Temporary employment agencies see an uptick

 They're doing better as companies gain the confidence to hire again — just not permanently. But bigger temp agencies are competing now with the small fry.

Joe Cummings, chief executive of Royal Staffing Services Inc., interviews a job seeker at his Westlake Village employment agency. Business has "been consistently on the rise since September," he said. (Al Seib, Los Angeles Times / January 10, 2011)

At Royal Staffing Services Inc., an employment agency in Westlake Village, more requests are coming in for temporary workers. And the agency has no trouble finding people to fill the jobs.

On a recent morning, agency Chief Executive Joe Cummings got a phone call requesting two $14-an-hour customer service representatives with good computer skills. The client wanted temp workers who could be hired permanently if they worked out.

"Within 20 minutes they had two resumes, and 10 minutes after that we had two interviews scheduled," Cummings said.

Business, he said, has "been consistently on the rise since September."
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Agencies that provide temporary staffing are benefiting from the fact that companies are feeling more optimistic about their short-term prospects but not confident enough to add permanent workers.

"The new reality is people have been much more resistant to bringing on permanent employees than they have been in the past because of the uncertainty of where the economy is going," said Michael Neidle, president of Optimal Management, a San Mateo, Calif., consulting firm for small- and medium-size staffing companies.

The number of temporary workers jumped 25%, to an average of 2.6 million a day, in the third quarter of 2010 compared with the same period a year earlier, according to the American Staffing Assn.

Neidle estimated that temporary workers would make up 4% of the workforce within three years, from a low of 1.65% before the recession.

In Torrance, staffing agency owner Amy Zimmerman said sales on the temporary-employment side of her business, which accounts for about 70% of her revenue, were up 8% in 2010 compared with the year before.

"The temp side is going to be growing big time this year," said Zimmerman, who founded Amy Zimmerman & Associates in 1993. She said her manager was at the time filling six temporary technology positions.

Temp workers, whose average stint last year was 12 weeks, cost companies 8% less than permanent workers on average because they usually don't get benefits, Neidle said.

Clients pay a staffing company a service fee, plus enough to cover a temporary worker's wages, payroll taxes, unemployment insurance and workers' compensation fees.

Now that the temp business is up, there are fewer small agencies to go after it. Experts estimate that about a third of those that existed in California before the recession have shut their doors.

But that doesn't mean the survivors will have an easy time of it. Clients have become more aggressive about negotiating fees and other costs.

"It's much more cutthroat and intensive," said Randy Hopp, president of Culinary Staffing Service in Los Angeles, which provides special-event food service workers for hotels, country clubs and universities.

Another problem for local staffing agencies: Some of the large, nationwide agencies are competing for smaller jobs they didn't used to consider worth their while.

"What used to be bread crumbs from them is what the independent ate for dinner," said Tom Tassinari, who runs Synergy Solutions in Tustin with his wife, Michele. "Nationals are more willing to compete in those areas" now.

The Tassinaris cut their salaries entirely during the recession. They've partially reinstated them now that business is picking up. But after watching overextended competitors close their doors, they remain focused on cash flow.

Said Tassinari: "I have some very good relationships with some people in accounts payable that I didn't have before."