Economic uncertainty still abounds, which inevitably can muddle decision making and strategic planning even for the most confident of business strategists. It is useful then to step back and take a holistic view of incoming trends, comprehensively looking at the labor market and how growth opportunities will develop within the numerous staffing verticals—not just in the next few quarters, but years from now.
Labor market fundamentals are in the process of being reshaped as an aging population and lower immigration levels result in shifting demographics, while certain staffing sectors are better situated for long-term growth than others. Savvy staffing leaders who plan with these long-term trends in mind can better situate their own companies for growth, for while the future may seem like years away, tomorrow always comes sooner than expected.
TACKLING THE LABOR MARKET MATH
Lower immigration and more retirements will sap the economy of both labor and job seekers. This has many implications for the future of staffing, mostly in that it will exacerbate labor shortages and slow economic growth due to the reduced demand for goods and services. The first effect generally creates opportunities for the industry as employers need more assistance finding the right workers they want.
The second effect, though, is negative as slower economic activity translates to lower labor demand. A more beneficial scenario for the staffing industry would be if immigration levels increased, as labor shortages would still persist, but the influx of population would bolster economic growth. Current immigration forecasts anticipate low levels, however, and thus staffing companies should realize that both constrained labor supply and demand will be a persistent trend at least in the short term.
Pressures from ongoing demographic shifts are already being felt. Immigration is predicted to contribute just 0.2% to overall population growth in 2026, according to the Congressional Budget Office, down from 0.7% in 2024. Currently, the ratio of the population aged 25-64 to the population 65 and older is around 2.7 to 1.0. This ratio has been declining for several years already (down from 3.7:1 in 2014) and is only projected to ease further, decreasing to 2.4:1 by 2034. For the foreseeable future even after this, the retirement-age population will continue to grow faster than the working population, shrinking the available labor force and creating structural demand for additional health care workers.
According to estimates from the St. Louis Federal Reserve, future economic growth will rely even more on increasing productivity as an aging population and lower immigration constrain the available labor force. The breakeven rate—the number of jobs needed to be created per month to hold the unemployment rate steady—is a factor of both population growth and labor force participation. (Note: The breakeven rate is calculated here as labor force growth multiplied by labor force participation rate.) Both are experiencing and will continue to experience a downward trend, meaning fewer jobs have to be created in for unemployment to remain healthy.
Low unemployment is important for the staffing industry as it is a fundamental factor of strong labor demand and thus staffing demand. The average monthly breakeven rate in 2025 was 113,000 jobs needed to hold the unemployment rate steady. However, only 10,000 jobs were added per month, resulting in a deficit of 103,000 jobs and a steady creep upward in the unemployment rate recorded that year. This year, the average monthly breakeven rate fell from 113,000 to just 28,000 jobs needed per month, with an average of 114,000 jobs added thus far, a major factor in holding the labor market steady and facilitating staffing growth.
While economic headwinds may slow the rate of job creation, the near-zero breakeven rate will continue this year and will bolster a labor market that has been struggling with sluggishness over the past few years. For the rest of 2026, the breakeven rate is projected to be between 15,000 to 87,000 jobs needed per month, as low immigration pushes down population growth and continuing retirements chip away at the labor force participation rate.
As the workers continue to leave the labor force faster than they are replaced, valuable skills and institutional knowledge will disappear with them. Training, upskilling, and job-hopping will become more important as employers seek to source the skills they need. A core one of these is adaptability, with nearly 60% of jobs in the engineering, IT, and scientific sector listing it as a top three skill and more than 90% of jobs in all other sectors listing it as a top three skill. While hard skills such as technical abilities are very important, individual agency, the flexibility to manage shifting demands, as well as other soft skills that make candidates a more perfect fit to employers will only retain their importance.
BREAKING DOWN THE DATA BY SECTOR
While the broader labor market fundamentals the staffing industry will be operating in are important as the staffing industry serves every sector of the economy, some industries are poised to grow even as others are set to lag behind. Utilizing both BLS and ASA data for staffing employment by sector, below are the breakdowns by the five major staffing industry sectors as defined by ASA.
INDUSTRIAL
Employment within production occupations is projected to shed 100,000 jobs by 2034, while transportation and material moving jobs are forecasted to increase by 580,000 jobs. Practical obstacles to reshoring and the capital-intensive nature of industrial production limit the demand for labor in this sector, especially as industrial employers have successfully increased their output while downsizing their headcount. While demand for production workers will further ease, the economic importance of logistics and e-commerce will continue to fuel demand for workers in transportation and warehousing.
Using BLS projections and the current staffing spread among occupations as a baseline for future employment, industrial staffing jobs are projected to grow at a slower pace than traditional employment in this sector. Industrial occupations are estimated to grow by 3.1% by 2034, higher than the 2.4% estimated for headcount in industrial staffing. Industrial staffing makes up the majority of staffing employment (51.1%), while industrial jobs make up only 36.6% of total employment. The cause of this disparity is that the jobs staffing currently fills within the industrial sector are projected to grow slower than other jobs within the same sector, a major factor that limits the staffing industry’s growth potential overall.
