If you were panicking in the first quarter when gross domestic product declined by 1.5%, please take a breath. The sky is not falling, at least not yet. Rising omicron infections, inflation and the Russian invasion of Ukraine were among a plethora of factors that knocked growth down from its stellar rate of 6.9% the quarter before. Yet overall, US GDP is still expected to grow 2.3% this year, according to the May forecast by The Conference Board.

Meanwhile, SIA projects the US staffing industry will reach a record $185.5 billion this year, surpassing the pre-pandemic market size of $152.8 billion in 2019. This year’s market size results from 28% growth in 2021 and 5% projected growth for this year. If we exclude the healthcare segment, which we expect to decline from record levels in 2021, our forecast calls for 10% growth this year. We forecast IT staffing to grow by 12% and industrial to expand by 10%.

Growth Drivers

Growth in the US staffing industry is being driven by decent growth in the US economy, strong consumer and corporate balance sheets, a record number of job openings, an improving supply of candidates as the pandemic wanes, and a high pace of wage inflation. We also believe technology advancements at staffing firms are leading to greater ease of use by clients and candidates, further expanding the volume of temporary workers participating in the industry.

Our examination of 2021 staffing industry data suggests that the industry grew an extraordinary 28%, driven by double-digit growth across nearly all skill segments as the economy recovered from pandemic disruptions and wages increased. The 85% growth in healthcare staffing was particularly notable as agencies supplied travel nurses and other clinicians to meet record demand. As a result, healthcare staffing grew to $39.8 billion in 2021 from $21.5 billion in 2020.

Employment Growth

In addition to cyclical factors, we believe some secular factors support the expansion of the US staffing industry in 2022.

Contingent acceptance. One is the growth and acceptance of contingent work arrangements by both client enterprises and candidates as opposed to traditional, regular full-time employment. More discussion on this topic can be found in our US contingent workforce estimates and our workforce solutions ecosystem update.

Remote work. A second and related factor that may support the use of agency temporary workers is the increased use of remote work or work-from-home arrangements. Decoupling work from geographic proximity means that talent can be anywhere and work for a client anywhere. This opens the door to nearly limitless possibilities for staffing firms to access talent and serve clients across the globe.

Platform tech. A third growth driver in our forecast is staffing firms’ emergence and blossoming use of staffing platform technology. We believe staffing platforms’ speed, automation and self-service advantages are enlarging the staffing industry by drawing in new clients and candidates. This has become apparent in nurse and industrial staffing and is gaining wider adoption in other segments. More details on this topic can be found in our “Temporary Staffing Platforms: 2022 Update” and “Understanding the New Platform Environment” reports.

Geographic Markets

Of course, labor market conditions vary substantially by geography, as shown in the diagram of year-over-year growth (April 2022 versus April 2021). All states grew over this period, although not quite at the same rate as Nevada. As wheat prices soar due to global supply chain problems, it will be interesting to see what impact this has on Kansas, which was at the bottom of the table. Our US Employment Situation interactive tool provides more insight into employment trends by industry and geography.

Growth in the US in 2022 is similar to other major markets such as France, up 10%; Germany, 10%; Japan, 13%; and the United Kingdom, 11%; however, it is a long way behind China, 17%, and India, 15%. We estimate the Canadian market will grow 10% this year and 5% in 2023. Yet the CFOs participating in a panel discussion I moderated at our Executive Forum North America conference in Austin, Texas, this year found little appetite for global expansion. To read more about this, see our “Global Staffing Market Estimates & Forecasts” report as well as our newly released “Most Attractive Staffing Markets” report.

Looking ahead to 2023, the US staffing industry will likely experience a more subdued macroeconomic environment, with GDP growth decelerating to 2.2%. Potential headwinds include rising interest rates, ongoing supply chain problems, slowing wage inflation, and disruptions and sanctions related to the war in Ukraine. Due to these factors, we forecast 2% growth (5% excluding healthcare) in 2023 for an industry market size of $189.1 billion. For more data on the US market, including sector breakdowns, see our “US Staffing Industry Forecast: May 2022 Update” report.

So is the sky falling? Not yet, but keep an eye on consumer spending data from the US Bureau of Economic Analysis as an economic bellwether.