How much is the Temp Agency that I work for getting paid for my services?

June 13, 2007 4:50 PM

How much is the Temp Agency that I work for getting paid for my services?

I have been temping for a company for the last [X] months, they recently offered me a full time position. I would like to know if the amount they offered me is in line with what they were paying the temp agency for me. Is there any way to find this out? If I find out it was considerably more than they offered me, is there any way to use this information to encourage them of offer a bit more?

posted by anonymous to Work & Money (23 answers total)

They were paying the temp agency for HR services, payroll, staffing, convenience, not having to pay benefits, etc. If they still needed and valued those services, they would stick with the temp agency, which was likely marking you up by 25-75%.

You're better off countering with research about what the position is worth, not what they were paying a temp agency. Point out that you already know the job and team. Focus on what you can do for them.
posted by acoutu at 4:56 PM on June 13, 2007

I used to temp making $15 per hour. My supervisor once slipped that they paid the temp agency $25. When I was hired full time I was paid $17, plus benefits. The total compensation is far higher then my temp pay. Don't ignore benefits, they make up a significant amount of your pay.
posted by TheDukeofLancaster at 5:00 PM on June 13, 2007

you will always get "paid" more when you are temp or contracting then if you are salaried. this is generally because of how the employer gets taxed as well as the fact that they don't have to pay for other things like health insurance or retirement options when you are temping/contracting versus if you worked for them full-time. when you factor those other things in, it becomes pretty comparable.

there's no way you can find out what exactly they were paying in total for you and the agency (and highly doubtful the agency will tell you). however, that shouldn't matter to you in negotiating. do some homework and find out how much this position in your field, in your town pays out on average and go from there.
posted by violetk at 5:01 PM on June 13, 2007

The other thing the company is paying the temp service is for is the ability to fire you without worrying about a lawsuit. And let's not forget the 9% or so social security tax in the US, which was being paid by the temp agency. So, like TWF and acoutu, I agree that it's not an apples-to-apples comparison to look at what the temp agency was being paid to decide whether they're offering enough. (In my experience, the markup is closer to 100% than 25%.)

The question is how much you could get paid doing the same job somewhere else. And "paid" includes benefits, the cost of which is typically about a third of the total pay package.
posted by commander_cool at 5:03 PM on June 13, 2007

When I worked for a consulting company back in the dotcom boom times, the scuttlebutt was that the company made anywhere between half again as much to 100% as much in a premium over your salary. But yes, the social and benefits came out of their cut.

This may not be applicable to your situation though -- this was a consulting company for sysadmins specifically.
posted by the dief at 5:14 PM on June 13, 2007

I once worked in an accounting department. Staff accountants and their ilk were often billed at 50% higher than they were paid. Freelance photographers, construction workers, truckers, engineers, and such were paid double their salaried counterparts. I started out as a temp and was billed at almost 80% more than I was being paid (Yeah, I was REALLY getting the shaft on that deal).
posted by SeizeTheDay at 5:14 PM on June 13, 2007

The agencies I work through have a conversion fee that kicks in when a company hires a temp employee on full time. That fee is 25% of the employees yearly salary. Check to see if your agency has a similar policy and, if they do, factor that into your thinking about what you're worth to the company.
posted by wemayfreeze at 5:21 PM on June 13, 2007

I've temped for other companies, temped within an agency, and temped as a bookkeeper writing the checks to my agency. 2-3x markup is quite common, for the reasons already cited.

You're not comparing like with like. What you should compare the offer to is what others in that position, with similar skills/experience and similar benefit package, make. Then ask for more than that number -- you have, after all, proven your value to them already. Good luck with the negotiation!
posted by nakedcodemonkey at 5:22 PM on June 13, 2007

I temped in college one summer earning $8/hour. I was receptionist for the summer and was supposed to open bills for Accounting. Including the one from the temp agency, who was charging my employer $14 an hour. Nthing everyone upthread who says to focus on the position and your skills, not what your company was paying the agency.

The company is going to have to pay for all your benefits (and probably a placement fee) when you are brought on permanently. If you are going to get in a snit about being paid what they previously "paid for you", why would they give you that amount, plus pay for the cost of benefits and fees when they can keep paying the agency only? Better yet, maybe they'd just ask the temp company to find them someone else if your negotiations fall through.
posted by ml98tu at 5:45 PM on June 13, 2007

One more thought, I'm pretty sure that you don't have leverage at all, regardless. I think I recall signing something that the company had to work with the agency to officially hire me. The agency would be responsible for negotiating my salary - I was out of the equation. I think the thought was that clearly the agency would try to negotiate for a high salary, since they get a cut. I might be wrong in this, or maybe it was unique to the firm I worked with, but it just popped up from my memory. It may be useful to find out if this is the case in your agency.
posted by ml98tu at 5:49 PM on June 13, 2007

To some degree, it depends on your pay grade. As I recall ~33% markup was pretty typical.

A lot of agencies pro-rate part of the finders fee to the employer based on how long you were placed in the position before going full time.

