Labor for Rent: Part-Time Economy Profits

Since the financial crash of 2008, employment has improved -- especially part-time employment. Most new jobs are low-wage, seasonal gigs that don't provide the upward mobility that has been the foundation of American growth.

The slow American economic recovery has made many employers solely interested in hiring either a purple squirrel -- the perfect job applicant -- or 22-22-22's, i.e., 22-year-old workers who will work 22 hours a day for $22,000 a year. The largest share (70%) of new jobs in 2013 are part-time jobs. In this feast-or-famine, sub-30-hours-per-week job market, staffing and human-resources companies Kelly Services (NASDAQ: KELYA  ) , Kforce (NASDAQ: KFRC  ) , and Insperity (NYSE: NSP  ) are three winners.

Get me a Kelly temp
Kelly Services is one of the most promising investments in the job placement sector. The part-time pioneer synonymous with the word "temp" is bound to thrive amid sub-30-hour workweeks. Kelly currently has just more than 500,000 temp workers under placement -- more staff than Google, Yahoo, Facebook, LinkedIn, and Microsoft combined -- but without all the full-time-employee overhead. A recent Pew survey detailed that a growing number of Americans would rather be freelancers in this economy. As more firms and workers warm up to freelance and contract work and companies look to fill jobs while decreasing overhead, Kelly will profit from these trends. Kelly aggressively adds value while providing jobs to beleaguered job-seekers.

Kelly is the largest employer of substitute teachers in the U.S., providing services for 3,000 schools in 35 states. Kelly Educational Staffing hires, trains, and schedules the new substitute teachers for eight Utah school districts and will serve another starting in January. No other firm in this sector has successfully targeted the education market like Kelly. Many contract substitute teachers and school administrators rave about KES. As school systems look to save, Kelly will be there to provide affordable and efficient staffing solutions.

Kelly's recent overseas acquisitions are also telling. In China, Kelly acquired P-Serv, a company specializing in temporary staffing, outsourcing, and executive search with operations in mainland China, Hong Kong, and Singapore. In Brazil, Kelly acquired Tradicao Tecnologia e Servicos, a similar outfit. Kelly wants to provide staffing solutions to firms in China and Brazil. These two BRICs can potentially double, triple, or even quadruple Kelly's number of billable temp workers under placement.

Kelly's numbers are equally encouraging: The company brought in $1.4 billion in revenue in the second quarter of 2013, up 0.1% compared to Q2 2012. That's a slight increase, but it's nevertheless a miracle in this terrible job market. Revenue notwithstanding, the stock's earnings per share were a healthy $0.33.

Part-time lovers
Kforce is a growing firm in the job placement sector with 10,000 consultants on assignment. Providing professional staffing in health information management, technology, and finance, Kforce continues to profit as the tech sector surges and the Affordable Care Act, or ACA, becomes reality. Kforce has also been proactively providing solutions for government.

The ACA has many companies scrambling to meet new regulations. Kforce has been instrumental in providing solutions or the ICD-10 transition. Heath care reform uses the ICD-10 -- a list of medical classifications produced by the World Health Organization -- to provide incentives for providers to lower their costs. As this transition continues, Kforce will be there to provide services and expertise -- and profit in the process. Shares of Kforce have soundly outperformed the market in recent years, and earnings and revenue are on the rise.

Insperity is a strong performer in this sector. As a business-performance and human-resources solutions provider, Insperity has raised the bar by innovating. Insperity's TimeStar TM 8.0 is just one example of how this firm is adding value. TimeStar TM 8.0 is a Software-as-a-Service (a.k.a. SASS) employee time and attendance solution. Insperity's Time and Attendance SASS is another excellent example of how this firm is moving toward software solutions to minimize overhead—shrinking payroll costs and creating efficiency—while still adding value for its customers.

With a market cap nearing $1 billion, Insperity is poised to become one of the "big boys" in this space soon. The stock has been soaring in the second half of 2013, and it provides a modest yield of 1.8%.

The trend is your friend
Global temp staffing is a $339 billion market, and Kelly Services, Kforce, and Insperity will reap more than their fair share of profits as they connect job-hungry applicants with value-driven employers in our part-time economy.

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