Could lead to a rise in contractors so employers aren't on the hook for benefits... although I'm not sure how that would fit into the overall count or number of employees, which for smaller companies could determine if they're responsible for providing benefits at all or subject to the penalty. Could also cause a rise in PT employees, for the same reason. We'll see.
John, great question. IMO, as a 32 year perm Fortune 500 corporate sector supporting 3rd party recruiter I see the hiring trend as follows.
Unless it's an industry where the demand is far greater than the supply of candidates companies will only add to staff superstars or "rain makers." They don't want to add to staff by nature as the average cost of Obamacare increases roughly 12K per employee per year for healthcare coverage. Assuming an average 75-25% premium split, 9K or 75% incurred by the employer, 3K or 25% by the employee. As a result, with the plentiful numbers of candidates milling around looking for work for awhile it will be hiring paradise for employers not needing recruiters as much either able to fill their jobs on their own or not having any hiring needs due to the economy.
The trend is contractor, temporary, and/or part time. It's why retail companies are cutting their employees hours back to 28 per week to avoid the Obamacare mandate, Here in Massachusetts if an employee works more than 20 hours a week they're entitled to all the benefits the head of the company has. So if they have a 40 hour a week job they're looking to fill? They hire two 20 hour a week employees instead of one 40 hour.
The 'game changers' will have perm employment, they're driving the business and either the best there are or able to perform multiple tasks adroitly doing the work of more than one employee. Otherwise, everyone else becomes a career transient nomad working 6 months in Seattle, 4 months in San Doego, 9 months in Chicago. Or, able to work remote from home supporting companies in those locations--just not as a permanent employee.
Obamacare, IMO, is a jobs killer--certainly perm jobs. It's a major reason I supported Romney. It adds drastically to the cost of doing business which like taxes, government regulations, and other government mandates all contribute to a profit motive disincentive thus discouraging adds to staff.
Just my five cents.....passing along Obamacare's cost to all of the other readers.
Well said Bill. I couldn't agree with you more. I'm division manager for a staffing company providing both permanent and temp placement services in a variety of key industries. We've actually had to hire two additional employees just to field requests from employers interested in our temp service. I think there is no question that the coming trend will be in the temp/contract area.
One recent story in the Harvard Business Review suggested that by the end of 2015, as much 70% of the workforce will be on some sort of temp/contract/part time basis. I don't necessarily believe it'll be that high, but it is interesting that the majority of Fortune 500 companies have increased their temp staff by 30% in 2010-11 alone. What do they know that smaller businesses do not?
It'll be interesting over the next 18 months to say the least!
Contract will go up along with the hourly rate for those contractors.
One question for Bill - where are the " plentiful numbers of candidates milling around looking for work"? In IT, Manufacturing and Engineering there is no surplus. Candidates are hard to find - and can often name their price.
Jerry, excellent question, as always, from you.
The shortage problems with Engineering and Manufacturing are primarily due to so many companies offshore outsourcing their manufacturing operations to places like China there becomes a dearth of qualified professionals here.
I recruited for a medical devices company through a recruiter I'd worked together with extensively in I/T for a major investment/financial services company in the past who'd switched. Looking a lot for Manufacturing and Quality as well as new product Designer Engineers. Many of their competitors do the actual manufacturing in China assembling the product here. Thus, a shortage of qualified candidates able to perform 95-100% of the job, which was a managerial requirement since they had no time, staff available to train, or formal training budget.
So IMO, Manufacturing and Engineering that remain here will have trouble finding people ultimately being forced to increase salaries to attract candidates, import H1B visa workers, hire contractors till finding that rare superstar open to the opportunity, figure out they may as well fund training programs and promote from within, and/or offshore outsource their operations completely to where the cheapest/most intelligent labor is in a profitable business climate. You'll have jobs to work on, and unless the managers are flexible/reasonable you'll have trouble finding the right person.
