DCR Workforce May 2013 Trendline Report

“ “
In this month’s edition of TrendLine we once again provide you with key insights into the
temporary staffing industry, highlighting our latest research on pivotal trending themes and
current events. Along with an in-depth analysis of contingent worker supply and demand, we
bring you predictive forecasts of wage trends and market standing.
Our first piece presents to you the DCR National Temp Wage Index, a statistical tool designed
to provide you with a pulse of contingent worker wage history and predictions. We also
briefly discuss various factors that affect contingent workforce economics including proposed
immigration regulations, the changing nature of work and the growth of small businesses.
Many workers from other countries who want to immigrate to the United States refer to the
month of April as “H-1B month”. This topic is particularly interesting this year as lawmakers
are currently discussing several pieces of immigration reform legislation. With that in mind,
our featured article this month dives deep into The Immigration Innovation Act (“I-Squared”),
exploring the rationale for its creation and the impact it would have on the job market. Look for
our examination of the different viewpoints regarding this regulation.
The next article focuses on the optimism felt by human resource professionals as they look at
the recent economic recovery. We examine the prospects of increased hiring in 2013 through
the interesting lens of the average workweek length. Keep an eye out for our graph on growth
areas of temporary jobs.
As a continuation of our articles from the March 2013 edition of TrendLine, “Hopelessly
Unemployed: A Missed Population in Calculation” and “Unemployment Rate through a
Different Perspective”, we continue our investigation into the calculation method behind the
official unemployment rate. We question the facts behind official claims as they relate to
unemployment and also explore the legitimacy of numbers behind job creation claims.
Our final article this month observes the composition of total compensation costs for private
and public employers, underlining the industries that dole out the better benefits.
Ammu Warrier
Ammu Warrier, President
Inside this Issue
Note from the Editor
DCR National Temp Wage Index
I-Squared: Spoiling or Saving
the U.S. Economy?
Economic Recovery brings
Optimism to Temp Employment
Unemployment Crisis:
Unearthing the Facts Behind
Official Claims
Public or Private: Which
Type of Job to Opt for?
1
2
4
7
8
10
“I am optimistic that this is
going to be the year that
really makes a difference and
we start to take off towards
the end of this year”
~Charles Evans,
President and CEO of the
Federal Reserve Bank of
Chicago
REPORT # 15 | May 2013
TRENDLINEContingent Worker Forecast and Supply Report
Note from the Editor
Trend Line: Contingent Worker Forecast and Supply Report. © DCR. All Rights Reserved - 1

“The number of contingent employees will increase worldwide. In the U.S. alone, contingent workers will exceed 40 percent of the
workforce by 2020. Traditional full-time, full-benefit jobs will be harder to find.”
~Intuit 2020 Report
Pending new immigration regulations would help to alleviate gaps in current law by giving employers a method to bring in
foreign workers for year-round jobs. The new W-visa program would admit 20,000 low-skilled foreign workers into the country
starting in 2015 and could gradually reach a cap of 200,000 in five years. Depending on unemployment rates, job openings,
employer demand and other data, the numbers of visas could fluctuate. The current H-1B visa program for low-wage workers
is capped at 66,000 per year and only applies to temporary or seasonal jobs. The instillation of this program would increase
the flexibility for employers to bring workers on board as and when required, and also keep the employment interests of U.S.
workers intact.
Experts anticipate that most of the foreign workers taking advantage of this new program will come from the nearby countries
of Mexico, Jamaica and Guatemala. Predictions are that the construction industry, which is more seasonal in nature, has a higher
chance of employing such workers. The majority of the opportunities created through the proposed W-visa program would
be in areas such as long-term care, the hotel and restaurant industry and other low-wage service sectors. Temporary foreign
workers are expected to obtain a higher preference over local workers due the versatile nature of their acceptance of job duties
and wages.
Over the first quarter of 2013 the temporary workforce population continued to increase at a rate of approximately 18.4k per
month. On a year over year basis (from Q1 of 2012 to Q1 of 2013), the national temp workforce has increased by 158.8k. This
shows a clear upward trend with a consistent demand for temporary workers. As per our wage prediction, the DCR National
Temp Wage Index, temp wages will continue to rise throughout the current quarter as well.
Recently, spurred by Yahoo, the debate over telecommuting has unearthed an interesting issue, related not to workplace
flexibility but to the essential nature of work itself. Permanent freelancing and temporary work is a rapidly growing sector of
the American workforce. In 2006 there were 42.6 million independent and contingent workers, accounting for 30% of the entire
American workforce. Over the last three years (2009 to 2012), the number of temporary employees rose by 29% and a survey
of 200 large companies found that, on average, temp workers accounted for 22% of each company’s workforce (historically
comprised almost 100% of permanent employees).
The Conceivable Impact of New Immigration Regulations
A Nation of Temporary Workers

