How Temp Agencies Work

Job applicants converse outside the Staffmark temp agency in Cypress, Calif.
Job applicants converse outside the Staffmark temp agency in Cypress, Calif.
Ric Francis/AP Images

Temporary employment agencies -- popularly known as temp agencies -- provide workers to a variety of businesses via short-term contracts or indefinite temporary positions. From the employers' point of view, temp agencies perform many of the duties of a company's human resources department, but may be able to do so more efficiently and have access to a wider applicant pool. Workers see temp agencies as a place that will put in the effort to place them in a job, even in a difficult job market. Plus, a temp job can be a foot in the door that leads to a permanent position.

Sometimes, temp agencies are seen as a last resort, a place for unskilled workers to find low-wage jobs. However, today there are temp agencies that specialize in providing highly skilled contract workers in fields like medicine, technology, publishing and engineering. These agencies provide flexibility for both employers and employees.

Temp agencies have their critics, however. They see temp agencies as cost-cutting measures that allow companies to use workers without providing vacation time, health insurance or other benefits. This practice, they say, contributes to the erosion of job security in modern job markets.

Though they have both pros and cons, temp agencies are a major part of the world's job market, especially in the U.S., where more than two million Americans were employed by temp agencies as of 2004 [U.S. Dept. of Labor]. Employment with temp agencies peaked in 2006 before suffering declines due to the economic downturn [U.S. Dept. of Labor]. From the "Kelly Girls" of the post-war years to today's contract software programmers, temp workers have become an integral part of the business landscape. For both workers and employers, it pays to understand how temp agencies work, what they cost (or pay), and how to use them to your best advantage.