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Behind the Jobless Recovery

Wall Street Journal (01/17/12) Aeppel, Timothy

Businesses have greatly increased spending on machines and software during this recovery, while at the same time moving slowly to add people to run them. A combination of temporary tax breaks that allowed companies in 2011 to write off 100% of investments in the first year and historically low short- and long-term interest rates helped push the longstanding trend of substituting capital for labor into overdrive.

Employers have added workers at a monthly rate of 142,000 for the past six months, half the pace needed to significantly reduce unemployment, which is now at 8.5%. Many economists say the ongoing surge in productivity brought about by investments in technology will in the long run create more jobs, but in the short-term, the burst of efficiency allows companies to delay hiring.

The trend toward using labor-saving machines and software is not limited to factories. W. Brian Arthur, an economist at Xerox Corp.’s Palo Alto Research Center, says businesses are increasingly using computers and software in the place of people in the service sector. “It’s not just machines replacing people, though there’s some of that,” says Arthur. “It’s much more the digitization of the whole economy.”

Manufacturing in New York Fed Region Expands at Faster Pace Than Estimated

Bloomberg (01/17/12) Homan, Timothy

The Federal Reserve Bank of New York reports the Empire State manufacturing index rose in January to its highest level since April, reflecting improving orders, sales, and employment. The Empire State index rose to 13.5 in January—the highest level since April—from a revised 8.2 in December. Economists projected the gauge would rise to 11, based on the median of 56 forecasts in a Bloomberg News survey.

Georgia Governor Deal to Push More Training for Skilled Trades

WXIA-TV (Atlanta) (01/17/12) Leslie, Jennifer

Georgia Gov. Nathan Deal is today launching a new program, “Go Build Georgia,” designed to bring down the state’s unemployment rate with more training for skilled trades. “It’s going to help tremendously,” says Beth Herman, regional director for ManpowerGroup. Herman notes she has a difficult time filling job openings for welders, machinists, and forklift operators. “It’s a real misconception that there are no jobs in manufacturing,” says Herman. “It’s not just manufacturing. It could be a pharmaceutical company that has a warehouse, or it could be a retail organization that has a warehouse. In that warehouse, there could be packers, shipping and receiving, forklifts, a person that has pallets around. It’s across all industries, not just in manufacturing.”

Colorado Firm Buys Fahrenheit Technology

Richmond BizSense (01/16/12) Schwartz, Michael

Global Employment Solutions, a national staffing firm with locations in nine states and Washington, D.C., recently purchased Littleton, CO-based Fahrenheit Technology, a staffing firm with less than 100 employees. As part of the deal Fahrenheit’s management team and brand will remain. “They liked the brand. It’s interesting and has unique marketing opportunities,” says Fahrenheit president Jason Tate. “From a business perspective it means Fahrenheit now has a national footprint.” The deal “gives us a bigger capital backing and the ability to leverage contracts and relationships in other markets,” Tate adds.

ADP Acquires Randstad’s Indian Payroll Business

Economic Times (India) (01/16/12)

Automatic Data Processing has acquired Randstad Holding’s Indian payroll business for an undisclosed sum to access the high-growth human resource business process outsourcing markets. Randstad’s Indian payroll business is handled by its subsidiary Ma Foi Consulting Solutions—which offers managed payroll services and social benefits administration to approximately 350 multinational and domestic clients—and has a team of around 200 associates.

Essential StaffCARE: New ASA Corporate Partner

A longtime supporter of ASA, Essential StaffCARE has elevated its commitment to the association by becoming a corporate partner. The financial support of ASA corporate partners enhances the value of membership by allowing the association to improve its products and services, and develop new initiatives that address emerging issues and trends in the fast-paced staffing and recruiting industry. Essential StaffCARE is a leading writer of health insurance benefits for the staffing industry.

“We are proud to partner with the American Staffing Association, one of the strongest and most actively involved industry associations in America,” says J. Marshall Dye, president of Essential StaffCARE. “ASA leadership in advancing the interests of staffing and recruiting firms is unparalleled.”

For more information, visit

Congress Returns to Battle on Taxes

Wall Street Journal (01/17/12) Bendavid, Naftali

As members of Congress return to Washington this week, they must immediately delve back into the fight over the payroll-tax cut. Congress has until Feb. 29 to extend the popular tax break, which lowers workers’ payroll taxes to 4.2% from 6.2%, as well as a program to extend unemployment benefits.

To pay for the extension, Democrats had proposed a surtax on millionaires, while Republicans wanted to slash the federal work force by attrition. The battle lines appear to have hardened, as Democrats believe they have the political edge and see little reason to compromise, while House Republicans are angry about the latest outcome and are determined not to back down.

New Law Affects Employee Leasing Organizations

JDSupra (01/16/2012) Wright, Dickinson

A new Michigan law dramatically affecting employee leasing took effect on Jan. 1. Employee leasing firms must be licensed by Michigan’s Department of Licensing and Regulatory Affairs by Sept. 1. Several exemptions to the licensing requirements are available: a provider of temporary help services does not need to obtain a license; certain independent contractor arrangements are exempt from the licensure requirements; and an entity whose principal business activity is not entering into professional employer agreements and does not hold itself out as an employee leasing firm does not need to obtain a license.

The following terms must be included in any employee leasing firm-client agreement executed after Sept. 1: the responsibility of the PEO and the client to pay wages, to withhold taxes, including unemployment taxes, and to make employee benefit payments for covered employees; the responsibility of the employee leasing firm and the client to hire, discipline, and terminate employees; and the responsibility of the employee leasing firm and the client to comply with Michigan’s Workers’ Disability Compensation Act.

Big Firms Try Crowdsourcing

Wall Street Journal (01/17/12) Silverman, Rachel Emma

Some large firms are opting to go with crowdsourcing as opposed to hiring temporary employees to perform large tasks. Crowdsourcing labor usually involves firms farming out small tasks that are part of a larger project to the general public—by posting the requests on a Web site—for little to sometimes no pay.

Companies that have assigned work to the crowd say it is generally cheaper and faster than hiring temporary employees or traditional outsourcing firms. Crowdsourced labor can cost companies less than half as much as typical outsourcing, says Panagiotis Ipeirotis, an associate professor at New York University’s Stern School of Business, who studies crowdsourcing. From 2010 to 2011, revenues of business-focused crowdsourcing firms grew 74%.