I/T will be vibrant from a software development standpoint as most of the infrastructure and data centers/operations are elsewhere including overseas. Again, they'll hire superstars for perm, otherwise contractors and many contractors will never go perm as they don't have to being in demand. So big problem with I/T with good people? Controlability.
As a 15 year recruiter I am constantly reminded how many people make career choices based on the availability of healthcare, vs other more reasonable factors like is the job a good fit for their skills and interests? I think with Obamacare going nationwide, more companies will participate in insurance exchanges (ie, choose to pay a penalty vs. providing healthcare directly), that candidates will get their own healthcare, and that it will become separate from the employment arena, which is going to be best for everyone. In this respect, the Canadian model works well.
I am a search firm owner and know that the impact on our industry will be huge, and possibly negative on the staffing side, at least in the short term. Nevertheless I remain confident in the ingenuity of the professionals in our business, and their ability to think of creative solutions to this challenge. I am excited by Obamacare and the chance for the under and non insured to get coverage; when healthcare costs are the leading cause of bankruptcy in the country, something is drastically wrong.
I disagree in that IMO job loss leading to unemployment/underemployment is the greatest cause of bankruptcy.
Yes, I do agree that possibly all employees could be on their own for benefits as many employers will drop healthcare forcing people onto government exchanges with time telling how healthcare works out under government control, so long as the fine is much lower than employee insurance premium cost as currently set up. I've seen the Post Office in action, it isn't pretty.
As to covering the unemployed/uninsured, great, 30 million more insured. However, many doctors able to afford to retire will get ouf of medicine due to drastically cut reimbursements among other things already having a serious doctor shortage currently. So lots more people covered, lots fewer providers to treat them.
As to how it impacts our recruiting business, for both the companies providing benefits and those paying the fine (which will rise in time, IMO) raising costs of doing business is never positive for companies adding to their payroll or our industry, IMO. I see an unalterable trend away from full time perm and towards non employee oriented work arrangements as businesses do what they always do till offered a profit incentive to employ workers.
Creatively find their way around government anti profit/business legislation.
Looks to me like there's never been a better time to look into placing contractors. :)
Jerry, I agree.
In my perm Defense Engineering recruiting trying to survive Obama's systematic destruction of it through defense cuts, sequestration, and their Obamacare preparation over the last 4 years I see contracting as one of the only future sweet spots.
It's a totally different world than perm, but I've found in my recruiting years necessity is the mother of invention.
Per Harvard study, largest causes of personal bankruptcy in US:
1) Medical expenses
2) Job loss
3)poor/excess use of credit
5) unexpected expenses
As mentioned elsewhere on this blog, as well as the cost to employers of Obamacare, let's not forget the benefits of a healthier workforce.
bill josephson said:
I disagree in that IMO job loss is the greatest cause of bankruptcy.
Yes, I do agree that eventually all employees will be on their own for benefits as many will drop healthcare forcing people into government exchanges with time telling how healthcare works out under government control as long as the fine is much lower than employee insurance premium cost. I've seen the Post Office in action, and it isn't pretty.
As to covering the unemployed, great, 30 million more insured. However, many providers able to afford to retireme will get out of their practices with drastically cut reimbursements whereas we already have a serious doctor shortage at present. So lots more covered, lots fewer providers to treat them.
As it impacts our recruiting business, for both the companies providing benefits and those paying the fine (which will rise in time, IMO) raising the cost of doing business is never positive for companies adding to their payroll, IMO. I see an unalterable trend away from full time perm and towards non employee oriented work arrangements as businesses do what they always do.
Creatively find their way around government anti profit/business legislation.
Oh boy. Trying to not go too political here... but I have to say that if you think "everyone" being covered by Obamacare or any kind of insurance is going to guarantee a healthier workforce, that's just naive. Having healthcare will in no way insure that people stop smoking, start exercising, eat healthier, etc.
Other than that I agree with Bill and Jerry. Also, wonder how many bankruptcies could be avoided by people just making better choices - period. But that's a post for another time. :)
Of course, if you are payrolling these contractors, you are in the same boat. Temp services will feel the pinch.