by Sarah Schmidt
March 16, 2022
Despite the COVID-19 pandemic initially crimping demand for temporary workers, the economic recovery through 2021 has led to a labor market short of workers, which has boosted demand for temporary staffing. Freedonia Focus Reports expects this shortage to recede slightly in 2022, but the inability to find workers will limit revenue growth for staffing firms going forward.
2020 started off as a bad year for employment services. The COVID-19 pandemic led to an economic downturn that year, causing businesses to freeze hiring, axe their temporary staffing, and reduce employee headcount. These impacts differed by sector: for example, healthcare-related and IT staffing firms saw rapid increases in demand for temp workers amid hospitals battling the COVID-19 pandemic and rapid shifts to work from home for office workers.
However, 2021 saw a reversal of 2020’s trends. Staffing firms received massive windfalls, bolstered by:
Since the beginning of the pandemic, employees have been changing jobs, or just quitting, in what’s being called the Great Resignation. This has stressed the labor supply, which is making temporary workers harder to find – and increasing the amount companies are willing to pay for them.
The industry hit peak revenues in 2021, and 2022 is expected to see declines as demand for temporary workers begins to subside. More workers are expected to rejoin the labor market as extended unemployment benefits end and the severity of the pandemic declines. As a result, pressure on the US labor market is expected to slacken slightly, reducing revenues for temporary help services.
However, after 2022, staffing firm revenues are expected to continue growing. Economic expansion and a still-tight labor market will drive demand for temporary staffing across most sectors of the economy. Additional factors include:
While companies employing temporary workers may see a near-term respite from higher fees and worker wages, the tight labor market will ensure this remains a headache for companies for the foreseeable future.
For additional information and analysis of US industry trends, see Employment Services: United States, a report published by Freedonia Focus Reports. This report forecasts to 2022 and 2026 US employment services revenues in nominal US dollars, the number of workers employed by employment services firms, and total US nonfarm employment. Total revenues are segmented by service in terms of:
Total employment service workers are segmented by occupation as follows:
Total nonfarm employment is segmented in terms of service providing and goods producing.
To illustrate historical trends, total revenues, the various segments, total employment services workers, and nonfarm employment are provided in annual series from 2011 to 2021.
Employment service firm worker totals include personnel and corporate staff at employment service firms. Workers co-employed by professional employer organizations, or PEOs (who are classified as employees of the client company), and persons who perform work for a company on a limited basis but are technically classified as self-employed are excluded.
Related reports include:
Owen Stuart is a market research analyst with Freedonia Focus Reports. He enjoys working with primary and secondary research to bring the latest insights to Focus Reports, and his experience as an analyst covers multiple industries.
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