It’s been a rough period for temporary staffing.

Over the past two years, the number of workers supplied to companies by staffing agencies in the US has been steadily declining. The slide has been disastrous for temporary workers forced into unemployment. It’s also led to layoffs and cutbacks for staffing companies and trickled down to other workforce solutions ecosystem players such as payroll funding providers.

Yet there are some encouraging signs. While it’s too early to pinpoint an upturn, fears that the industry will collapse are “unfounded,” according to SIA’s recent report, Insights on the Recent Downturn in US Temporary Staffing 2024.

“We believe that once a new equilibrium is reached, temporary help employment will find its footing and return to its usual pattern of growth when the US economy grows,” wrote SIA Vice President of Research Timothy Landhuis in the report.

One reason for optimism: a strong demand base. More, and larger, companies are adopting contingent workforce programs, according to SIA research. The steady rise of remote work policies also opens the door for staffing firms to help clients recruit and deliver talent from around the globe.

But perhaps the biggest positive sign is the increasing complexity of workforce technology.

“Clients may find it more difficult to maintain cutting edge, in-house capabilities related to talent acquisition and therefore be more likely to outsource this function to a staffing supplier,” the report said.

Behind the downturn

Despite such positive tailwinds, the industry is not yet in in growth territory — it’s expected to contract 5% this year after a 15% decline in 2023. The sustained downturn has stymied industry watchers and staffing providers alike.

“Since the pandemic hit in 2020, normal economic forecasting has been extremely challenging,” Landhuis said in an interview.

Key client industries, such as manufacturing, have been flat over the past two years, the report showed. At the same time, a labor shortage has made temp workers more expensive. The average industrial staffing bill rate soared 30% between 2019 and 2022, according to according to SIA’s SIBC Benchmarking study of US staffing firms.

And the recent decline is a shock after a prolonged period of growth.

“When I took a step back and looked at the data, I realized the staffing industry has enjoyed an impressively long stretch of growth,” Landhuis said. “The last recession to impact all segments of staffing was 15 years ago — the Great Recession.”

The trend isn’t limited to the US. Companies that responded to SIA’s UK Pulse Survey said they faced challenges acquiring new clients, slow decision making from clients and/or sluggish demand from clients.

A return to growth

The slide in temporary help employment has been “disconcerting,” but “I think there are a lot of reasons for optimism for staffing industry growth in 2025,” Landhuis said. Manufacturing and logistics sectors have shown recent signs of improvement, clients’ cost-cutting efforts were likely overblown and demand for typical staffing services are likely to reappear.

But to take advantage of an upturn, staffing firms have to be ready. If they haven’t begun preparing their operations and services to meet clients’ evolving needs, they need to start now.

“I believe that in a market as competitive as staffing is, the successful firms are going to need to evolve rapidly to keep up with changing customer requirements,” said Landhuis.