In March 2013, companies with 49 or fewer employees added 74,000 jobs (seasonally adjusted), accounting for 47% of
employment gains across all payroll size groups. Of this, the majority (44,000 jobs) was added by service providing
businesses with 1-19 employees. It is predicted that over the next decade small business numbers will increase with the
greatest growth in personal and micro-businesses, and that such small businesses will be smaller in workforce size to meet
agility requirements, increasing the use of contingent workers.
Small Businesses’ Substantial Contributions
Changes in Small Business Employment by Sector
(Source: ADP, Inc: Moody’s Analytics)

I-Squared: Spoiling or Saving the U.S. Economy?
The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality Act, which allows employers to
temporarily employ foreign workers in specialty occupations. The U.S. sets a limit of 85,000 H-1B visas every year, which prior
to 2009 was a cap reached within the first week of accepting petitions. Over the past four years, however, employers have filed
fewer petitions, resulting in it taking up to nine months to reach the limit. However, under the current law, tens of thousands of
H-1B visas granted are not counted under the cap due to exemptions. According to the Economic Policy Institute, 135,530 H-1B
visas were issued in 2012, far exceeding the “cap” of 85,000.
In January of 2013, The Immigration Innovation Act (known as “I-Squared”) was introduced. This piece of legislation would
increase the maximum limit to 300,000 H-1B visas for the private sector along with exemptions for graduates of U.S. universities
holding advanced degrees.
“The American economy has become very dependent on foreign labor. Indeed, most of our workforce growth since
1990 has come from immigration, a trend that is expected to continue for at least the next 20 years. How these
workers are employed, therefore, will have important implications for American economic health, as well as for
national unity and social stability.”
~Ray Marshall, Former Secretary of Labor

There are various viewpoints on the issue of allowing an increasing number of foreign immigrants into the United States.
An Employer’s Viewpoint: A larger talent pool will provide greater choice when selecting workers, especially as it relates to
recruiting high-skilled foreign workers at comparatively lower wages. Employers today are hiring fewer workers and are actively
searching for workers with specialized experience, requiring no training or learning curve. Many foreign immigrants have vast
experience in their home countries yet are willing to accept lower wages in order to break into the U.S. job market. At low wages
employers can afford to keep a large number of H-1B workers on the bench, which is not feasible with domestic workers.
An Academic Institute’s Viewpoint: Most foreign students studying in the United States elect a STEM (science, technology,
engineering and math) field as their major. For example, foreign students encompass half the enrollment in engineering
graduate programs. Since these students later become part of the working population, Americans again have to compete with
foreign college graduates with advanced degrees in science and technology. However, this step might be essential. For example,
analysts predict that in this decade the United States will have to fill 1.2 million jobs in computing professions that require a
bachelor’s degree, and at the current pace American colleges will not matriculate even half the number of American graduates
needed to fill these positions.
“There’s a huge demand for underpaid workers through this program…though federal law requires employers to
pay H-1B workers at a prevailing wage, the law gives pay scale options depending on the profession. And the vast
majority of the time they choose the lowest wage or the second-lowest wage, both of which are below the average wage”
~Daniel Costa, Immigration Policy Analyst at Economic Policy Institute
Different Angles

An Opponent to the Bill’s Viewpoint: Opponents to the “I-Squared” bill believe that the influx of foreign workers will have
a negative impact on the economy and job market. Because the H-1B visa is renewable for a total of six years, an increase in
the cap could add more than 2 million new high-tech workers to an arguably unhealthy labor market. Additionally, current
unemployment rates and wage growth do not suggest a labor shortage in STEM occupations, where the unemployment rate
of college graduated workers in STEM occupations was 3% in 2012. Critics of the bill also argue that the proposed legislation
does not address all the flaws of the current program, including artificially low wages, recruiting requirements and benefits to
offshore outsourcing companies. Finally, opponents point to issues in the bill itself, including the authorization of employment
for spouses and dependents of the H-1B visa holder.

