Following a year of historic growth in the US staffing industry, many recruitment firms felt what seemed like an inevitable slowdown in 2023. Staffing Industry Analysts (SIA), the leading global research and advisory firm focused on staffing solutions projected a decrease of 10% in revenue generated by the US staffing market last year.
The staffing industry has experienced a decline in demand across industries. Analysts and experts attribute this to the calibration and settling of the economy from the Bullish growth in the temporary workforce during the Pandemic.
US Healthcare staffing industry revenue is expected to shrink by 3% this year to a total of $184.6 billion, according to a new report by SIA. Helping drive the decline is travel nurse revenue, which continues to normalize after its pandemic highs. Travel nurse revenue is expected to decrease by 20% for this year. Excluding travel nurse and per diem nurse revenue, overall staffing industry revenue is expected to be roughly flat year over year with a contraction of just 0.3%.
In comparison, the staffing industry is estimated to have declined by 15% in 2023.
One explanation for the industry’s growth trajectory is that the US staffing industry is normalizing after the extraordinary upticks in 2021 and 2022 brought on by government spending in response to the pandemic, according to the report. Travel nursing grew sixfold between 2019 and 2022 amid Covid-19.
Other explanations include higher pay rates reducing client demand and sectors with high usage of temps, such as manufacturing, seeing difficulty in the economy.
Looking at the revenue forecast by segment, SIA expects industrial staffing revenue to fall 5% this year, while office/clerical will hold steady. IT staffing revenue is expected to fall 3%.
There were bright spots in other segments. Education temporary staffing is expected to grow by 7% this year, and engineering staffing is expected to grow by 6%.
Looking forward to 2025, SIA forecast US staffing industry revenue will grow 3% to $189.9 billion. SIA believes the commercial segments will return to growth in 2025, while most professional segments other than healthcare will experience a mid-single-digit expansion.
What is the revenue split between temporary staffing and permanent staffing globally?
Worldwide, the split between temporary and permanent staffing weighs heavily in favor of the former. Temporary staffing amounts to 85% of the market globally, whilst permanent staffing, also known as place and search, amounted to 15%.
In the US, it is estimated that temporary staffing will account for 89% of all revenue generated in the US staffing market. We’ve previously discussed why temporary contract staffing is a popular avenue for recruitment firms to explore.
US employment rate and staffing industry performance since pre-pandemic
Despite the US staffing market value receding in 2023, it is important to note that the industry is almost $50 billion larger than before the pandemic, as indicated in the graph below. It’s suggested that this increase may be a likely result of better pricing for staffing agencies especially for the Healthcare industry, where hospitals and facilities issued Covid Bill rates. The Travel Nursing and Per diem staffing agencies experienced the largest chunk in the growth.
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