If they are bringing you on full time, then you should have leverage, even if you have to work it through the agency. Yes, they may be paying a finders fee for you, but they are also getting a known quantity. If you fall through and there isn't another temp to hire, they'll have to go to the trouble and expense of finding another candidate.
posted by Good Brain at 6:08 PM on June 13, 2007

There's not really any way to find out unless you can find someone to tell you (and that person probably should not tell you if they are following the rules). Temps are not supposed to know what is being paid for their services. Being as how the fee being paid for your services is probably considered private business information that you are not supposed to have by your employer, trying to leverage the information in a salary negotiation would probably be a bad idea. The issue that the total cost of employing you versus your wage that others have raised is a valid issue as well, and makes it harder to compare the two. Stick with conventional research (salary surveys etc.) and conventional negotiation to get the best salary you can manage.
posted by nanojath at 7:45 PM on June 13, 2007

Thanks everybody. I have a pretty good idea of the pay range for my position in my local area and the job market is booming. I'm just trying to check all the angles. Though the comments here do lead me to believe that maybe this is one best ignored.
posted by [insert clever name here] at 9:07 PM on June 13, 2007

When I interned/contracted at a telco in college I realized the same huge discrepancy you've stumbled upon and would bitch about it with the consultants during lunch. They mentioned that if you're going to continue contracting/consulting for an extended period of time it is sometimes possible to set yourself up an S-Corp (Jersey personal business type - don't know anything about other states), have the employer pay your personal S-Corp as a proxy staffing agency and then pay yourself in dividends. Even with capital gains you usually come out on the plus side. There's alot of personal income math and tax estimation to be done beforehand but I knew individuals who took home extra tens of thousands a year doing it.

Disclaimer: not saying 'gogogo!,' just throwing it out there as an option to look into.
posted by datacenter refugee at 10:04 PM on June 13, 2007

Here's another data point: I'm in pretty much this position with a temp agency in London, UK. At the moment they take a 40% cut of my weekly pay before tax. When I go permanent, my employer will pay them a one-off lump sum "finders fee" of 20% of my first year's salary.
posted by Drexen at 2:25 AM on June 14, 2007

Here in the UK when I office temped around 15 years ago, it was around twice as much. So the temp agency got £14 per hour, for which I got £7. Sometimes the ratio was slightly different in my favour, and it really did depend on how much I haggled. I seem to recall a £10/£6 deal. I know this because, as a temp, I often had to file away the paperwork relating to my own employment. Additionally, some employers made it clear that I was expensive and so should feel guilty (yeah, right).

If you're wondering why I got paid so little, I was a student, so didn't pay tax. And I was poor, so £7 an hour seemed like lots.
posted by humblepigeon at 2:42 AM on June 14, 2007

Want a numerical value?

Someone I know is employed by Manpower and is paid $12/hr by Manpower. Manpower charges his employer $20/hr for his labor.
posted by santojulieta at 4:05 AM on June 14, 2007

More anecdotes: When I was temping, I turned down a few offers of permanent employment. SOP was to offer a buck or two more than I'd been making as a temp — that is, if they were paying the agency $18 an hour and I was getting $10 of it, they'd offer me a permanent job at $11 or $12 an hour.

Being as I kept turning them down, I don't know how far I could have raised those numbers by bargaining. I get the impression that temps going permanent have more leverage than new hires, since replacing someone you've trained is a bigger pain than interviewing the next applicant on your list, but I may be wrong.
posted by nebulawindphone at 5:18 AM on June 14, 2007

In my experience, the markup is about 40% for clerical/administrative work.

Nthing everyone else that they will not pay you as much as they paid the temp agency -- they were paying the temp agency for your services as well as the temp agency's services. (Not defending the markup. Resisting the urge to post off-topic stories.)
posted by desuetude at 7:04 AM on June 14, 2007

I used to work in the HQ of a big temp agency. Typical markup for clerical work is anywhere from 30-40% depending on the volume of jobs the client does with the agency or how well they negotiate.

Often there is a finder's fee, but at my old company they would often offer to convert the temp to perm for no fee after a certain amount of time had elapsed, say six months.
posted by look busy at 10:29 AM on June 14, 2007

If you feel their offer is too low, offer to work for 90 days and then get a bump up in salary with a positive review. Set measurement marks you can meet. The employee won't have to pay as high a conversion fee to the temp agency.
posted by IndigoSkye at 11:35 AM on June 14, 2007

Not germane to your question, but also know that there is a good chance that the agent who dealt with you at the temp agency will get a commission if you get hired full time. The commission will probably be in the range of 10-30% of your annual salary.

This is very similar to a headhunter's fee.

If you're at all friendly with your contact at the temp agency, hit them up for a free lunch or dinner or something if you get hired. They'll likely be happy to take you!
posted by de void at 12:08 PM on June 14, 2007

Here's one way to find out what they're charging you out for (and this is without knowing whether you are working in an administrative capacity) See if you can intercept any mail coming from the the temp agency (usually marked confidential!). Open it, it'll likely contain a statement for your services. I actually did this- but I was working as a receptionist. I just played dumb when asked about why I'd opened confidential mail, since, hey, my job consisted of opening mail.

I was working for $10/hour at the time and if I remember correctly, they were charging me out at $17. This was 10 years ago, though.

Temp agencies are a bloody waste of time, IMHO. Don't bother fighting with them for a higher wage. They don't care.
posted by solongxenon at 8:42 PM on June 14, 2007