing models, new technology, social media and other trends. Here are some other futuristic ideas that have not been discussed widely but could present new and expanded opportunities for staffing firms that anticipate and prepare for them.
Guest Worker Program
When the immigration issue is eventually resolved, many people currently not authorized to work in the United States will probably receive some kind of work authorization.
A few years ago, I received a letter from the Council on Foreign Relations suggesting that the staffing industry could be a key player in the management of a guest worker program in the United States. I am sure that my approach would vary from theirs, but it was an intriguing idea, and it makes a lot of sense.
In the early 20th century, there was very little employment law. Today, it is hard to find any aspect of employment that government does not regulate or operate. Most American employers are in some business other than employment itself. They try to comply with the ever-increasing body of employment law, with varying and limited degrees of success. For nonstaffing companies to employ guest workers would be to invite low levels of compliance given the separate set of different rules that would be involved in such a program.
Staffing firms, on the other hand, are employment law specialists, because employment is their product. They are accustomed to working with temporary, transient and low-income workforces. They onboard new employees every day. With a few outlying exceptions, staffing firms have an excellent record of employment law compliance in multiple legal jurisdictions and are trusted by government. Indeed, in its 1997 policy guidance on contingent workers, the Equal Employment Opportunity Commission seems to “deputize” staffing firms to educate and counsel clients on the front lines of employment law issues. The staffing industry is present everywhere, with more than enough capacity to absorb the guest worker population. Concentrating guest labor employment in the staffing industry would be an efficient way to satisfy both the government’s and society’s goals.
The general idea of a special program for guest workers is not unprecedented. The 20th Century’s Bracero program for Mexican seasonal farm workers (launched before the birth of the modern staffing industry and terminated in 1964) and the modern H-2A visa program were less than comprehensive attempts to deal with the issue.
A leading role for the staffing industry in immigration reform will emerge only if the industry proactively promotes it. The industry is experienced and effective at resisting and diluting hostile legislation, but it has not done much to promote helpful legislation. A guest worker program could be organized in many different ways, some of them bypassing our industry, so it will be better for us to be writing the menu of designs than to simply be on that menu.
Degree Not Required
Under federal labor law, all tools for the selection of candidates for employment and promotion must be “validated,” proven to actually predict the candidates’ job effectiveness without unnecessarily discriminating against minorities. Despite that legal principle, educational degree requirements have persisted as employment selection tools without much validation or enforcement against their unvalidated use.
Arguably, education — especially higher education in nontechnical, nonprofessional fields — has become less valid than ever. Think of a graph plotting the cost of education against its value. For many years — even decades — the cost line of a college education has risen sharply, while the value line of what the education contains, stands for and is worth in the economy has been going down. If these lines have not already crossed, surely they will soon.
When employers, students and other institutions fully realize what has happened, they will reach a tipping point where some very influential institution or firm will declare that — except for professional training like law, medicine, science and engineering — it no longer cares at all about academic degrees. When that attitude spreads, employers will want to know exactly what candidates can do, what their aptitudes are, and what practical skills they have — tools that are much more valid than degrees.
Some tools already exist for measuring these things, such as SATs, personality tests and other selection tools. But they are products used by the staffing industry rather than an essential part of the staffing industry’s product. The staffing industry could become the go-to source for the measurement, validation and even creation of employee talent. If it does not embrace those functions, other firms will fill the vacuum, as the VMS/MSP movement filled customer needs that staffing firms had neglected.
The need for massive infrastructure repair in the United States is undeniable, yet the record of past infrastructure projects, with some exceptions, is discouraging in terms of cost, speed and quality. In just 60 minutes, in total darkness and silence, Army engineers can build a bridge that carries tanks over a river. Why does it often take years to build even small pieces of civilian infrastructure?
Nontraditional private firms may be able to finish projects early and under budget on a national scale. To do that for a large number of infrastructure projects will require labor flexibility and portability. Temporary employees are believed to be harder working per unit time than so-called “permanent” employees; infrastructure work could be a dramatic way for them to prove that. Creativity of the type displayed by Tesla Motors founder Elon Musk might also be brought to bear, even though infrastructure may not be as exciting as his projects.
Because of vague laws and inadequate enforcement, there is widespread misclassification of individual workers as independent contractors instead of as employees.
Independent contractors are about three times as numerous as temporary employees, yet few of them work through staffing firms. Some staffing firms broker independent contractors, and they are doubtless more conscientious about proper classification than nonstaffing employers, but this is a risky line of business. It is legally safer to insist that all assigned workers be W-2 employees, and many staffing clients impose that condition on staffing suppliers. Such strict conditions turn away many workers who prefer independent status.
A few staffing firms have experimented with a hybrid model whereby workers become W-2 employees but otherwise function as independent contractors — arranging their own assignments, channeling expense deductions through the staffing firm, and accepting wage payments net of expenses and burden items (calculated by a reverse payroll algorithm) only after clients pay for their work. This approach is not inherently abusive, but current employment laws do not accommodate it, making several aspects of the hybrid model technically illegal.
The market for staffing would greatly expand if legislation were enacted to legitimize the hybrid model and to base independent contractor status on clear and objective factors.
Poised to Profit
Aside from its employment product, the business of staffing (other than PEO) is still relatively free legally. It boasts extremely easy entry, few union challenges, a wholesome product and virtually no direct regulation. Although both major political parties have proliferated employment laws, the proposals that are the most threatening to staffing are likely to be placed on hold during the present hegemony of the Republican Party in the federal government and many state governments. The art of exploiting future opportunities will be in staying free and avoiding public utility status while proactively inspiring government action that creates or facilitates new staffing business.
Operationally, things are also bright. Unemployment and workers’ compensation costs have been trending down. Technology is helping to make the high transaction traffic of staffing more efficient. Millennials’ attitudes toward work are especially compatible with temporary and contingent labor arrangements. Seniors are becoming more available for work as their lack of savings and the uncertain future of entitlements threaten their economic security. And a more vigorous benefit plan market with greater flexibility for contingent workforces may emerge during the gradual erosion of the Affordable Care Act.
Staffing is in an historical heyday, but it can make that success even greater with vision and initiative for exploiting exciting opportunities.