The High Cost of Traditional Staffing Firms

May 5, 2009 – 8:04 pm

Help, I Fell Down and I Can’t Get Up! –

Somebody send Barry Asin, EVP and Chief Analyst for Staffing Industry Analysts, Inc., a medical alert device right away! He just fell down on the issue of staffing firm charges and I’m afraid he can’t get up.

Asin writes in his blog that one of the results of his organization’s latest research study “just about caused me to fall out of my chair.” What possibly could have caused such a strong response in an otherwise healthy industry insider? It was the answer to this survey question:

“What cost, if any, do you think a typical temporary staffing agency would charge you for finding you a temporary job?”

Asin writes that fully 50% of people who had never worked as a temporary employee or independent contractor “thought that a temporary staffing firm would charge them some sort of a fee.” Moreover, about one-third of the respondents who had actually worked for a staffing firm held the same view.

Asin was surprised that anyone at all should have thought that staffing firms charge for finding temporary work. Would someone please help this man get back on his feet!

Frankly, I am surprised that more people do not think that staffing agencies charge a fee for helping someone find a temporary job. After all, staffing is not charity work. Staffing agencies have to make a profit and the money must come from somewhere.

Obviously, staffing agency profits come from the money that temporary workers generate for the agency. The staffing agency’s fee for helping someone find a temporary job is the difference between what a staffing agency collects from the client and what it pays the temporary worker! Who could argue with that?

If the worker had not used a staffing agency to land a particular temporary assignment, the entire revenue stream would have gone to the temporary worker. When a staffing agency enters the loop, the agency takes a significant portion of the collected billings as its gross profit before paying what is left over to the temporary worker.

Granted, staffing agencies do not advertise or publicize how much they take off the top. What staffing agencies take off the top as their profit is a hidden fee, but a fee nonetheless.

How about this for a more realistic survey question?

“What hidden fee, if any, do you think a typical temporary staffing agency would charge you for finding you a temporary job?”

Not only do staffing agencies charge the independent professional for finding a temporary job, what staffing agencies charge for finding that job is disproportionately high compared with the fees charged by Hollywood talent agencies, that find work for creative artists, and the fees charged by sports agents, who find work for professional athletes. I will analyze the disproportionately high cost of staffing agencies in a later post.

The Low, Low Cost of Solo W-2, Inc.

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Solo W-2, Inc. is an Open Book

As with every other professional service provider, Solo W-2, Inc. has no hidden fees. In sharp contrast to the traditional staffing vendor business model, the Solo W-2, Inc. business model is completely open to scrutiny. Solo W-2, Inc. proprietary systems are automated and efficient. With every payroll, every Solo W-2, Inc. employee receives a complete accounting of every penny generated by the employee’s efforts and every penny spent to fund the employee’s benefits and tax-advantaged payroll. Read about the many ways that Solo W-2, Inc. manages and preserves your cash flow.

James R. Ziegler, Ph.D.