We hear it all the time.... From temps and from clients. "You're paying the temp $8.00/ hour and billing the client $11.20/hour." You would think we are making a killing with this, but that is not the case.
So let's take a moment and look at what that "spread" provides to both the temp and the client beyond the hourly cost of the labor alone.
The client receives the benefit of the following:
1. Avoids the cost of recruiting qualified personnel. This includes such things as advertising, interviewing time, checking references, background checks, testing etc.
2. Administrative tasks are handled by the Staffing Company. Payroll processing, UC claim forms, child support orders, loan papers, welfare paperwork, garnishments etc. are processed by the supplier.
3. Certain insurance costs beyond Workers Compensation are packaged in the client's bill rate. General liability, errors and omissions, employee dishonesty are a few of the coverage's provided.
4. The cost of risk is absorbed by the Staffing Company. The best example these days is the charging of UC benefits to the supplier's state account and not the clients. This serves to lower the clients UC rate paid against its own staff. The same goes for Workers Comp claims that are absorbed by the staffing company and stay off the client's risk.
5. The client benefits from the interest free funding the service carries while paying the employees working at the client's facility, depending on the credit terms offered by your service. Depending on volume this can be significant.
6. The "spread" most obviously includes payment of all payroll taxes and with-holdings to the proper source. These include such tings as FICA, FUTA, State Unemployment, Workers Compensation as well as Federal, State, Local Income Tax withholding and School District taxes. You might not realize it, but your service has to withhold local taxes and pay corporate income tax to hundreds of different taxing authorities as well as collecting sales tax in each county it operates. . . all with different rates.
7. Legal costs to defend against bogus Workers Compensation claims, Sexual Harassment/EEOC litigation, General Liability lawsuits, Bankruptcy/Collection matters and General Counsel are all paid by your Staffing Service.
8. The cost of technology must be factored into the end cost of your contingent labor force. Employee records, payroll records, applications etc. are all stored via electronic media. Networks are established to link offices and to proved clients with state of the art customer service. And as you can imagine, with technology comes the cost of hardware, software and the IT experts that make it all work.
9. Your provider maintains a fully trained professional full time staff in order to manage all these items. About 75% of the Ryan Alternative Staffing, Inc. full time staff have four year degrees.
Above and beyond a paycheck the temp receives:
* The opportunity to showcase their talents to a perspective employer that might consider them for full time employment.
* Unemployment, Workers Compensation, Old Age Survivors and Disability Income Benefits to provide compensation during periods of recession, job related accidents and in retirement.
* Training to improve job skills.
* Flexibility to arrange a work schedule around their personal life and geographically located close to where they live.
So, what does this all add up to? A heck of a deal, if you ask us. In effect, a professionally run Staffing Service is providing you a staff of experts in:
* Human Resource Management
* Labor Law
* Insurance and Risk Management
* Payroll and Tax Management (CPA's)
* Managed Care (MCO)
* Third Party Professionals (TPA)
* Information Technology (IT)
And all of this is in addition to the cost savings you realize via workforce flexibility and benefit savings!
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