ENGINEERING, IT, AND SCIENTIFIC
As a sector with a relatively more favorable outlook, IT-related and other computer occupations will continue to experience long-term demand despite recent workforce resizing among employers. Computer and mathematical (10.1%), architecture and engineering (5.3%), and life, physical, and social science occupations (5.0%) are all forecasted to grow faster than the average rate of growth by 2034, as demand for AI-based systems, data processing, software development, research services, and associated consulting services are the major engines that are expected to drive the need for workers in both this industry and, to some extent, the professional-managerial space as well.
Engineering, IT, and scientific staffing is projected to grow at a faster rate than non-staffing employment in the same sector. Engineering, IT, and scientific occupations are estimated to grow by 7.9% by 2034, below the 8.5% estimated for staffing job growth in this same sector. Employment in this sector makes up only 8.1% of staffing employment, but this is above the 5.7% that contributes to the economy overall, meaning there is a greater relative presence of staffing. The importance of the staffing industry to this sector is only projected to increase due to the factors listed above (namely AI usage, data infrastructure, and consulting services) and will be an important growth vehicle into the future.
PROFESSIONAL–MANAGERIAL
The demand for technical talent spills into an adjacent sector with similarly strong fundamentals. As the second largest growing industry group, over 60% of future job gains in this sector will largely be concentrated within management occupations that are expected to grow at nearly twice the average rate (6.1%) and add more than 800,000 jobs by 2034. As businesses seek to increase their productivity to better handle rising costs, more clients want to hire professionals who can help their organization efficiently utilize their workforce. As the premium companies place on productivity only increases, staffing demand for professionals with these skills will increase.
Professional–managerial staffing is also projected to grow at a faster rate than traditional employment in this sector. Total professional jobs are estimated to grow by 2.3% by 2034, below the 3.1% estimated for professional staffing growth. Professional workers make up only 20.9% of staffing employment compared to 33.8% of jobs in total; however, professional staffing’s relatively faster growth rate means this sector will only grow in importance to the broader staffing industry as employers continue to demand flexible, skilled candidates.
HEALTH CARE
As the largest growing industry group, the health care sector has arguably the strongest fundamental tailwinds in its favor, driven mainly by demographic aging and chronic conditions that require more workers to provide medical services. While demand for registered nurses and specialized medical professionals will remain strong, at-home care is also expected to rise significantly.
Interestingly, health care staffing is projected to grow at a slower pace than overall health care employment. Employment in health care is projected to grow by 9.1% by 2034, compared to 8.5% growth estimated for health care staffing. Currently, jobs in health care only make up 9.9% of staffing employment, compared to 12.5% of employment nationally. Health care staffing was crucial to hospitals and other health care facilities during the pandemic, but these same institutions have now become more cost conscious and are thus relatively reluctant to take on temporary health care talent that has a larger sticker-price than traditional employment.
Solid, long-term demand for health care workers will create thousands of jobs, but the relatively modest staffing presence will limit how much health care staffing will be able to contribute to total headcount of the industry at large. Conversely, it also means that there is room for the staffing industry to expand its presence as health care employers look to manage costs and protect flexibility.
OFFICE–CLERICAL
The continued adoption of automation systems, including AI-powered automation, will likely result in further reduction in the total employment of office and administrative support workers. While demand for these roles exists, many clients now prefer candidates with more experience and certifications, slowing down the hiring process in favor of finding a more perfect fit. This trend is largely true for the staffing industry in general, as economic uncertainty and rising labor costs increase the risks associated with hiring a poor-fit candidate. In this regard, staffing can help filter and screen talent for clients, which creates opportunities as human resource departments are overwhelmed with scores of AI-enabled applications; however, the underlying hiring reluctance is a greater limit on growth.
Office–clerical staffing is projected to decrease at around the same pace as overall office-clerical employment, at 3.9% below current levels by 2034. This sector makes up only 9.9% of current staffing employment, compared to 11.4% overall, as administrative staffing has fallen in overall industry representation.
IDENTIFYING TAKEAWAYS FOR GROWTH PLANNING
Changes that experts forecasted years ago are taking shape now. Lower immigration levels and the demographic shift toward an aging population present opportunities and challenges for the staffing industry, as the increasing scarcity of labor clashes with an increasing reliance on productivity growth to fuel economic opportunities. Sectors like health care are clear winners, but professional and technical-intensive positions which facilitate employers’ abilities to harness their potential productivity will be in high demand as well.
- The broader labor market will continue to be gradually enveloped in structural constraints around labor supply. While this trend enhances the staffing industry’s utility to employers, it also threatens to limit economic growth.
- Future unemployment will remain largely subdued as slow population growth results in fewer job seekers needing employment. If job growth holds at currently healthy levels, more jobs will be created than there are job seekers looking for them, creating vacancies and staffing opportunities.
- Industrial and office–clerical staffing will continue to face headwinds, while other staffing sectors are poised for growth due to a myriad of factors largely hinging on demographic shifts and employment decisions that enhance an employer’s productivity.
- Adaptability is still one of the most critical skills across all sectors. As retiring workers take their experience with them, clients will increasingly value candidates who can learn and grow into evolving roles.
Staffing companies have reason to be modestly optimistic about the industry’s direction, as businesses learn to absorb and adapt to economic headwinds. Additionally, prospects for growth have some key structural facets baked into labor fundamentals that can help bolster the industry’s central proposal: to source scarce talent where and when it’s needed.
Max Aldrich is an economic analyst for ASA. Send feedback on this article to s******@americanstaffing.net. Engage with ASA on social media—go to americanstaffing.net/social.
