Number of Workers of Employee Leasing Firms Soared 686% From 1992 to 2017

Since the industrial revolution, businesses have strived to streamline operations to maximize employee productivity and minimize costs. They embraced automation, a popular way to modernize workflows and production processes, but it was not enough.

Enter California businessman Marvin R. Selter, who in the late 1960s popularized a concept that gave businesses a way to avoid employment taxes and other costs: lease — not hire — employees.

How would it work? Leasing firms would provide the leased workforce and handle all the human resources, payroll, and employee benefit functions for the client, but the client would still maintain day-to-day management of the workers.

Employee leasing became especially valuable to businesses with large seasonal swings in employment.

The concept took off.  Between 1992 and 2017, the number of people working for employee leasing firms skyrocketed 682% from 341,884 to 2.7 million.

Employee leasing became especially valuable to businesses with large seasonal swings in employment. If they hired rather than leased workers, they would have to lay them off when business was slow and bring them back when it picked back up. A leased worker, however, could be leased for a set period.

Employee leasing also became valuable to small- and medium-sized businesses that could not provide worker benefits on their own.

Contractors can be classified as leased employees or temporary employees. How they’re counted depends on how the worker is managed day-to-day and whether the business that hires them pays for the worker’s benefits.

The concept took off.  Between 1992 and 2017, the number of people working for employee leasing firms skyrocketed 682% from 341,884 to 2.7 million.

Employee leasing became especially valuable to businesses with large seasonal swings in employment. If they hired rather than leased workers, they would have to lay them off when business was slow and bring them back when it picked back up. A leased worker, however, could be leased for a set period.

Employee leasing also became valuable to small- and medium-sized businesses that could not provide worker benefits on their own.

Contractors can be classified as leased employees or temporary employees. How they’re counted depends on how the worker is managed day-to-day and whether the business that hires them pays for the worker’s benefits.

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