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Temp agencies slip after Obama health care delay

The Associated Press

NEW YORK (AP) -- The Obama administration's decision to delay a key part of its health care overhaul caught adversaries and allies alike by surprise. But could it also prove bad news for temporary staffing agencies? Wednesday morning, investors said yes.

THE BACKGROUND: A big part of the health care overhaul is a rule that will require companies with more than 50 workers to provide health insurance for them.

That has been a boon for agencies that help employers find temporary staff. Investors reasoned that the new rule would influence companies — particularly those near the 50-employee limit — to bulk up with temps instead of long-term employees. In the past nine months, shares of Robert Half International Inc., ManpowerGroup Inc., TrueBlue Inc. and On Assignment Inc. have shot up, including a jump of more than 50 percent in ManpowerGroup's shares.

THE SPARK: The White House said late Tuesday that the rule, which was supposed to take effect at the start of 2014, will now be pushed to the start of 2015. Shares for all four staffing agencies dipped Wednesday morning.

THE ANALYSIS: William Blair analysts, led by Timothy McHugh, wrote in a note to clients that investors' original thinking about the health care law helping staffing agencies could still prove true — but they'd have to wait an extra year to know for sure, and some won't be willing to do that.

BREAKING IT DOWN: The analysts thought the impact would be especially harsh for Robert Half, because many of its clients are smaller businesses. Its shares were down by the biggest proportion.

SHARE ACTION: Robert Half fell more than 6 percent, down $2.14 to $31.16. TrueBlue, which specializes in staffing for blue-collar jobs, was down more than 3 percent, losing 71 cents to $21.08. On Assignment, which focuses on health care and science jobs, lost more than 2 percent, down 67 cents to $26.78. ManpowerGroup was also down more than 2 percent, losing $1.26 to $54.04.