Economic Recovery brings Optimism to Temp Employment
According to a Right Management survey of more than 2,000 human resource executives in 14 countries, 52% of U.S. executives
said that 2013 would be a year of recovery and growth with increased investments in talent as a high priority.
Hiring executives in Brazil, China and India are even more optimistic with 68% of executives in Brazil, 73% in China and 80% in
India expecting recovery.
According to CareerBuilder’s annual job forecast, 40% of employers have plans to hire temporary and contract workers this year,
up from 35% in 2012. And the newest Jobs Outlook Survey by the Society for Human Resource Management finds that “half of
HR professionals are confident that the U.S. economy will add jobs in the second quarter of 2013”.
Another surprising indicator of optimism for the job market is the trend of longer workweeks. The average workweek in
February 2013 was at 34.5 hours, up from 33.8 in 2009 and within sight of the 34.7 hours per worker per week at peak
economy in 2006. According to Drew Matus, an economist at UBS, this indicates that employers are nearing the end of their
ability to get more work done by extending workweeks, thus leading to a need for accelerated hiring. At near-peak workweeks,
employers see a slowdown in productive growth, which motivates the hiring of new workers. In the fourth quarter of 2012,
economists said that productivity fell at an annual rate of 1.9% (the sharpest drop since late 2008). Moody’s Analytics economist
Marisa Di Natale provides the construction industry as an example of this trend, where the average workweek is now 39 hours,
demonstrating a reason for the industry adding 48,000 jobs in February 2013.
Leading areas of job growth are in human resources and home health aides. Human resources, training and labor relations
specialists are seeing a 25% growth and a median hourly wage of $26.44. Meanwhile, home health aides have a growth rate of
21% and a median hourly wage of $9.96.
Growth Area of Temporary Jobs

Unemployment Crisis: Unearthing the Facts Behind Official Claims
The BLS divides unemployment into six categories, U1 to U6, that measure different aspects of unemployment. The
official unemployment rate is U3.
Some of these segments should have been included in the unemployment calculation, but it will make the
unemployment rate increase. This is an interesting concept and puts a large question mark on the population
segment who have either not worked in a long time or have struggled to find jobs and have given up. It also
provokes questions on the unemployment calculation method.
The official unemployment rate in February 2013 is 7.7% (down from 7.9% in January 2013), which is commonly
attributed to a positive jobs report. Rex Nutting of Market Watch refutes this, saying that the unemployment rate
fell due to 130,000 unemployed people who were unable to find jobs and became discouraged, thus dropping
out of the U3 measure of unemployment. The U6 measure, which includes some discouraged workers, shows an
unemployment rate of 14.3%. However, statistician John William created a measure that includes all
discouraged workers (people who have completely ceased looking for a job) which shows an unemployment rate
at 23%. Following this logic, the real rate of unemployment is 2-3 times the official reported rate.
The BLS reports that 236,000 new jobs were added in February. Dr. Paul Craig Roberts of Global Research questions
the creation of these jobs. The 23,700 new jobs in retail trade are questionable due to the absence of consumer
income growth. The 20,800 jobs in motion pictures and sound recording industries are problematic since this is a
category that historically has not had substantial change in employment. However, the 48,000 jobs in construction
are credible due to the recent boost in the housing market; the 10,900 jobs in accounting and bookkeeping are also
legitimate as tax preparation is seasonal, with income tax annual filing deadline of April 15th.
BLS Definition of Unemployment: Persons are classified as unemployed if they do not have a job,
have actively looked for work in the prior 4 weeks, and are currently available for work.
U1 Percentage of labor force unemployed 15 weeks or longer
U2 Percentage of labor force who lost jobs or completed temporary work
U3 Percentage of labor force who are without jobs and have looked for work in the last four weeks
(Official Unemployment Rate)
U4 U3 plus the percent of the labor force that counts as “discouraged workers”
U5 U4 plus the percent of the labor force that count as “marginally attached” or “loosely attached” workers
U6 U5 plus the percent of the labor force that counts as “underemployed”

Unemployment Crisis: Unearthing the Facts Behind Official Claims
A Comparison of Unemployment Rates

