As demonstrated throughout this year, the industry has the potential to adapt and prosper despite future challenges, having undertaken many of the critical steps required today to address the staffing needs of tomorrow.
Noah Yosif
Weekly Economic Outlook
12/17/2024
Staffing Resilience Bodes Well for 2025
As individuals, companies, and communities take of stock of past year past and year ahead, the staffing industry can hold its head high for demonstrating remarkable resilience despite a turbulent labor market and regulatory landscape. This year began much as 2023 had started: Employers faced rising labor costs that discouraged them from adding new headcount, prompting most employees to stay put within their current roles due to a lack of opportunities elsewhere. Employers are more likely to recruit temporary workers when turnover rises among their existing ranks, so in a low-churn labor climate, staffing employment continued to decline at similar levels seen in late 2022 and 2023.
However, staffing companies turned challenges into opportunities by adapting to changes in the labor market. They embraced new business ventures such as consulting, analytics, and coaching, and used tech tools, including artificial intelligence, to improve talent engagement, top-of-funnel activities, and search and match functions. So, while contributions from traditional staffing employment to total industry sales fell to their lowest point in 20 years, the latter suffered comparatively less erosion despite continued declines within the former. As evidenced by sideways momentum in the ASA Weekly Staffing Index, after shedding excess headcount, employers still recognize the value added by temporary workers and staffing companies but were simply hamstrung by suboptimal labor costs and economic conditions.
But improving conditions toward the end of 2024 and 2025 make the case for cautious optimism within the industry. While risks remain to the downside, inflation is slowly returning to optimal levels. The Fed will likely enact one more interest rate cut on Wednesday; it has exhibited a willingness to continue loosening monetary policy in 2025 albeit at a more gradual pace. Furthermore, economic growth remains above expectations, owing to robust consumption enabled by a healthy, though stagnant, labor market. All these tailwinds will likely support further deceleration in labor costs that have stifled employers’ appetite to hire, thereby enabling staffing employment and industry sales to see greater stabilization and growth.Â
Next year still holds plenty of unknowns. Policy uncertainties with respect to immigration as well as global trade could spark a resurgence in inflation or more volatility in the labor market. Budding bubbles in household as well as corporate debt could weigh on further growth and stifle business activity. Long-term trends, including an aging workforce, increased focus on productivity enhancements, and global skill gaps, have the potential to significantly transform current operating environments for staffing firms. However, as demonstrated throughout this year, the industry certainly has the potential to adapt and prosper despite future challenges, having undertaken many of the critical steps required today to address the staffing needs of tomorrow.
Total Private Compensation Costs vs. Staffing Sales and Employment
Source: U.S. Bureau of Labor Statistics, ASA Research Department
Weekly Staffing Research Outlook
12/17/2024
With most surveyed adults thinking of taking on work this holiday season, the staffing industry could start to round the corner on its current slump.
Max Aldrich
’Tis the Season for Staffing
The end of the year often sees a boost in terms of labor demand, as many workers take time off and orders accumulate. However, this holiday season, according to a study conducted in November by Indeed Flex, 68% of respondents are considering taking on more shifts this holiday season—mainly for some immediate extra cash.Â
Four in 10 (41%) say the most desirable temporary work is in the industrial, hospitality, and retail sectors. The vast majority (74%) are looking for part-time work up to 19 hours per week while one in five (21%) are looking for longer engagements of 20 to 39 hours per week. The majority of those considering flexible shifts cite access to supplementary income as the primary motivator, as workers look to support themselves in a job market that softened considerably. But other financial reasons are given as well, such as saving for the future and funding holiday vacations and gift-giving. Â
Specifically, many workers want immediate access to wages, and such offerings are found to be an effective incentive to draw talent. A study conducted by economists at the University of California found that providing the option for instant withdrawals led to an increase in hours worked that was equivalent to an increase in hours worked that accompanied an 11% increase in pay. To complement these findings, 43% of respondents in Indeed Flex’s survey reported considering temporary work this winter for instant income.Â
Staffing employment often peaks in the fourth quarter. However, the industry has seen quarter-to-quarter declines in average weekly employment for the past two years. With most surveyed adults thinking of taking on work this holiday season, the staffing industry could start to round the corner on its current slump in what could make a strong end to the year and a promising start to 2025.
Why Workers Are Seeking Holiday Shifts in 2024
Source: Indeed Flex
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