We don’t need to tell you that 2020 was a tough year for staffing. The industry as a whole was down approximately 11 percent for the year. In 2021 the industry reversed course and is currently at 16 percent growth overall, with some segments greatly exceeding this mark.
Will this trend continue for 2022? With the economy at the forefront of nearly everyone’s mind, what can we expect in this new year?
Julie Ann Bittner, TRICOM President & CEO, spoke with Adrianne Nelson, Staffing Industry Analysts Senior Director of Global Membership Products, as well as Jason Turner, Chief Investment Strategist for Great Lakes Advisors for TRICOM’s podcast series Insights With Insiders to discuss the research and trends propelling the economy, and specifically staffing industry, into and throughout 2022.
The past year and half have brought a lot of change and turmoil to our industry, and Adrianne’s deep dive into the numbers and trends is invaluable. When combined with Jason’s broader economic assessments, together they provide expert insight into the year ahead.
Currently, the August SIA report shows that year over year staffing revenue grew at 26 percent from August of 2020 vs. August 2021. Some segments outpaced others:
Travel Nurse – 85%
Allied Health – 33%
Office/Clerical – 21%
Industrial Staffing – 29% in June
Life Sciences – 21%
IT – 19%
While healthcare in general saw tremendous growth, that was also combined with increases in nursing salaries, as well as turnover rates. SIA is forecasting Healthcare to continue to do well into 2022.
A note to those hoping to break into the healthcare segment if you’re not already there: credentialing is key, and can make it tricky for a staffing company entering this segment if they don’t have an experienced healthcare professional on staff.
Another area for growth in 2022? Education. Education has seen a 35 percent increase in growth this year, and that’s expected to continue, specifically for substitute teachers, aides, etc.
Adrianne also notes that Direct Hire is seeing tremendous growth. People searching for employment are less likely to accept a temp-to-permanent offer when a direct hire offer is an option.
However, one of the challenges across the board when it comes to employment is the result of the “Great Resignation.” Jason notes that nationally unemployment is relatively low at 4.2 percent. Yet, staffing companies and employers are struggling to fill the wealth of open positions. Jason points to both short- and long-term trends at play.
First, Jason notes that the unemployment rate only counts those actively looking for work. In reality, many people have left the workforce: specifically baby boomers taking early retirement or families choosing to rely on single earners because of family obligations like child or elder care. The result is that the labor force is approximately 3 million individuals short because of this major drop in the participation rate.
The longer trend that Jason reveals is that there has been a steady increase in job openings over the past six years prior to the pandemic that has really exacerbated this labor force participation issue. “We’re seeing an American economy that needs more labor and the labor hasn’t been there to meet those trends,” concludes Jason.
People are also more willing to leave positions than they were in the past. Jason points to a recent Fidelity survey in with 4 out of 10 Americans said they are anticipating switching jobs this year. That’s 40 percent vs. in the past when this percentage has been in the teens.
What can companies do to combat this trend?
Julie Ann and Adrianne also discussed some of the main outcomes of the pandemic, including the role of automation. Automation in terms of the speed of hiring, mobile engagement, etc. has quickly become even more important to be at the forefront of both acquiring talent and sales. Changes that in the past would have taken years or even a decade to achieve are being initiated and implemented in months.
Another shift in the industry is the prominence of remote work. Employees are looking for it (in some cases it’s even more important than salary and benefits), as it contributes to the importance of a work-life balance that employees are increasingly seeking. Staffing companies can not only use this as a benefit, but also expand their own temporary worker base.
One of the main topics Jason and Julie Anne discussed in trying to recruit and retain talent is wage growth. Wages and inflation are inter-related. While inflation is currently high and wage growth has made some strides, Jason notes that real wages are currently still one to 1.25 percent short of where they need to be to keep up with inflation. He sees that there is still room for wage growth, and that it’s an easy enticement to pay more, especially in industries such as hospitality and restaurants where pay has already been pushed significantly higher. He sees wage growth pressure to continue across industries in 2022, with the reality being higher wage costs for businesses.
This is just a small sample of the topics and research touched on during the podcasts. Jason also spoke to the coming Federal Reserve rate increases, supply chain issue resolutions, the fate of brick and mortar business, what the media isn’t talking about, upcoming economic volatility, and more.
Both Julie Ann and Adrianne agreed that staffing has always been innovative and responsive to change, despite economic predictors. Today is no different than other times when the industry became upended and responded by coming back even stronger. It’s for these reasons and more that they see a Golden Age of Opportunity on the horizon for the staffing industry.
To listen to the podcasts with Adrianne Nelson (November 2021) and Jason Turner (January 2022), please visit TRICOM’s Spotify page.
Julie Ann Bittner is a 30-year veteran of the staffing industry and President/CEO of TRICOM, a leading resource to the staffing industry since the company was founded in 1989. Visit TRICOM.com for more information.