Public or Private: Which Type of Job to Opt for?
Benefits Breakdown (Employer Costs per Hour)
On average 29.14% of the total compensation cost is comprised of benefits for the entire workforce including government
and private employees. From the graph above it is clear that part-time workers earn almost half of the wages of private
employees, and one-third of the wages of state and local government employees.
In terms of benefits, the major share of costs is for health insurance, which accounts for 8.5% of the total on average.
This is followed closely by legally mandated benefits, including Social Security, Medicare, Workers’ Compensation and
Unemployment Insurance, at 7.8%. Paid leave comprises another 7.0% of total costs; while the remainder is made up of
retirement contributions and supplemental costs, such as overtime pay.
A large share of state and local government’s costs per employee goes towards benefits at 35%, compared with 31% for
full-time private sector workers. The costs to the government are greater per worker at $41.94 with $27.24 in salaries.
Meanwhile, private employers on average pay $33.63 overall per worker, with $23.22 in wages. The lowest cost is for
part-time workers in private industry, with a total compensation cost of $15.22, where the large majority is towards wages
with only $3.26 for benefits. The makeup of benefits expenses varies between private and government workers. Government
benefit costs are higher for health and retirement contributions, while private employers pay more in bonuses and overtime.
Overthecomingyearsthisdisparitymaydecrease,asnewhealthcarelawsrequiremoreemployerstoofferinsurancetoworkers.
Similarly, public pressure and difficulties with local and state pension systems could have an impact on government’s
contributions to retirement and saving plans.

Methodology
References:
https://www.youtube.com/watch?v=WEMkFoEq3Ac
http://www.huffingtonpost.com/stan-sorscher/i-squared-immigration_b_2834419.html
http://www.wbez.org/us-demand-high-skilled-foreign-workers-106398 http://www.usatoday.com/story/money/columnist/kay/2013/03/30/at-work-a-little-good-
news/2037311/
http://www.globalresearch.ca/the-unemployment-crisis-in-america-staring-economic-armageddon-in-the-face-while-hiding-it-with-official-lies/5326492
http://www.usatoday.com/story/money/business/2013/03/10/new-jobs-more-money/1973743/
http://www.bls.gov/news.release/ecec.t12.htm
http://blogs.wsj.com/economics/2013/03/23/number-of-the-week-employers-benefits-costs/
http://www.bls.gov/news.release/ecec.t04.htm
http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=9a1d9ddf801b3210VgnVCM100000b92ca60aRCRD&vgnextchann
el=9a1d9ddf801b3210VgnVCM100000b92ca60aRCRD http://www.epi.org/publication/immigration-innovation-i2-act-2013/
http://qz.com/65279/40-of-americas-workforce-will-be-freelancers-by-2020/
http://http-download.intuit.com/http.intuit/CMO/intuit/futureofsmallbusiness/intuit_2020_report.pdf
http://www.adpemploymentreport.com/2013/March/SBS/SBS-NER-March-2013.aspx
http://www.shrm.org/hrdisciplines/staffingmanagement/Articles/Pages/Hiring-Forecasts-for-Q2-2013.aspx
The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The
wage rates for temporary workers or contingent workforce are based on payments made by staffing firms to these
workers based upon hours worked. Data collected from sources such as Bureau of Labor Standards (BLS) and other
government sites as well as an internal pool of staffing companies and consultants, is aggregated and classified based
on regions and skill categories, to arrive at an aggregate index.
The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with
the said baseline and is representative in terms of direction and scale of change. Five years of data has been included
to observe seasonal patterns and distinguish seasonality from long-term wage movements. The data and the model has
been further refined over last six months.
DCR Wage Index combines the exhaustive data from BLS with practical and more recent developments and data from
on-field consultants and clients, to provide timely near-term indications of trends and consistent long-term actionable
and objective information.
Source Data
DCR Work Index uses multiple economic variables to ensure the robustness of its forecasts and cross-validation
of trends.
Key data sources and parameters of interest included and influencing the index are:
Unemployment data
Gross Domestic Product
Prime rate of interest
New and seasonal Job openings
Non Form employment
Job Opening
All Export
All Import
Average Hourly Earnings of All Employees Total Private
Aggregate consultant data on job market parameters

About DCR Workforce
DCR Workforce is an award winning, best-in-class service provider for contingent workforce and services
procurement management. Our proprietary SaaS platform (SMART TRACK) assists in providing customizable VMS
and MSP Solutions to manage, procure and analyze your talent with complete transparency, real-time control, high
performance and decision-enabling business intelligence.
DCR Workforce serves global clientele including several Fortune 1000 companies. Customers realize greater
efficiencies; spend control, improved workforce quality and 100% compliance with our services.
For more information about DCR Workforce and its Forecasting Toolkit (Rate, Demand, Supply and Intelligence)
including Best Practice Portal, visit dcrworkforce.com
For more information call +1-888-DCR-4VMS or visit www.dcrworkforce.com
Public Relations:
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508-380-4039
7815 NW Beacon Square Blvd. #224 Boca Raton, FL 33487
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www.dcrworkforce.com | blog.dcrworkforce.com
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DCR Workforce May 2013 Trendline Report

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