One hundred workers count on Betsy Briones for their paychecks. But not one of them works for her.
Briones is a so-called nonemployer, relying exclusively on contract or temporary workers. This arrangement, which allows employers to avoid the soaring costs of health insurance and other benefits, is booming in California, according to a Census Bureau report to be released today.
The 63-year-old Briones runs a busy referral agency for in-home care workers out of her Los Angeles residence, placing caregivers with elderly or disabled clients. All of her caregivers are independent contractors and are responsible for obtaining their own benefits, she said.
Los Angeles County -- a hotbed for small business -- seems to be the capital of this "free agent nation." It has more nonemployers than any other U.S. county, although their ranks are now growing even faster in the Inland Empire, according to the census report.
California businesses have been hiring contract and temporary workers in construction, administrative and high-tech jobs for years, and the practice appears to be spreading to industries such as real estate brokerages, beauty salons and insurance agencies, the report said.
The number of nonemployers grew 19% statewide from 2000 to 2004, reaping 27% more in revenue, according to the Census Bureau. During that time, the number of nonemployer real estate offices grew 46%, while healthcare and social assistance businesses increased 27% and architectural and engineering services jumped 12%, the report said.
Los Angeles County added 4.6% more nonemployers in 2004, while Riverside and San Bernardino counties added 7% and 7.1%, respectively, according to the report.
As the economy slows, analysts expect the tight labor market and increased business investment to boost demand for temporary workers, already up 2.7% in June compared with last year, according to the Labor Department.
"A lot of people want to have a business but don't want the headaches of actually having to employ people," said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. The recent growth of nonemployers -- particularly in the entertainment, transportation and warehouse industries -- is dramatic, Kyser said.
Los Angeles-area businesses become nonemployers to avoid the costs of workers' compensation, paid leave, health insurance and state taxes, he said. Contractors end up paying more for their own healthcare or go without it.
