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Why Skilled Temps Are Seeing Wages Stall

Fortuneteller in hiring process . / Credit: Hiring process cartoon via Shutterstock

Because skilled temporary workers enable businesses to quickly add or subtract key capabilities on an as-needed basis as demand fluctuates, they are often considered bellwethers of future economic activity. As the economy strengthens, wages for these temps should increase.  But in spite of the recent reported employment gains, an index of real-wage growth among skilled workers shows continued stagnation in salary rates. What’s the disconnect?

Yoh, a specialized workforce solutions arm of Day & Zimmerman, has been tracking wage increases for skilled temporary workers since 2001. The Yoh index for the last quarter of 2011 barely budged from the same quarter in 2010, posting only a 1.15 percent increase.  How can employment be surging according to some sources, while real-world tracking of actual wages remains flat?

Much of it has to do with the employment participation rate, which now stands at 63.7 percent, currently at the lowest point since the early 1980s, Yoh said. An artificially low employment participation rate decreases the unemployment rate by reducing the total number of people looking for work. Whatever the cause, the fact remains that there’s still incongruity between what the government is reporting in job growth, and what companies are seeing in the real world.

[Contract vs. Employees: What You Need to Know]

What are the real forces keeping American employment down? A recent survey of 100 executives of U.S. companies commissioned by Yoh found that systemic uncertainty over the economy and structural inefficiencies with the hiring process continue to suppress U.S. employment, and threaten to do so well into the future.

"This institutionalized lag might continue to be a drag on economic recovery and could cost corporations billions of dollars in lost opportunities,” said Lori Schultz, president of Yoh. "In large part, this delay is due to poor workforce planning, an area of enterprise management that has not kept pace with other business practices, such as logistics, supply or distribution."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.

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