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NEW YORK (
TheStreet) - Staffing agencies tumbled Wednesday after the White House announced a healthcare mandate aimed at employers will be postponed.
Robert Half International(RHI ),
TrueBlue (TBI ), and
On Assignment(ASGN )fell following the announcement. Robert Half led the slump losing 5%, finishing the day at $31.65. Manpower stumbled 1.2% to close at $54.66.
The Patient Protection and Affordable Care Act calls for employers with 50 or more employees to provide health benefits for full employees. Employers who fail to comply with the legislation will be fined $2,000 per worker. The Obama administration has been expected to begin enforcing the act in 2014, but has delayed it until 2015.
"Many investors have purchased temporary staffing stocks during the last nine months with the view that the employer mandate would drive increased demand for temporary staffing services, particularly from small businesses that were close to the 50-employee threshold," wrote analysts with William Blair in a report.
Investors expected the upcoming enforcement would lead small and medium businesses to employ the services of staffing agencies, in hopes of avoiding the health care obligations placed on them by the federal government. Analysts still see the mandate eliciting this scenario when it goes into effect, but the delay has removed the necessity for investors to move on the shares.
The staffing industry has grown in the United States and is deemed stable for the most part. The sector has seen "7%-8% growth in the industry as measured by the BLS's last monthly employment report and Staffing Industry Analysts' Pulse survey of staffing firms for the month of June," wrote the analysts led by Timothy McHugh.
Robert Half International has seen 15% growth this year to date, posting gains for the last three years. Robert Half, Manpower, and On Assignment are set to outperform, according to William Blair.
-- Written by Robert Arenella in New York
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