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Hiring Trends 2018: What’s Ahead for Staffing Firms?

Staffing firms plan for yet another year of growth in 2018.

Hiring Trends 2018: What’s Ahead for Staffing Firms?

By: John Rossheim

As a staffing professional, you’re a master juggler. Keep in touch with clients? Check. Reach out to new clients? Check. Reach out to prospects? Manage responses? Check. And the list goes on. Meanwhile, the paperwork is piling up, phone calls go unanswered—and oh, wait for it—here comes a New Year, just as you were getting your head around 2017 staffing trends

Are you ready? Worry not. We’re here to help you forge fearlessly into 2018, armed with the insights from top industry experts. Their expertise points to two key upcoming areas of concern for staffing in the year ahead: a tight labor supply, and uncertainty about how government policy will affect business.

To some extent, that uncertainty can provide opportunity for staffing firms. “Temp staffing is a tool that organizations can use to manage uncertainty,” says Barry Asin, president of Staffing Industry Analysts. “Anything that adds to uncertainty tends to add to temporary staffing.”

Yet the stretched labor supply is likely to present an even steeper challenge in the New Year than it has in 2017. With unemployment as low as it is, “it will be a challenge to find the right talent,” says Jodi Chavez, president of Randstad Professionals.

“Over the past two years some of our member firms have had more open requisitions than at any other time in their history,” says Richard Wahlquist, CEO of the American Staffing Association, a lobby group. “This is the number one ‘up-at-night’ issue,” along with filling staffing firms’ pipeline for internal employees, he says.

Take a few minutes to familiarize yourself with the key trends below and boost your 2018 confidence index. 

Higher churn rates may be a boon to staffing. “In 2018 we expect to see a continued imbalance between a tight labor supply and fairly robust demand,” says Patrick Beharelle, CEO of TrueBlue. “And with such low unemployment, you tend to see more churn.” Such churn can increase demand for temporary or temporary-to-permanent employees as clients scramble to fill in for departing workers.

A tight talent pool could constrain staffing expansion in 2018. With unemployment near 4 percent as 2017 winds down, the talent supply is a critical concern for the staffing industry. “Shortages are making it harder for staffing firms to grow,” says Asin.

Workers’ leverage is bringing them somewhat larger paychecks. After many years of economic recovery with relatively small hikes in pay, in 2018 the staffing industry and its clients likely will have to accelerate increases in compensation. “We’re starting to see salaries increase where they must,” says Beharelle. Says Asin: “We forecast modest revenue growth of 3 percent for staffing firms in 2018, and a big chunk of that is increases in bill rates.”

Industry experience can be an effective draw for talent. “We’ll have to be creative, but there are still good workers who need industry experience,” Chavez says. Whereas the training of contingent workers was once mainly about learning the tasks of a specific job, it’s now more about learning the industry and its software, she adds. Many candidates seek that training.

With talent tight, customer relationships are even more important. Providing top-quality service is critical when the labor market tests the patience of clients, as is likely in 2018. So it’s important to assess how clients feel about your firm. “NetPromoter scores have come to the staffing industries,” says Wahlquist. “We encourage doing this with three groups: candidates and employees, client companies, and internal staffing employees.”

Acts of Congress and the White House – or inaction – are likely to affect staffing activity. With taxes and healthcare the subjects of hot debate in Washington, many sectors of staffing face uncertainty in 2018. For example, “a lot of healthcare staffing is driven by the Affordable Care Act,” says Asin. “If that goes away, a lot of volume for healthcare staffing might disappear.”

Wise staffing firms will keep a closer eye on city and state regs. The White House administration is seeking a major rollback of regulation, so labor advocates are evolving their strategy. Given labor unions’ traditional Democratic affiliation and that the party is out of power in Congress and the White House, labor organizations are bringing their regulatory advocacy to select cities and states instead, Wahlquist says. Staffing firms need to carefully monitor changes in state and local regulations for 2018. 

Workers from around the world are still a key resource. Although immigration will continue to be a hot-button issue in 2018, “clients are not shying away from using international professionals,” Chavez says. 

Industry experts believe immigrants with legal status to work will continue to be a key component of the talent supply. “More trade and more immigration are good for the economy overall,” Asin says. “Making it tougher for people to get into the country is bad for staffing. Curbing immigration actually makes it more likely that work gets pushed offshore.”

Says Wahlquist: “What I’ve seen within our business community is a call for calm rationality in making sure that America continues to attract the best and the brightest.”

 

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