Special note: The growth rate for 2023 has been updated to a contraction of 15%.
The staffing industry should grow along with GDP, right? Not recently. GDP growth is positive, while industry revenue fell 15% last year, according to preliminary estimates from SIA. This was after strong growth in 2021 and 2022.
““We’ve had a lot of growth over the years; we’re in a challenging time right now, ” SIA Chief Analyst Barry Asin said in a keynote speech to kick off Executive Forum North America in Las Vegas. “The world is also changing.” It’s a difficult time for the staffing industry, Asin noted in his presentation, “Leadership in a Time of Turbulence.” Its challenges come amid positive US economic indicators.
GDP has been positive since 2021, with projected growth of 2.2% this year. US jobless claims are at lows. Total jobs numbers are climbing.
Yet inflation, which erupted in the wake of the pandemic, still weighs. While it’s coming down, it remains higher than the Fed would like. Interest rates are also elevated.
“My sum total on the economy now is it is a little bit weird,” Asin told the audience. “It is a very mixed time.”
Even so, Asin noted, “I think we will look back at this and say this is what a soft landing looks like when we’re in the middle of it. A soft landing to economists is sort of what a purple squirrel is to the world of staffing.”
There are several explanations for why the staffing industry isn’t tracking with overall economic.
- Industry sectors less focused on temp such as hospitality are seeing growth, while industry sectors that use temporary workers more heavily are showing some weakness.
- Some employers are “labor hoarding” and there’s overall less churn in the labor market.
- Disruption from the pandemic continues.
- Staffing growth “normalized” in 2023 after growing by nearly 50% between 2019 and 2022.
“I think there’s some combination of all those things explaining what’s going on,” Asin said.
SIA’s preliminary forecast shows the US staffing industry is set to contract 3% this year and return to growth in 2025 with an increase of 3%.
Some of the hardest-hit sectors this year are healthcare, projected to contract 11%, and industrial, projected to contract 5%. There are, however, sectors exhibiting growth. One is education staffing, where revenue is projected to be up 7% after rising by 20% in 2023.
The full SIA forecast of industry revenue growth was published today and is available to SIA corporate members.
The Future of Staffing
Trends impacting staffing today include the talent shortage and technology, Asin noted. US labor demand exceeds supply by 2.7 million jobs. Demographics suggest slow growth ahead, and immigration remains a politically polarizing issue.
“I think this is a long-term, fundamental shift, and I think it’s a reason for optimism in staffing,” Asin said of the talent shortfall. “If people are having a hard time recruiting, they need experts to help them. … The ability to recruit in this type of labor market is a key to success moving forward.”
Other long-term drivers of change were digital transformation and disruption, including AI; flexible work; and macroeconomic and regulatory turbulence and uncertainty.
Experts on a recent SIA panel forecast that 39% of staffing firms’ tasks could be handled by AI in the next three years, Asin noted. Looking toward the future, Asin said he expected the industry would begin to have even more impact, visibility and value. He also forecast staffing will become more of a strategic partner to clients, become more valued by workers, be more tech driven and human centered and bring higher value to businesses.
Executive Form North America continues through Thursday.