By: Susan Diesenhouse

In a nation where the number of people without health insurance is growing, the temporary-help industry is often singled out as a villain. The temporary work force is growing 10 times as fast as the permanent one, and few of the 4,500 companies in this $25 billion business offer their workers comprehensive benefits.

John H. Chuang thinks that is unconscionable, and is trying to change things. The 28-year-old entrepreneur from Queens started a temporary-help company that supplied people skilled in using Macintosh computers for jobs from word processing and desktop publishing to spreadsheet assignments.

The company, MacTemps, is so tight on costs that it requires its executives to stay at Motel 6 on business trips, and it won't pay for a new pen unless the staff person can prove the old one is empty, not lost. But it also provides its long-term temporary workers with a benefits package that would be the envy of many permanent workers: medical, dental and long-term disability insurance, a retirement savings plan, and vacation and holiday pay.

The nearly 40 million Americans who don't have health insurance are "a social problem that our industry is part of," Mr. Chuang said. "As a business, it's our job to solve social problems, not whine about them."

When Mr. Chuang (pronounced CHWONG) said this to a conference of the mostly male leaders of this industry - an industry that employs about 1.5 million "temps" a day, most of them women - "he was a breath of fresh air," said Peter Yessne, publisher of the newsletter Staffing Industry Report.

If Mr. Chuang were merely an idealistic outsider, he wouldn't be taken so seriously. But in fact his privately held company, which is run by four executives all under 30, will do about $30 million in revenues this year, up 50 percent from 1992, and will earn a profit of almost $2 million, or about 6 percent of sales.

Its growth rate makes it stand out even in its fast-rising industry, which as a whole is averaging revenue increases of about 20 percent a year and profits of about 2 percent of sales. With a staff of 85 and about 1,400 temporary workers on the job in a given week, now working on all kinds of computers, MacTemps is one of the 60 largest temporary-help companies, Mr. Yessne said.

When he started his business six years ago, Mr. Chuang did not offer benefits for his temporary employees. He added them early this year. The benefits package works this way: People the company hires out as temporary employees who work 1,000 hour a year qualify for a 401(k) plan. At 1,500 hours, they receive other benefits, including a comprehensive health plan with no deductible, the cost of which they split with MacTemps (about $90 a month for each for a single worker). The plan is the same offered to management and staff.

Of about 6,500 temporary workers at MacTemps this year, Mr. Chuang estimates that 1,000 are eligible for the 401(k) plan and 500 for the additional benefits. Of the 500, he estimates that about 250 enrolled. Mr. Chuang estimated the maximum cost of these mostly young employees at about $270,000 a year, or about 15 percent of profit.

What makes the whole thing worthwhile, Mr. Chuang says, is that good benefits attract and keep good people eager to please. Also, temps who work the most hours for his company are the most profitable: MacTemps must do the same amount of administrative work - recruiting, testing, training- for every temp it employs. One person working five months is cheaper than five people working one month each.

Mr. Chuang also says his company can afford the extra costs of benefits because it sells a high-end service for which he can charge a premium, keeps overhead low, and has no franchisers, large investors or shareholders with whom to share profits, as do many competitors. (Mr. Chuang owns 82 percent of the company and two board members, Steven M. Kapner, and Mia M. Wenjen, own the other 18 percent).

Indeed, as revenues at MacTemps have jumped in recent years, so have margins - from 2.5 percent in 1991 to 6 percent this year, even with the added expense of the benefits plan. Even with the health benefits, MacTemps's margins are about average for high-end temporary-help companies, said Judith G. Scott, a securities analyst with Robert W. Baird & Company, Milwaukee.

While rates vary, MacTemps's clients on average pay about $19 an hour while the temporary workers earn about $12.50.

Some temporary-help companies, including Manpower Inc., also offer benefits to some workers. But MacTemps "has been on the leading edge in the breadth and depth of the benefits it offers," said Bruce Steinberg, spokesman for the National Association of Temporary Services, a trade group.

Some in the industry question the wisdom of MacTemps's policy. "They have certainly pioneered in this, but ultimately, is that benefits package affordable in the long range?" asked H. Thomas Buelter, chief executive of On Assignment, a publicly held company a bit larger than MacTemps. "Can you show enough return to become a public company and attract investors?"

Mr. Chuang's success is easier described than done. Sounding like the Harvard M.B.A. he in fact is, he describes his formula as finding a business that meets a true need, differentiating it in a way that is sustainable and meaningful to clients, accumulating assets through frugality and hard work, attracting and retaining trustworthy people to allow expansion, and sticking to the core business, diversifying very selectively.

The only child of college-educated Taiwanese immigrants living in Queens, Mr. Chuang began his first venture when he was 9, going door to door selling greeting cards.

At Stuyvesant High School in Manhattan, he was academically driven. "We were so competitive we figured grade-point averages out to the second hundredth."

But he likes to recall that at Stuyvesant, where "Question Authority" buttons were popular, he became devoted to change. "I've got that rebellious streak but without the bitterness so it can be constructive," he said.

Among his many entrepreneurial ventures, in 1983 as a freshman at Harvard, he imported 1,500 stereo headsets from Taiwan because they were cheap. But he couldn't even give them away.

While still in college in 1986, Mr. Chuang and two classmates persuaded Harvard Business School to hire them to typeset its weekly newspaper. They used a school Macintosh computer to do the $40,000-a-year contract and started Laser Designs, a desktop publishing service that MacTemps still owns.

They had no capital or assets and drew no salaries for two years. They worked weekends and nights. Slowly, they acquired equipment, rented an office and started a business that rented their Macintoshes at $6 an hour or 50 cents a page, no charge for mistakes.

Clients using his services often asked whether he could send people to their offices to work. He liked the idea. With no business plan, and no temps, he ran an ad in a computer magazine offering Mac-skilled temps. MacTemps was born.

To cover expenses, Mr. Chuang secured a $5,000 loan from a small bank nearby. As friends moved to cities around the country they opened MacTemps offices: first New York, San Francisco, Los Angeles, Chicago. Soon there will be 24. Soon afterward Mr. Chuang began work on an M.B.A. from Harvard; he received it last year, never having left his business.

This year, MacTemps began its first high-profile advertising campaign, which chides companies that don't give benefits to their employees, who are mostly women.

But even at this progressive company, the top management is all male. "It bothers us to no end," Mr. Chuang said. But top management hasn't expanded and creating unneeded positions isn't logical. "We hope to get more balanced as we grow," he said.