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The larger the gains in hiring and quits, the larger the gains in staffing employment. Right now, both hiring and quitting are falling due to tight economic conditions, which explains the current slump in demand for temporary workers.
Momentum within the staffing industry remains at a standstill, but which trends might help it recover? Like a matchmaker, the staffing industry thrives upon adequate levels of labor churn. This occurs when employers and employees actively seek to meet each other, usually in the form of hiring and quits. If employers are looking to add more employees to their payrolls, and employees have enough incentive to quit their current positions for better opportunities on the open labor market, staffing companies will be looked upon to make these connections and thrive as a result of it.
Labor market churn often starts with employers as the forecasters of growth because an increase in hiring tends to have a greater impact on staffing employment than quits. However, both trends have a proportional impact on demand for staffing services, as shown in the first chart below. The larger the gains in hiring and quits, the larger the gains in staffing employment. Right now, both hiring and quitting are falling due to tight economic conditions, which explains the current slump in demand for temporary workers. But the magnitude of declines in hiring and quits has decreased substantially as the days of the Great Resignation recede further into the rearview mirror.
That is why staffing employment has reached a floor and could begin to increase in time. Over the next few months, these gains will be small. As shown in the second chart below, 53% of monthly movements in hiring range between 0% and 10%. Similarly, 35% of monthly movements in quitting range between 0% and 10%. Together, these trends suggest that gains in staffing employment will be small should economic conditions truly begin to ease. This means a long road to previous highs seen during the Great Resignation for the staffing industry overall.
Lifted to record heights by the red-hot labor market of the postpandemic economic recovery, the temporary help services industry employed 3.1 million workers in 3Q2022. Just two years later the industry contracted by 15.8% to employ 2.6 million.
Lifted to record heights by the red-hot labor market of the postpandemic economic recovery, the temporary help services industry employed 3.1 million workers in 3Q2022. Just two years later the industry contracted by 15.8% to employ 2.6 million. While this decline was nationwide, it was not evenly felt. Data from the Quarterly Census of Employment and Wages (QCEW) program provides insights that help parse staffing employment trends on a local level, identifying how well certain areas performed and why.
By U.S. Census region, the Midwest saw the greatest proportion of staffing job loss at 18.3% from 3Q2022–3Q2024. Conversely, the Northeast shrunk the least at 10.4% during the same period. Nearly four out of 10 temporary help employees were in these two regions in the third quarter of 2024. The South and West regions were largely equivalent to the national average and employed the remaining six out of 10 staffing employees. Out of all 50 states, Delaware saw the greatest decline in staffing employment, down 27.6% from 3Q2022 to 3Q2024. Followed by West Virginia (-26.5%), Kansas (-26.5%), Minnesota (-24.8%), and Illinois (-23.7%). The last three out of these bottom five states are in the Midwest region.
Part of what might help explain geographic differences in staffing employment are conditions in local labor markets. Analyzing JOLTS data from the Bureau of Labor Statistics found that the ratio of unemployed persons per job opening rose more than 60% in the Midwest region, from 0.46 unemployed persons per job opening in 3Q2022 up to 0.74 in 3Q2024. The ratio increased nationwide as openings fell and unemployment gradually rose, but rose the least in the South, up only 47% during the same period. Generally, a lower ratio indicates a more competitive labor market, where workers are scarce and staffing agencies play a greater role in helping businesses meet hiring needs. The greater relative increase in the ratio could help explain why the Midwest experienced greater declines in staffing jobs compared to their neighbors.
