2011 Staffing Industry Economic Analysis

In the two years after the Great Recession ended in June 2009, U.S. staffing firms created more new jobs than any other industry. According to the U.S. Bureau of Labor Statistics, the temporary help services industry added nearly half a million workers and accounted for 91% of total nonfarm job growth from June 2009 through June 2011.

Even as the American staffing industry leads overall job growth, it still has far to go in returning to its prerecession high. The industry lost more than a third of its work force during the recession, and only about half of those losses have been recovered in the subsequent two years of economic expansion.

The staffing and recruiting industry is "hypercyclical," meaning its business cycle tends to be exaggerated during economic expansions and contractions.

Staffing industry employment usually peaks in the fourth quarter of any given year. In the fourth quarter of 2008, however, when the U.S. economy was in the midst of a free fall, staffing employment contracted by a quarter million workers—the most severe decline in the recorded history of the industry. When business is going badly, staffing clients quickly respond by first shedding temporary and contract workers. In January 2009, the White House estimated that payroll employment in temporary help services accounted for one in five job losses in 2008.

In contrast, in the early stages of economic recovery, businesses turn first to temporary and contract workers to help them meet growing demand. Hence the rapid uptick in staffing employment since the Great Recession ended.

This cycle can be observed in decades of government data. It reveals that staffing employment is a coincident economic indicator and a leading employment indicator, particularly when the economy is emerging from a recession.

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