With staffing industry trends for 2010 pointing to increased state unemployment rates for staffing firms, now is the time to tighten up any processes affecting unemployment costs.

One thing you can count on to lead staffing industry trends is increased unemployment rates.  Staffing businesses in at least 35 states will see an increase in unemployment insurance taxes this year.  17 states have either decided or are close to raising either their SUTA wage bases or tax rates to help restore their almost non-existent state trust funds. 

CNNMoney.com’s article Unemployment Taxes Slam Businesses reports that the median increase will be 27.5%; staffing companies in states like Texas will see their state payroll taxes per employee nearly triple from $23.40 to $64.80; those in Florida, over tenfold from $8.40 to $100.30; and the New Jersey Business & Industry Association reports that NJ businesses could get hit with an additional $400 per employee.  While lawmakers are trying to figure out how to soften the blow these hikes have on businesses, an increase in employer unemployment taxes appears to be a long term staffing industry trend – see recent Philly Inquirer article on Dems Call for Compromise on NJ Unemployment Fund.  Also, checkout our Staffing Industry Employment and Unemployment News Feed.

One easy way to reduce your unemployment costs is to place people who have already hit their SUTA limit for the year. 

Check out this math, which shows how much can be added to your staffing firm’s bottom line if your recruiters give extra consideration to candidates who have already hit their SUTA caps for the year:

For example, candidate “A” who hasn’t hit their SUTA cap is placed on a job along with candidate “B” who has reached the SUTA limit for the year.  If both candidates are earning $350/week in a state with an unemployment rate of 5%, then you’re saving $17.50/week on candidate “B” who’s hit the SUTA cap.  If 150 placements in that week with similar pay could be “steered” towards candidates with no SUTA burden, then that translates into $2,625/week or $136,500/year in savings.  Being more conservative, realizing just 30% of the above savings adds over $40K to your bottom line!

In order to make this happen, you’ll need to:

• Make a candidate’s SUTA taxable year-to-date income easily accessible to your recruiters.
• Coach recruiters on how to access such information and use it in their decision-making process.
• Incentify the behavior of looking at a candidate’s SUTA taxable year-to-date income by making commissions based on a gross margin calculation that includes actual employer SUTA costs for an assignment.

You’ll want to harness the power of your staffing software  to make it especially easy for your recruiters to see where a candidate is at with their SUTA taxable income for the year and to do the commissions calculations and reporting.  For example, in our staffing software, we publish each candidate’s SUTA limit right to the hit list that a recruiter generates when searching for candidates to place on a job:

Candidate hit list in AST's Persona Staffing Software shows who's hit the SUTA limit

In this example, the candidate hit list is showing that Deborah Frankel is the only candidate that has already reached the SUTA limit for the year.  While this doesn’t mean that placing Frankel is a no-brainer – there are many other factors as to whether this person is a good fit, recruiters should definitely bring this information into consideration when deciding who to place on the job, and it helps when they understand how making placements with no SUTA costs attached will lead to higher commissions for them.

Contact us to talk to us about additional ways you can be using staffing software to streamline your processes and cut costs relating to unemployment, workers compensation, and sales.  Also, comment on this blog or email me at ev@astusa.com to tell us what other steps are you taking to reduce your unemployment costs?  I’d love to share them with our readers in a future blog post.