You can call it Tempessee -
Volunteer State leads nation in temporary staffing

Tennessee leads the United States in the percentage of temporary workers and boasts the fastest-growing temp population as well, according to a research report recently released by Staffing Industry Analysts Inc. More than 2.8% of the Volunteer State’s workers are classified as temporary by the U.S. Bureau of Labor Statistics, almost one-and-a-half times the national average. And between 2003 and 2004, the last year for which data are available, penetration increased by a U.S.-leading 0.4% – well above the national average of 0.1%.

Why Tennessee? Several factors have combined to give temporary agencies a boost there. They include new industries moving into the state, a moderate unemployment rate, a growing number of new arrivals and a “critical mass” of temporary staffing competition and awareness.

“The economy in Tennessee has been very good, and we’ve got a lot of low-skilled to semi-skilled jobs like distribution and manufacturing,” said Kelly McCreight, president of the Tennessee Staffing Association and a VP at Hamilton-Ryker Co. McCreight pointed to an influx of manufacturing companies, mentioning automotive industry leaders like Saturn, Nissan and Toyota, as well as computer giant Dell. “Not only those companies but also their suppliers are customers,” said McCreight. “It has a domino effect for the staffing industry.”

The political climate also is helpful, the association president said. Although there is a significant union presence in the state, Tennessee has a right-to-work law, and the unions do not dominate to the extent they do in some other areas of the country. And so far, the state legislature has not burdened the approximately 950 agencies with anti-staffing legislation, McCreight said.

Economists agree that the state is building a temp-friendly job base. “Almost surely it’s linked to industry structure,” said Bill Fox, professor of economics at the University of Tennessee and director of the Center for Business and Economic Research in Knoxville. “There is a heavy orientation toward non-durable manufacturing, also tourism in some parts of the state.” Fox pointed to the fast increase in employment in the state, along with its relatively less skilled population, as factors in the growth of temp agencies.

The unemployment rate among Tennessee’s 2.9 million workers has been decreasing gradually and was at 5.1% in December, according to the U.S. Bureau of Labor Statistics. Nashville alone enjoyed an even lower rate of 4.0%.

Fox raised another – and controversial – reason for temp growth. Critics have suggested that Tennessee’s liberal public healthcare program, called TennCare, helps temporary companies by taking pressure off them to provide benefits. But Fox cautioned that no studies have established that and said the current governor’s administration’s reforms have largely closed that door in any case, cutting 190,000 people from the rolls.

Distribution hub

One industry that has flocked to Tennessee is transportation and distribution, a sector that has always had a relatively high temporary employment penetration rate. Not only are FedEx and UPS centered in the Memphis area, but manufacturers – Proctor-Silex, Pottery Barn and others – have built their own distribution centers in the state as well.

“Tennessee is a very big logistics hub,” said Terry Goodman, senior branch manager for ProLogistix Inc. in Nashville, which specializes in logistics staffing and employs between 150 and 500 people. “You can reach 75% of the United States in a day’s drive from Nashville.” And that industry tends to be seasonal, which makes it ideal for staffing companies. “It doesn’t make sense to make them permanent,” she added.

Sandra Huddleston, regional manager and an owner of TA Staffing Inc. in Nashville, supplies workers for FedEx’s warehouse operations. Because of the fast-growing economy, many of the 400 to 500 employees she assigns weekly wind up being hired full-time by her customers, she said. Many observed that rapid growth – and the new arrivals it attracts – is part of the reason for the exceptional health of temporary agencies. McCreight mentioned a new arrival from Oklahoma he hired after the employee checked with various employers and found they used his company. Huddleston noted that Tennessee received a large share of refugees from Hurricanes Katrina and Rita, adding that these new arrivals are often unfamiliar with the local companies and more comfortable hiring on at agencies until they get settled.

Critical Mass

The new industry and new arrivals may have happened upon a state that is reaching critical mass as far as temporary labor is concerned. When Tennes-see’s economy suffered early in the decade, many smaller agencies were absorbed by larger companies. With the arrival of new industry in the state, many national temp companies also set up offices. The result was both stiff competition and an increase in public awareness of the agencies as a resource. “For a long time, there have been good staffing companies in Tennessee, and the customers are knowledgeable and are used to using them,” said McCreight. That in turn has made workers more aware of the staffing companies and more willing to apply to them, he noted.

Huddleston pointed out that the work climate makes the companies more competitive for workers, which raises pay and benefits. Tennessee has plenty of major competitors, so even small companies like hers have to provide benefits such as medical coverage and vacations. And all signs point to continued boom times for staffing. “Our company has been experiencing growth steadily since I’ve been here – and that’s 17 years,” Huddleston said.