4 Reasons Why Recruiters Should Tap Into the US Contingent Workforce Trend
The contingent workforce in the US has been on an upward trend since 2020 after the labor market underwent extraordinary shifts, mainstreaming remote and flexible work. So much so, that by 2050, 50% of the US workforce is estimated to be made up of contingent workers according to a US Government Accountability Report, offering an extraordinary level of opportunity for recruitment firms in the US who source and place temporary roles.
We're going to explore 4 reasons why recruiters should tap into this growing US contingent workforce, but first let’s explore the contingent workforce definition.
Contingent Workforce Definition
Contingent workforce is a broad term used to describe a pool of workers hired for a fixed amount of time. For the context of this blog, the contingent workforce consists of people earning income by undertaking projects or on a temporary basis. This can include:
Temporary workers assigned through staffing agencies
Temporary workers sourced directly
Independent self-employed workers (Independent contractors)
Consultants
Temporary workers on project based as needed work (Such as summer internships, day-laborers, and seasonal work)
Temporary workers sourced via online platforms (Delivery services like Uber, Upwork, and freelance sites)
The section of the contingent workforce we are focusing on for the majority of this blog is temporary workers assigned via staffing agencies to give you an idea of the opportunities of contract recruiting in the US.
US Contingent Workers Health Benefits
One significant point to note when defining contingent workers in the US, is that they they often have a more difficult time securing healthcare benefits (a must in the US) via their employers as they do not have a full-time contract. This may deter candidates from accepting contract roles over permanent.
However, if you are an international recruiter thinking of tapping into the growing US contingent workforce by placing temporary workers with clients, utilising PGC as your US contractor payroll solution, means your US contractors have the option to opt into a benefits plan from a top 3 US healthcare provider. This can be a huge selling point when breaking into the US market.
Now, that we’ve got the contingent workforce definition over with, it’s time to find out the 4 main reasons why recruiters should tap into the growing US contingent workforce trend.
1) Recruiting in the US Contingent Workforce Decreases Reliance on one Market and one-off Perm fees
To identify reasons why recruiters should tap into the US contingent workforce vs permanent recruiting, we must take a quick tour of the US economy as the vast range of recruitment opportunities it presents often coincides with the size of the contingent workforce and its demand.
The size of the US economy offers a larger talent pool to choose from
The US enjoys geographic diversification, with roughly 50 metro areas to choose from when recruiting. As the third most populous country with over 330 million people. Each of these major metro areas contain their own unique mix of industries and cultural nuances that allow niche recruitment firms to gain competitive advantages in specific geographic markets. The US economy is also bolstered by a steady stream of net migration, decreasing the reliance in one area when seeking qualified candidates to fill vacancies.
The size of state economies decreases reliance on one area for recruitment demand
While the US economy is not immune from volatility due to economic and political turbulence, it does enjoy an enhanced level of stability due to its diversified economy. The large domestic market in the US makes it less dependent on international trade, and the stability of the US dollar.
Many US states have a gross domestic product (GDP) surpassing that of entire larger countries, so when there is economic instability in one state, you could diverse your recruitment business by recruiting contingent talent within another, which may have more booming sectors.
Take for example, the inflation problems and political instability the UK is experiencing in 2022. These problems are causing havoc to arise in the UK economy, and in turn decreasing businesses confidence to bring aboard new hires via recruitment agencies.
When downturns arise in places like the UK, recruiters based there could diversify their business by recruiting in the US from afar by utilizing an employer of record like PGC to onboard and payroll their contractors. As the US has essentially 50 different economies to choose from, larger fees, and shorter employment notice periods, there are many more opportunities available.
Likewise, if recruiters are operating in New York, and the banking industry is affected by economic turmoil, there are other areas and sectors in the US which may be less affected. Especially when companies turn to contract over permanent hires in times of uncertainty, there is no better time to start tapping into the US contingent workforce, to decrease your risk of instability during challenging periods.
The US is the global leader in nearly all sectors for recruitment
The US holds the title as the largest economy in the world, making it an attractive destination for sourcing and placing temp roles within the contingent workforce. The US is an innovator and leading producer across a broad range of sectors, from financial services to technology, you’re sure to find recruitment demand for nearly all niches.
Some of the most innovative and globally disruptive companies are based in the US -including Amazon, Apple, Facebook, Google, Netflix, and Uber; helping to protect the ongoing competitiveness of the US economy and employment. These globally recognized companies also attract the best and brightest contingent talent to work on short-term projects, adding to the reasons why recruiters should tap into the US contingent workforce. A report by MBO Partners which surveyed 504 senior decision makers in large corporations on their use of contingent workers, found:
Contingent labor makes up 28% of a large company’s workforce
67% of corporations expect their use of contingent workers to increase over the next 18 months from August 2022, with only 5% pulling back in their usage.
Over the next five years, 80% of the corporations expect their use of contingent labor to increase.
The findings of this report paint a positive picture for recruiters recruiting within the US contingent workforce, at a time when large corporations are relying more on contract labor to provide them with specialist skills to get tasks done quickly within short timeframes in an increasing digitalized world.
2) The Size of the US Contingent Workforce is Increasing Demand for Contract Recruitment
Largest global contingent workforce is in the US
The US has the largest global contingent workforce in the world. It is estimated by SIA that there were 33 million contingent workers in the US in 2021, generating over $1.7 trillion in revenue.
International recruiters should consider tapping into this growing US contingent workforce due to the number of temporary workers already placed by staffing agencies in the US vs other popular countries. For example, according to SIA’S Global Gig Economy 2022 report, the US dominated in 2021 when it came to placing temporary workers with clients at nearly 3 million workers vs just over 1 million in the UK market. With demand high for contingent talent via recruitment agencies in the US, and the market being less saturated,
3) Remote Work and Economic Uncertainty has Accelerated Recruiting Within the Contingent Workforce
Even before the COVID pandemic arrived, the US contingent workforce was expanding. Remote work has accelerated the process, leading to organizations rethinking how they get work done to add greater agility in the workplace. Many businesses in the US now acquire temporary talent to supplement their workforce needs, particularly for project-based work with short turnarounds and during times of uncertainty.
Advancements in technology, and the prominence of remote work, have made it easier and more accessible for international recruitment agencies to source and place temporary talent within the US contingent workforce. Especially, when many can start recruiting without even entering the US thanks to our ‘recruit from afar’ model.
4) Emerging Industries to Place Contingent Talent
As of May 2021, 2.9 million Americans were employed by a temporary staffing agency, and this has been predicted to increase by 11% by 2030 by the US Bureau of Labor Statistics.
Sectors such as IT, energy and marketing have experienced consistent growth in the US since 2020, with more contingent workers expected to pivot into these roles temporarily to meet their flexible living demands.
IT accounts for the largest professional segment of the US temporary staffing industry at 19%, followed by engineering, and finance/accounting. The remaining portion is made up of life sciences, marketing/creative, education, legal and other professional occupations.
The popularity of temporary roles within these sectors in US makes it the perfect destination to seize the new age of contingent talent.
Ready to Start Recruiting Within the US Contingent Workforce?
In conclusion, the US contingent workforce remains a vital pillar of the US economy. With the temporary hiring through staffing agencies activity within this workforce at record levels in the US, it remains an attractive area to explore to get ahead of the trends.
If you’re considering recruiting within the US contingent workforce, we’re here to help staffing agencies in the US place temporary talent with clients in the US. Our employer of record solutions empowers you to rapidly place contractors in any US state with or without a local entity. We manage payroll, employment compliance, benefits, and the complex back-office tasks that come with operating in the US. All you have to do is find the talent, we sort out the rest.
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.