US Staffing Industry Forecast 2024: Commentary from Staffing Industry Analysts & PGC Group
US Staffing Industry Forecast 2024
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Following a year of historic growth in the US staffing industry, many recruitment firms felt what seemed like an inevitable slowdown in 2023. Staffing Industry Analysts (SIA), the leading global research and advisory firm focused on staffing solutions projected a decrease of 10% in revenue generated by the US staffing market last year.
We sat down with John Nurthen to assess the outlook for the US staffing market in 2024. John manages the team that delivers SIA’s international research content. The following content is part-derived from our conversation with John (which you can watch above), in addition to insights from the team at PGC.
In this blog, we’ll cover:
The US Staffing Industry Forecast for 2024
US Staffing Industry Statistics (key sectors and locations to watch this year)
Staffing Industry Trends in 2024
What is the US staffing industry forecast for 2024?
How big is the global staffing industry?
SIA estimate the global staffing industry generated $654 billion of revenue in 2022. With this in mind, the market is forecasted to be worth in the region of $665 billion worldwide in 2024.
The US is the largest staffing market in the world, amounting for almost one-third of the entire revenue generated. In fact, the US is such a dominant global force that it outperforms the combined revenue of the next three largest staffing markets in Japan, UK, and Germany.
Is the US staffing industry growing?
Looking ahead to 2024, the US staffing industry is poised to generate $207.2 billion, with SIA projecting growth of 3% year on year.
What is the revenue split between temporary staffing and permanent staffing globally?
Worldwide, the split between temporary staffing and permanent staffing weighs heavily in favour of the former. Temporary staffing amounts for 85% of the market globally, whilst permanent staffing, also known as place and search, amounted to 15%.
In the US, it is estimated that temporary staffing will account for 89% of all revenue generated in the US staffing market. We’ve previously discussed why temporary contract staffing is a popular avenue for recruitment firms to explore.
US temporary staffing industry sector outlook for 2024
Tech & IT
2024 Market Value = $43.2 Billion
Projected y/y increase = 5%
The IT sector accounts for the most significant portion of professional temporary staffing revenue in the United States. According to SIA's projections, the IT staffing segment is expected to experience a 7% year-over-year growth in 2024, reaching a total value of $43.2 billion.
Engineering
2024 Market Value = $10.4 Billion
Projected y/y increase = 8%
The engineering segment is anticipated to exhibit growth in 2023, making it one of the few US staffing segments with this positive outlook. This follows robust growth in the previous two years, and it comes as no surprise that the engineering sector is projected to strengthen even further in 2024, with an estimated growth rate of 8%. This growth translates to a market value of $10.4 billion.
Finance/Accounting
Predicted 2024 Market Value = $9.1 Billion
Projected y/y increase = 4%
The finance/accounting segment in the US, like other staffing segments, experienced a decline in volume in 2023 due to client caution and reduced hiring plans. However, there are projected signs of slight growth in 2024, primarily driven by improved volumes and pay rates. SIA are predicting the US finance/accounting staffing segment to be worth $9.1 billion in 2024
Life Sciences
Predicted 2024 Market Value = $3.5 Billion
Projected y/y increase = 5%
Staffing Industry Analysts forecast a 5% growth for the temporary staffing segment in the life sciences sector in 2024, reaching a value of $3.5 billion.
Education
Predicted 2024 Market Value = $2.2 Billion
Projected y/y increase = 7%
The education temporary staffing sector is expected to have experienced a significant surge of 20% in 2023, and this upward trend is expected to persist in 2024. SIA predict this market to increase by a further 7% to be worth $2.2 billion in 2024.
Marketing
Predicted 2024 Market Value = $2.1 Billion
Projected y/y increase = 5%
Due to recession concerns, many companies have scaled back or halted their advertising and marketing activities, leading to a projected decline in the marketing staffing segment for 2023. However, as business activity resumes in 2024, it is expected that this segment will experience a 5% growth, resulting in a market value of $2.1 billion.
Insights around gross margins and bill rates for US staffing agencies in 2024
Staffing Industry Analysts regularly conduct pulse surveys among recruitment leaders to get a true feel for market conditions. In our discussion John states that 90 different staffing companies were asked what they thought would happen with bill rates in 2024.
In response, 20% thought bill rates would increase while 23% thought they would see a decrease in bill rates. The majority of staffing firms did believe that their gross margins will improve this year.
There appears to be a strong belief among recruitment leaders that although market conditions are certainly tougher than they were in 2022, there is more than enough opportunity for staffing agencies to thrive in the US market, noted by the responses to our conversation with SIA.
As a trusted Compliance Partner, PGC Group help guide and advise recruitment and staffing firms how to build a thriving and compliant contract book in North America.
US employment rate and staffing industry performance since pre-pandemic
Despite the US staffing market value receding in 2023, it is important to note that the industry is almost $50 billion larger than prior to the pandemic, as indicated in the graph below. John suggests that this increase may a likely result of better pricing for staffing agencies and some inflationary pressure.
