10% Fall in US Staffing Revenue: What You Should Know

The US staffing industry is facing a significant revenue decline, with projections indicating a 10% drop in 2024, bringing the market size down to $189.0 billion, according to the latest report by SIA. This decrease is sharper than the 3% decline anticipated in March, underscoring the industry’s current challenges. While a return to growth is expected in 2025, staffing firms must navigate the immediate landscape carefully.

Factors Behind the Decline

The US Staffing Industry Forecast: September 2024 Update highlights several key factors contributing to the revenue decline:

1. Widespread client caution: Companies are delaying projects and exercising restraint in hiring due to economic uncertainty.

2. Depressed manufacturing sector: With slower production rates and decreased demand, staffing needs in this sector have plummeted.

3. Falling bill rates in healthcare: In critical sectors like healthcare, bill rates are falling, leading to reduced profitability for staffing firms.

4. Shift in employment preferences: Both employers and workers are increasingly favoring permanent roles over temporary positions, impacting demand for temporary staffing.

Healthcare Staffing Hit Hard

One of the most affected segments is healthcare, particularly travel nurse staffing, where revenue is forecast to decline by a staggering 30%. Per diem nursing revenue will fall by 11%, while allied healthcare staffing is expected to see an 18% decrease. This shift reflects changing dynamics in the healthcare industry, where cost pressures and regulatory changes are pushing hospitals and care facilities to seek permanent staffing solutions over temporary ones.

Broader Industry Impact

The downturn isn’t limited to healthcare. IT staffing, a traditionally strong segment, is also feeling the pinch, with a projected 7% revenue decline. Additionally, the commercial staffing sector — encompassing office/clerical and industrial roles — will experience a 9% revenue drop.
For staffing firms operating in these areas, the challenges are evident: shrinking margins, heightened competition, and the need for greater operational efficiency to weather the storm.

Bright Spots in a Challenging Year

However, it’s not all bleak. Some segments are still projected to grow in 2024. Locum tenens staffing, for instance, is expected to rise by 12%, highlighting the continued demand for temporary physicians in underserved areas. Education staffing will grow by 10%, driven by the ongoing need for substitute teachers and support staff in schools. Meanwhile, the engineering sector will see a modest 3% revenue increase, likely due to continued investment in infrastructure projects.

What Staffing Firms Can Do

In light of these challenges, staffing firms must focus on adapting to market conditions and exploring new opportunities in growth sectors. Here are some key strategies for staffing firms to consider:

1. Diversify services: With healthcare and IT sectors facing declines, firms should look to pivot into growing segments like education, locum tenens, and engineering.

2. Improve operational efficiency: Automating routine tasks and streamlining processes can help staffing firms reduce overheads and remain competitive in a price-sensitive market.

3. Leverage data and insights: Market mapping and proactive recruitment strategies can help firms identify emerging opportunities and make data-driven decisions.

4. Focus on client relationships: In uncertain times, maintaining close communication with clients and understanding their changing needs can lead to long-term partnerships and new business opportunities.

Looking Ahead

While the 10% decline in revenue presents a tough year ahead for the US staffing industry, the projected return to growth in 2025 offers hope. Staffing firms that can navigate the downturn, capitalize on growth sectors, and enhance operational efficiencies will be better positioned to thrive in the years ahead. Now is the time to reassess strategies, strengthen core capabilities, and prepare for a more competitive market landscape.