American Staffing 2009: Looking for Growth

After one of the most difficult years for the U.S.—and the world—since World War II, the global economy is on pace to shrink by 1% to 2% in 2009, according to the World Bank. Everyone is looking for signs of growth. The staffing industry is a good place to start.

Hypercyclical, the staffing industry has taken quite a beating in this recession. According to a preliminary White House estimate, temporary help services accounted for 21% of all U.S. job losses in 2008. While temporary and contract employment appears to have stabilized in 2009, jobs losses in search and placement firms accelerated earlier this year. But at this point in the economic cycle, the staffing industry can tell a lot about the future.

ASA analyzed quarterly employment and sales data that the association has been collecting since 1992 to ascertain the level of gross domestic product growth required for the staffing industry to grow. Models show that GDP growth of 1.2% is required to increase temporary and contract employment, and growth of 0.8% is required to increase sales. Generally, then, economic growth of about 1% is necessary for staffing industry growth.

In June, 54 economists regularly surveyed by the Wall Street Journal predicted that the recession would end sometime in the third quarter of 2009, with GDP growing at an annual rate of 0.6% in that period—not enough to trigger staffing industry growth. But if the economists are right in their predictions that GDP will grow at a rate of 1.9% in the fourth quarter, then staffing industry employment and sales should begin to show modest increases before the end of the year.

Then, instead of just looking for signs of growth, staffing industry executives can start looking for double-digit growth—the kind that has occurred after the prior three recessions. It might take a couple of years, but with history as a guide, it would not be too soon to start to plan accordingly.

Temporary and contract staffing has historically grown faster than the economy and nonfarm employment—even taking recessions into account. Staffing industry growth, over the long term, is expected to significantly outpace overall economic growth. That expectation is not likely to be derailed by the current recession, particularly given that the industry has historically enjoyed double-digit growth rates when the economy is emerging from a recession.

Read more about recent trends in the staffing industry, as well as the industry's prospects for this year and beyond, in American Staffing 2009, the ASA annual economic analysis. The report includes 18 charts that illustrate the industry's sales and employment growth, as well as the ways it benefits employees, staffing clients, and the economy. The report is available online at americanstaffing.net.

American Staffing 2009 is the cover story of a special issue of Staffing Success magazine, in the mail to ASA members this week. This special issue is also being mailed to several hundred policy makers, journalists, and industry analysts.