Tough job market sinks employment agencies

Indiana’s lofty unemployment rate not only is taking a toll on the jobless but also the recruiters that help them find work, leading to the demise of several local employment agencies.

In July, the most recent month for which state unemployment statistics are available, Indiana’s seasonally adjusted jobless rate stood at 10.6 percent—the third consecutive month it has topped double digits and the highest it’s been since 1983.

“There’s no question it’s probably been one of the most challenging times in the [employment] industry,” said Harry Danz, a co-founder of Indianapolis-based That’s Good HR.

Danz cut his staff from a high of 26 employees in December to 18 now, as the companies for which the firm helps find talent are no longer demanding its services as much.

Worse, though, is that the tight labor market appears to have claimed at least three local companies. Phone numbers for staffing firms Alexander Talbott and Gin/Tek Associates have been disconnected, while the most recent number listed for The Pyramids Group is an automated answering service for a company called Career Transition Strategies.

Numerous attempts to reach officials at these companies were unsuccessful.

None of the three employment agencies was among the 10 largest in the city, according to the most recent IBJ statistics. And only Alexander Talbott boasted more than 10 full-time counselors.

But they weren’t fledgling upstarts, either. Alexander Talbott was nearly a decade old, having been founded in 2001. The other two were much older—Gin/Tek was founded in 1983 and The Pyramids Group in 1976.

The shakeout in the local recruiting industry is just a microcosm of what’s occurring nationwide, according to the Los Altos, Calif.-based Staffing Industry Analysts research firm.

Industry revenue plunged nearly 60 percent in the first six months of this year compared to the same period in 2008, and financials weren’t expected to improve much during the rest of 2009, the firm wrote in a recent report.

Most firms help companies fill temporary and permanent positions and get paid only when successful.

“Business in [the direct-hire] sector is likely to remain rough going for the foreseeable future,” Staffing Industry Analysts said.

Pinnacle Partners, Indianapolis’ second-largest employment agency based on full-time counselors, can relate.

“We’re not seeing double-digit growth like we used to, but we’re still doing well,” company President Herb Benshoof said. “In difficult times, you do what it takes to survive and come out the other side.”

Benshoof has expanded the footprint of his 10-year-old firm from central Indiana to the entire state, in an effort to gain more business. He concentration is in accounting, finance, information technology and health care.

Even so, if a company is hiring, it might take six to eight weeks to fill a position instead of the more typical four to six weeks, Danz said. His bread and butter is accounting/finance, human resources and operations.

If there’s a sliver of optimism, it may be that the state’s jobless rate has held nearly steady since May, indicating the unemployment situation may be stabilizing.

Benshoof at Pinnacle Partners is sure business ultimately will pick up.

“If you treat everybody right,” he said, “it will come back to you someday.”