5 US Staffing Industry Q1 2022 Updates for International Recruiters Eyeing up the Market [Infographic]
The US staffing industry is the largest in the world and is packed with opportunities for international recruiters to explore and expand their margins by placing contractors either remotely, or by landing and expanding with our help. This infographic and blog will run through the main 5 US staffing industry updates from January to March 2022 (Quarter one – Q1) so you can see for yourself the potential of the US staffing market.
US Staffing Industry Q1 2022 Update
1) A Surging Start to 2022 as US Staffing Industry 2021 Data is Released
New data released by the American Staffing Association in March 2022, emphasized the US staffing industry’s growth since the pandemic, as temporary and contract sales jumped 17.9% from 2020, to reach a new record high of $144.2 billion in 2021.
Contributing to the $144.2 billion revenue generated by temporary sales, staffing companies hired a total of 14.1 million temporary and contract employees in 2021, up from the 13.6 million hired in 2020. This highlights the demand for contract employment which is set to grow further in the coming year.
Contract recruitment demand is growing in the US
Companies are rethinking the way they work since the world was plunged into accepting remote work, realizing they can now hire anyone from anywhere without the office requirement. From marketing and accountancy workers to handle spikes in demand during busy seasons, to IT workers who complement in-house capacity and help operations run smoothly in the ever-changing tech-powered workplace, companies are relying more heavily on contract workers.
As the contracting economy continues to grow, with freelancers projected by Statista to make up 50.9% of the US workforce by 2027 to a total of 86.5 million workers, there is no time like the present to start building your contract talent pool in the US to capitalize on this upward trend.
2) Talent Pool Availability in the US Based on US Economy and Labor Trends Q1 2022
When reviewing how the US staffing industry performed in the first quarter (Q1) of 2022, the US economy is a good place to start, as it often reflects the performance of the staffing market. December 2021 set the scene for 2022, as US real gross domestic product increased at an annual rate of 6.9% in the fourth quarter, according to a recent estimate released from the US Bureau of Economic Analysis. Let’s look a little closer at the performance of the US labor market each month in Q1.
US labor market updates from Q1 2022 to keep in mind when sourcing talent
The ADP recorded nearly 1.5 million jobs added in the US in the first quarter of 2022, which presents lots of opportunities to make placements to clients in the US.
a) January 2022 US labor market performance
January set the US labor market off to a strong start in 2022 recording high yearly job growth and temporary staffing revenue from all skill segments. The US Bureau of Labor Statistics (US BLS) reported 11.3 million job openings in January, a 1.6% month-on-month (m/m) decrease, but a huge 55.7% surge year on year. Out of this, US temporary help jobs were up 9.7% y/y. Additionally, 10 States posted the lowest jobless rates in January 2022 since 1976.
b) February 2022 US labor market performance
Job openings remained at a near-record level in February at 11.3 million, up 43.3% year over year, the US Bureau of Labor Statistics reported. In terms of the temporary labor market to tap into, 278,000 temporary help jobs were added in February on a y/y basis.
The US Unemployment rate edged towards historically low levels in February to reach 3.8%, near the pre-pandemic level of 3.5%, which was the lowest in five decades. Another indication of the state of the US labor market in Q1 2022 was the quit rates. The number of Americans quitting their jobs was still historically high in February, at 4.4 million, up from 4.3 million in January.
This number, however, decreased slightly from the highest on record 4.5 million in November. What does this mean for international recruiters thinking about operating in the US staffing industry? Keep reading as we will go into detail on what temporary workers are increasingly expecting in order to apply to jobs and be retained.
US workers are eyeing job changes in response to inflation
Creeping US inflation rates jumped to 4.9% in April 2023. This has spurred a tidal wave of US workers expecting pay rises to combat the extra costs of living. Insight Global found that 66% of US workers are considering looking elsewhere if employers don’t comply. So, inflation should be kept in mind when negotiating salaries with clients to attract and retain contract talent.
c) March 2022 US labor market performance
The US labor market continued to grow even tighter in March, with US unemployment claims falling to a jaw-dropping 187,000 in the week ended March 19. This was the lowest level since September 1969 and is a sign that employment in the US should remain strong. Additionally, the US gained 4,900 temporary jobs m/m in March (+260,000 y/y) to equal approximately 3.15 million.