John also states that employment figures in the US have generally increased since before the pandemic. “Over a three-year period, 38 states have experienced an increase in employment.”
Furthermore, over the period of 2023, Mississippi was the only state not to see an increase over the 12-month period according to the latest data from the Bureau of Labor Statistics.
What are the best states in the US staffing industry to operate in?
If you haven’t already figured it out, the US is a HUGE place. At PGC, we recommend that recruitment agencies take the ‘inch wide, mile deep’ approach to recruiting in the US.
Agencies should not see the US as one whole market. Employment gains, domestic migration, taxes, and laws will all differ state by state. When agencies are starting out in the US we recommend they specialise in a specific location and a specific sector.
A common question we get asked at PGC is, “Where is the best state to operate in?” And the answer is usually, “Well, it depends!” Every recruitment leader will need to choose a location that makes strategic sense for their business.
The traditional top states for recruitment agencies entering the US market are California, New York, and Texas. In recent times, we’ve witnessed increasing activity in states within the south-east region of the US, most prominently Florida and North Carolina.
Partnering with companies like PGC and SIA is a great window into insights for top-performing locations in the US. SIA’s geographic opportunity atlas is a fantastic tool for those interested in the US market, offering detailed analysis at state, county, and metro levels, outlining where the opportunity lies for staffing agencies.
US staffing industry trends to watch in 2024
In the coming year, we anticipate several key trends and shifts that will shape the US staffing industry landscape.
2024 is an election year
An election year in the US tends to create uncertainty for businesses, impacting their hiring decisions and causing a temporary slowdown in the staffing market. Companies often opt for a cautious approach until the election outcome is known and potential policy changes become clearer.
Previous election years serve as examples of how the staffing market can react.
It must be considered that other attributing factors had their effect on the US staffing market during election years; the COVID-19 pandemic in 2020, and the financial crisis of 2008 offering two starkly examples.
However, in 2016, CNBC reported that many companies initially held back on hiring decisions until after the election due to uncertainty surrounding the outcome and potential policy changes. This cautious approach led to a temporary decline in hiring activity.
John comments that this trend is not unique to the US, as elections loom in the UK and across Europe, all of which could have significant ramifications for the global staffing industry.
US employment laws that will impact staffing agencies
The United States is experiencing various US employment law trends and changes. As employment law differs on a state and federal level, it’s important to get it right when working with contractors in the US.
For example, California has expanded their prohibitions again non-compete clauses in contracts, meaning that with limited exceptions, non-compete agreements are considered void and unenforceable in California, regardless of whether they were signed inside or outside the state.
In our conversation, John also makes reference to the Equal Pay Act which was introduced in Illinois in 2023, in addition to the licensing required for nurse staffing agencies in Louisiana.
We recommend checking out our blog for the latest updates on US employment laws taking place at the start of 2024.
Rise in platform model delivery
“They plan to continue investing in tech and automating their staffing processes.”
The latest research from SIA indicates that staffing firms are continuing to invest in tech. John claims that about 27% of the US market in 2022 was delivered by way of the platform model, which is particularly common in areas such as the travel nurse segment.
With a rise in automation, recruitment agencies entering the US market may well be competing against lower cost models. However, it is worth much consideration that the US is and will remain a very relationship-driven market, and the emphasis will be put towards those recruitment agencies that can continually deliver a well-rounded, high-quality service to their clients.
Earned wage access
John notes that there has been an increased trend for US agencies offering their contractors the option to be paid on a daily basis. This growth is particularly frequent for contractors in lower-skilled jobs. In a survey conducted by the American Payroll Association in late 2022, 21% of workers indicated that earned wage access (EWA) is a benefit they were either already receiving or would be interested in receiving.
With states bringing in legislation around earned wage access, it is certainly a trend recruitment leaders should be aware of and something we expect to see more of in the future.
SIA are planning to produce a more detailed report on EWA, so keep an eye out for upcoming details. In the meantime, you can find out more about this emerging trend in the staffing industry here.
Explore what the US Staffing Industry has to offer with a Trusted Partner
As the largest global staffing market, the US has plenty of opportunities for recruitment agencies.
If you're planning to enter the US market in 2024 or want to stay ahead in the staffing industry, it's important to seek expert advice and stay informed about the latest developments. That’s where PGC come in!
We provide best practice guidance pursuant to applicable law, insights into the latest US staffing trends as well as managing the onboarding, payroll, expenses, insurance, and benefits, of your contractors so you don’t have to.
Schedule some time with one of our experts who can help set you up for success in the US staffing industry.
Interested in more staffing industry insights from SIA? Join them at their Executive Forum in Las Vegas March 25-28, 2024.
Disclaimer: The information provided here does not, and is not intended to, constitute legal or accountancy advice. Instead, the information and content available are for general informational purposes only.