At ASA, we believe temporary staffing remains a good model for alternative employment, but it is hard to gain traction in the current macroeconomic environment. The industry thrives as a matchmaker between employers and employees; so, employment suffers when fewer people show up to dance.
Temporary staffing employment sharply declined in June, shedding nearly 50,000 jobs over the course of the month. This was the most severe contraction in industry employment over the last three years, only eclipsed by atypical drops in April of 2021 and 2020, as well as sustained deterioration during the Great Financial Crisis. Given last month’s severe decline, accelerating a prolonged industry contraction since April of 2022, many experts are wondering whether temporary staffing is still a good model for alternative employment, or if it has become a relic of prepandemic times.
ASA data and analysis confirms that temporary staffing remains a good model for alternative employment, but it has been challenging to gain traction in the current macroeconomic environment. The industry thrives as a matchmaker between employers and employees; so, employment suffers when fewer people show up to dance. With reduced hiring among employers and most job openings limited to specific sectors or skill sets, employees are now spending more time outside the labor market. This has fostered increased risk aversion among temporary workers when considering new engagements, yielding lower industry employment.
Sources: U.S. Employment and Training Administration and U.S. Bureau of Labor Statistics
But what about the value proposition of temporary assignments? Are temporary work arrangements less popular than full-time or part-time work arrangements? At a time of depressed labor churn and increased labor costs, employers are more likely to favor long-term work arrangements. However, this preference does not appear to be threatening long-term industry employment. In fact, occupations facing the most severe unemployment have low levels of industry penetration. Conversely, those occupations realized some of the highest levels of expansion following the Covid-19 pandemic.
Source: U.S. Bureau of Labor Statistics
In other words, the decline in industry employment is likely symptomatic of a broader correction within the labor market stemming from exorbitant levels of labor demand following the pandemic. Given these trends, the temporary staffing industry maintains a vital niche within the labor market, but this model has drifted beyond the reach of many employers and employees during these challenging times.
Managers of staffing firms must stay abreast of trending workplace benefits to aid retention of internal employees, and those in client-facing roles must be prepared to educate clients about which benefits are most important to offer.
The Society for Human Resources Management recently released the 2024 SHRM Employee Benefits Survey report, and with it several key insights into the landscape of benefits today. Of the more than 4,500 employers surveyed, 88% consider health care benefits to be extremely or very important. This topped the list, eclipsing retirement savings/planning benefits and leave benefits (81% each.)
Flexibility was fourth on the list with 70% of employers deeming it very or extremely important. Despite this importance, the survey captured a decline in the share of employers offering subsidies for home office equipment, from 62% of employers in 2022 to 56% in 2024. However, work from home is not the only way companies can become more flexible: Recent research by Express Employment Professionals found that fewer hiring decision-makers say having dress code guidelines is important today (31%) than five years ago (49%), and job seekers agree (34% versus 62% five years ago.)
Whatever the benefits a company offers, it is essential to be sure employees understand them. In a survey from The Hartford, half of employees (50%) believe their companies need better resources to help them understand their benefits. At the same time 73% of employers surveyed believe employees underutilize the benefits and services available.
Monitoring trends in employee benefits is a worthwhile exercise for any company, but for staffing firms, the importance is two-fold. Managers of staffing firms must stay abreast of trends for internal employees, and those in client-facing roles should be prepared to educate clients about which benefits are most important to offer. Interested in benchmarking your company’s compensation structure against other staffing firms? Get the hard data you need from the ASA Compensation and Benefits Benchmarking Survey, open for participation now. Learn more here.