Overall, the positive US GDP rate predictions, falling unemployment rates, and uptick of temporary jobs signify a strong US labor market, which in turn continues to paint a positive picture for the US staffing industry for the rest of 2022.
3) Workers Seeking Greater Benefits to be Retained
The great resignation in the US has not been left behind in 2022, with workers still gaining more say over their workforce requirements, and having a greater ability to ‘pick and choose. To help you grasp the enormity of the situation, the US Bureau of Labor Statistics revealed in January that approximately 47.1 million Americans quit their jobs in 2021.
A recent survey by WTW (Willis Towers Watson), sheds light on what is happening in the US labor market, which has a knock-on effect on the US staffing industry. WTW surveyed 9,658 US workers between December 2021 and January 2022 and found that more than half were open to leaving their employers (53%), with a further 44% admitting to actively looking for a job in the fourth quarter of 2021/early 2022.
One positive of this employee retention crisis paired with the ‘at will’ employment requirements in the US, is as US companies are still struggling to quickly fill positions alone, they are turning to specialized staffing agencies to find skilled professionals within their niche.
In order to seize this growing trend in the US labor market, recruitment agencies must upsell the benefits they can offer to both clients and workers via contract staffing, which isn’t solely money-focused, to build and retain high-quality candidates.
Top reasons workers cited for accepting a position elsewhere in the WTW survey, which staffing agencies should keep in mind when upselling contract roles, include:
Hybrid work arrangement (58%)
Higher pay (56%) - Emphasising the importance of salary transparency in job ads and payments that reflect the higher cost of living and inflation rates.
Attractive health benefits (39%)
Retirement programs (47%)
Job security (33%)
Offer top healthcare coverage for Contractors in the US
One point we are going to emphasize from the list above is the importance of healthcare benefits to US workers. This is because healthcare is not a free benefit provided by the government in the US. Instead, workers expect a comprehensive employer-sponsored healthcare package to enable them to access healthcare.
You should be aware that if you enter the US staffing market, contractors face a more difficult battle to secure health coverage vs standard employees in the US. That’s why our clients, who are international recruitment agencies entering the US staffing market, use us as their US employer of record. We become the legal employer and provide your eligible contractors with access to top-of-the-range benefits plans via one of the top 3 healthcare providers in the US.
If you have plans to make placements in the US, using PGC will allow you to give US contractors the option to enroll in a benefits plan that will enable them to access the coverage they may not have otherwise. This will help set you apart when building your talent pool and client base.
Offering a top healthcare benefits plan has become a point of separation and selling point for our clients operating in the US staffing market and is an opportunity worth seizing.
4) IT Continues to Dominate Temporary Staffing Revenue in the US
If you are considering making placements in the US staffing market, knowing where the demand is and focusing on a niche area will help surge your growth. IT temporary staffing is a segment we highlighted in 2021, which has shown no signs of slowing down in the first quarter of 2022.
IT continues to contribute the most to professional temporary staffing revenue in the US according to SIA and is predicted to reach record revenue levels in 2022 amid growing volume and tighter supply. However, according to a global survey by Gartner in March, IT workers appear restless, with only 29% having a high intent to stay with their current employer.
Ambitious international recruiters could consider this as an opportunity to lure ‘open to switching’ IT talent to consider taking contract placements with their US clients. After all, IT is a booming market in the US and employers are crying out for top-tier talent to meet demand.
5) A Comeback for Skill-based Hiring?
A study released by the Harvard Business Review in February 2022 found that employers reduced degree requirements for 46% of middle-skill positions and 31% of high-skill positions from 2017 to 2019 when they struggled to fill vacancies. With demand for talent currently outstripping supply due to the high quit rates in the US labor market, we have witnessed some of our international recruitment company clients operating in the US turning to skill-based hiring rather than degree requirements.
Considering Entering the US Staffing Industry?
The temporary US staffing industry has got off to a strong start in 2022, with temporary jobs increasing each month year on year for the first quarter of the year, and demand for talent still high.
If you want to gain a deeper insight into why the US staffing market could be the next stage for your recruitment business, you can schedule a US strategy call with us to learn about the opportunities in the market and how you can easily place talent by using an employer of record solution.
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.