5 Recruiting Predictions for 2014

It certainly has been an interesting past several years in employment and recruiting.  This year promises much of the same, but with a more positive outlook for hiring.

Based on Top Echelon Contracting’s placement statistics, discussions with recruiters, and industry data, here are the five top trends we expect to see 2014:
1. Contract staffing growth continues.  Contract staffing broke records last year, and we expect more of the same this year.  In 2014, 42% of employers plan to engage contract workers, according to CareerBuilder.  Our placement statistics support this.  More direct hire recruiters made their first contract placements through our back-office in 2013, and others have contacted us about adding contract staffing services to their business models in 2014.

It is becoming clear that this is not a knee-jerk reaction to the recession.  Companies are using it as a permanent business strategy, building blended workforces that include BOTH contractors and direct hires.  As a result, we are seeing a new workforce model emerging where companies maintain a small core of direct hires supported by a larger outer ring of contractors.
2. Companies are (cautiously) optimistic.  The unemployment rate is at its lowest rate since 2008.  Job openings near the end of 2013 reached their highest level since March 2008.  Overall hiring increased 5.2% in 2013.  These are all positive signs and indicate increased hiring in 2014.  But there is still an air of caution, particularly surrounding instability in Washington and the upcoming healthcare reform regulations.  Utilizing contractors is a way companies can complete projects and meet critical deadlines without permanently adding to their overhead just in case the economy goes south or the financial burden of employment regulations prove to be too much.
3. Candidate demand in STEM industries.  One area where hiring is hot despite uncertainty is in the growing STEM (Science, Technology, Engineering, and Math) arena.  Competition for talent is fierce, so recruiters focusing on these niches will be in demand.  Because a lot of the work is project-oriented, much it will be handled by contractors.  This is good for candidates in these industries who prefer contract staffing due to the flexibility and higher earning potential contract work offers.
4. Obamacare preparation  . . . again.  The employer mandate provision of the Affordable Care Act (ACA) was supposed to kick in at the start of 2014, but employers got a reprieve when it was delayed until 2015.  While the new deadline is looming, employers will once again need to examine their workforces and determine how to respond.  Under the employer mandate, companies with 50 or more full-time or full-time equivalent employees will have to provide healthcare coverage for those employees.  Companies will have to determine whether to offer the insurance as required, pay the penalties for not doing so, or reduce their workforce below the 50-employee threshold.  Many will turn to contractors to avoid the employer mandate.  As W-2 employees of a staffing firm or a contract staffing back-office, contractors don’t count toward a company’s 50-employee threshold.  The staffing firm or back-office assumes responsibility for Obamacare-compliance for those contractors.
5. Worker classification enforcement . . .still.  The government’s continued vigilance against independent contractor (IC) misclassification will remain an important factor for employers and recruiters into the foreseeable future, as federal and state agencies seek to recoup lost tax revenues.  The stakes will be even higher this year because the Department of Labor and a number of states are now working with the IRS to enforce proper worker classification.  Be sure to warn your clients of this and offer to convert their ICs to contractors who are W-2 employees of a contract staffing back-office.
The New Year should be a good one for recruiters, but based on the above predictions, it appears that those who offer contract staffing services stand the best chance for success in 2014.

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