CWS 3.0: March 29, 2011 - Vol.3.8

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Because You Asked: Healthcare for Temps

Dear Worried,
 There's a misconception that temporary workers are assigned health benefits. Here's the catch. If end users of contingent labor required their staffing agencies to provide benefits to temporary workers assigned to its site, they would comply. But this would mean increased bill rates as staffing agencies pass on the enlarged overhead.

Here's how the benefit landscape is drawn among staffing firms. According to a Staffing Industry Analysts 2009 survey, in general, larger staffing firms offer more generous health-related benefits. For instance, among staffing firms in the less than $2.5 million revenue range, only 19 percent offer subsidized medical insurance to their temporary workers. At the other end of the size spectrum, among staffing firms in the $1 billion or more revenue range, 46 percent offer subsidized medical insurance.

The most common benefit provided to temporary workers is paid vacation, which is offered by 57 percent of staffing firms. Dental insurance and unsubsidized medical coverage are also offered by a bare majority of staffing firms.

Sixty-three percent of staffing firms either offer no medical insurance at all or only offer unsubsidized insurance. Another 12 percent of staffing firms offer temporary workers both subsidized and unsubsidized medical insurance, probably depending on length of association with the firm and/or skill level. The remaining 25 percent of staffing firms offer temporary workers subsidized medical insurance exclusively. In general, 25 percent of staffing firms say the medical insurance they offer temporary workers is identical to that offered to their internal employees.

The fact of the matter is that benefits offered to temporary workers vary markedly by skill segment and industry served, with higher paid temporary workers generally getting the best benefits. In terms of skill segments, staffing firms primarily selling information technology skills typically offer the best benefits packages. Staffing firms primarily selling industrial skills generally have the least generous benefits.

End users of contingent labor are under no obligation to provide benefits. It's a quirk of U.S. history that led to benefits being attached to employment. After WW II, the U.S. government tried to keep wages steady. Unable to increase workers' pay, employers instead started doling out benefits. It then transpired that companies could expense it as a tax deduction and the rest is history.

If you did a quick poll among your peers -- CW managers -- you would find that most don't ask their staffing firms to provide benefits for the workers they place. It's not how that works. Changing that equation could prove costly.

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