Obamacare a Huge Boon … For Temp Staffing Companies



There is no law or regulation so well thought out and iron-clad that desperate business owners trying to make a living can't figure out some way to soften the costs and burdens it imposes on them. When you're talking about Obamacare/the Affordable Care Act, there are lots of intrusive rules to consider — but a major concern for employers has been the mandate that companies with at least 50 employees must offer "affordable" health coverage or else cought up a penalty. That's potentially a major expense for companies, since Obamacare also seems to be driving an increase in health care costs. The solution to that dilemma … Well, let me quote an Investors Business Daily story from last week, noting that "[t]he bullish outlook for staffing firms is reflected in their current stock prices. The 20 stocks in IBD's Commercial Services-Staffing group are trading at a five-year high. The group's value has risen about 40% over the last four months." In fact, that stock market vote of confidence seems based, at least in part, on the fact that temp workers aren't included in the law's mandated coverage.

Writes Jay Hancock at the Washington Post:

The health-care law could prove to be a boon for temporary-staffing companies as employers outsource jobs to sidestep complex requirements for medical insurance.

But some experts say the Affordable Care Act's exceptions for temporary employees could undercut the goal of expanding coverage to more American workers.

"That could lead to an increase in part-time workers" who lack insurance, said Susan N. Houseman, an economist at the Upjohn Institute for Employment Research who studies staffing companies. "You regulate something and people will always try to find a way around the regulation."

Starting in January, employers with at least 50 workers must offer affordable coverage or pay a penalty. To stay under this limit, some are considering outsourcing jobs to specialists such as Kelly Services, Manpower, Robert Half and Randstad, whose stock prices have soared.

"We are already getting inquiries from our client base for companies in and around 50 [employees], asking us to help them understand this legislation, and to inquire as to how we might be helpful," M. Keith Waddell, Robert Half's president, told investors on a conference call a few weeks ago. "Our response is that we can legally help them remain under 50."

This is not a unique development, by the way. In parts of Europe where labor regulation is especially onerous, temp workers have become the norm, laboring month to month with minimal pay and benefits, because hiring them full-time would bind employers to expensive long-term — even life-long — commitments. In Spain, such workers are traditionally called mileuristas for the 1,000 euros they earn per month. In 2011, NPR reported on just this issue:

Spain has a two-tiered labor system. Workers have either temporary contracts or jobs for life. It's a key issue in national elections Nov. 20. But it's also the third rail of Spanish politics, where unions are powerful, Allard says.

"When somebody talks about labor-market reform, they think they want to turn the market into something like the U.S. market," she says. "But what they don't realize is that they've got 30 percent of their workers with no job security whatsoever, in really inferior conditions, so that the others can enjoy the kind of job security that they have."

Thank you, President Obama, for driving growth in at least one industry. In the future, we may all be temps. But next time you want to bring a little bit of the European lifestyle to the United States, may I suggest tailored suits and paella?