Another year has come and gone, and jobs are still in the news. It’s time once again for Top Echelon Contracting’s predictions for jobs and recruiting in the new year.
We have worked in the staffing industry and tracked trends for the past 21 years. Based on our statistics, discussions with recruiters, and industry data, here are our predictions for 2014:
- Continued growth of contract staffing. Last year was a record-breaking year for contract staffing, and there is no end in sight to its growth. According to CareerBuilder, 42% of employers plan to engage contract workers in 2014. Our own data backs this up. We saw more direct hire recruiters making their first contract placements in 2013, and an increasing number of recruiters are contacting us about adding contract staffing services to their business models in 2014. Clearly, this is no knee-jerk reaction to the recession. It is becoming a permanent business strategy. We are seeing more companies building blended workforces that include BOTH contractors and direct hires. The common workforce model that is emerging is one in which companies maintain a small core of direct hires supported by a larger outer ring of contractors. To read more about this trend, subscribe to our newsletter, Contracting Corner where we will take a closer look at this workforce model in an upcoming issue.
- Companies cautiously optimistic.The economy ended on a good note in 2013 . The unemployment rate fell from 7.3 to 7 % in November. Citing Department of Labor (DOL) stats, Recruiter.com reported that job openings near the end of 2013 reached their highest level since March 2008, and hiring overall had increased 5.2% in 2013. Despite those encouraging signs, there is still an air of caution as another debt ceiling debate brews in Congress. This uncertainty is one of the factors that is driving contract staffing. By utilizing contractors, companies can complete projects and meet critical deadlines without making a long-term hiring commitment.
- Tight candidate market in STEM. While hiring may be tentative in many industries, it’s hot in the growing STEM (Science, Technology, Engineering, and Math) arena. Finding candidates with the specific technical skills required in these sectors is very difficult, and competition for talent is fierce. Recruiters who specialize in these areas are in high demand. The project-oriented nature of the work will likely drive the growth of contract staffing even further. Many candidates in these industries actually prefer contract staffing because of the flexibility it provides for work-life balance, plus they earn more money by being paid for every hour they work.
- Crunch time for Obamacare. Employers got a reprieve last year when the employer mandate provision of the Affordable Care Act (ACA) was delayed until 2015. Now that the new deadline is looming, it will be time once again for them to take a closer look at their workforces and how they will navigate the complex law. The employer mandate will require organizations with 50 or more full-time or full-time equivalent employees to provide healthcare coverage for those employees. Companies will have to determine whether to play (provide healthcare), pay the penalties for not providing healthcare, or somehow find a way to reduce their workforce below the 50-employee threshold. This is another factor that could hold off direct hiring and accelerate the use of contractors. Because contractors are the W-2 employees of a staffing firm or a contract staffing back-office, they don’t count toward a company’s 50-employee threshold. Obamacare-compliance for the contractors becomes the responsibility of the staffing firm or back-office.
- Continued scrutiny on worker classification. Nothing new here, but the government’s continued vigilance against independent contractor (IC) misclassification will be an important factor for all employers and recruiters in 2014 and beyond. The loss of tax revenue caused by worker misclassification continues to compound, and the federal and state governments want their money. The stakes keep getting higher as the Department of Labor and a number of states have agreed to work with the IRS to enforce proper worker classification. If you have clients who are misclassifying W-2 employees as 1099 ICs, you can help by offering to convert them to contractors who are W-2 employees of a contract staffing back-office.
It appears that 2014 has the potential to be a very good year for recruiters, particularly for those who can provide contractors. We wish you a Happy New Year full of success and growth.
Originally posted by Top Echelon Contracting.