The staffing industry has experienced intense change since the Covid-19 pandemic, and through the lens of Staffing Industry Analysts’ research, we attempt to better understand the implications. This article shares insights from SIA President Barry Asin’s keynote presentation at the 2023 Executive Forum North America conference, with focus on four changes shaping the staffing industry’s future and some strategies and tactics needed to succeed in a new era.
Talent shortage to talent crisis: We have seen a very persistent workforce shortage due to limited supply and robust demand. Although the supply of workers has finally returned to pre-pandemic levels, the growth of the economy has resulted in a surplus of 6.3 million more jobs than candidates seeking work. A large driver of the shortage is the increase in the number of retirements. There has been a decline in the labor force participation rate for adults aged 65 and older. The rate fell from 20.7% in January 2020 to 19.3% in January 2023, according to the US Bureau of Labor Statistics. Additionally, immigration fueled just shy of three-quarters of the workforce growth between 2010 and 2019, according to The Economist. The pandemic decreased the flow of immigrants entering the US, resulting in an estimated shortfall of 1.8 million workers who did not join the US workforce. Coupled with the long-term demographics where the labor force is getting older — the number of retirements is expected to outpace the number of younger workers entering the workforce — the result is an ongoing talent crisis.
To better understand what health systems and clients in other industries are doing to combat the talent crisis, SIA conducted a “Workforce Solutions Buyer Survey” in 2022 that asked clients what they are doing to address the talent shortage. Almost three-quarters of buyers, 71%, stated they have raised pay rates for contingent workers, while 57% of companies have changed staffing vendors. The current state of the economy provides significant opportunities for staffing firms to contribute towards solving the labor shortage as the pandemic shined a light on the value staffing firms provide, especially when health systems’ internal recruiters are having trouble filling needs.
New openness to flexible work: Health systems have become more willing to take workers from around the country, which opens a whole new labor market. Additionally, unit managers are becoming more flexible in terms of shift coverage to meet the growing preference of healthcare professionals who desire more control of their schedules. This flexibility allows clients to fill gaps in their schedules and meet the growing healthcare demand. According to SIA’s April 2023 “US Staffing Industry Forecast,” healthcare staffing has tripled since 2019 — reaching $64 billion in 2022 — making healthcare the largest segment of staffing, ahead of IT and industrial. Although we do not expect the market to ever return to its pre-pandemic state, SIA will be monitoring solutions that may prove beneficial to health systems such as collaboration with public schools and technological innovations while also lessening the burden on healthcare professionals through mental health programs and advocating for safe working conditions.
Accelerating digital transformation: The pandemic accelerated digital transformation and we can see this in tech stack plans for staffing firms who are adding more texting and email technology, engagement platforms, job boards, analytics and benchmarking. In terms of processes, automation is occurring heavily for both clients and candidates in areas such as job searches, résumé submissions, shift availability, billing information and video interviewing. One particularly disruptive use of automation is the emergence of temporary staffing platforms that allow candidates to serve themselves and directly accept assignments without the need for a recruiter. SIA estimates that total global temporary staffing platform revenue in 2022 reached $21 billion, growing five times faster than traditional staffing by SIA estimates.
New models and approaches: Staffing firms are presenting new models to their clients that are potentially disruptive, such as direct sourcing and daily pay. According to SIA’s 2022 “Workforce Solutions Buyer Survey,” 80% of buyers are implementing direct sourcing or are looking to implement it in the next few years. Among companies with direct sourcing in place, the median spend on direct sourcing is only 3% of total contingent workforce spend, but SIA research shows that direct sourcing is growing. During the pandemic, direct sourcing was favorable to clients as it resulted in more access to talent, minimizing the effects of the labor shortage and proving higher priority than a focus on cost reduction. Another paradigm shift in business processes is taking place in the form of more frequent payment options regarding wages. According to SIA’s 2022 “North America Staffing Company Survey,” 96% of temporary workers are paid weekly or longer but same-day pay and other earned wage access programs are becoming widely available and preferred by candidates.
We are still attempting to understand the ramifications the pandemic had on hospital leaders and frontline workers. It is important for staffing firms to stay up to date on industry changes to better understand structural issues and offer strategies that allow clients to stay focused on their important work. Through partnerships, technology and research, staffing firms may uncover the best approach to achieving success in a post-Covid world, proving their value to clients and their place in solving the talent shortage.
