US Employment Service Revenues Set to Drop in 2022, Return to Growth Long Term

News provided by

May 09, 2022, 13:38 ET

Economic expansion, need for workers will bolster industry through 2026

CLEVELAND, May 9, 2022 /PRNewswire/ -- US employment service revenues are forecast to decline 1.0% annually in nominal dollars through 2026, according to Employment Services: United States, a report recently released by Freedonia Focus Reports. The industry experienced a revenue surge in 2021 as a tight labor market and a rapidly reopening economy generated elevated levels of demand for temporary staffing services. However, the industry is projected to contract in 2022 as the labor market returns to trend. Declines are expected to reverse after 2022, as economic expansion and a tight labor market drives demand for workers in most industries. Additional factors include:

Low unemployment levels are creating a challenging hiring environment, supporting demand for employment services.
Increasing wages will support growth in fees collected by employment service firms.
Skill shortages, exacerbated by retiring baby boomers, and shifts toward more flexible workforces will encourage employment firms to offer retraining programs.
Firms with fewer than 50 full-time employees will continue to use temporary help to avoid the Affordable Care Act's (ACA) mandate to offer health insurance or face tax penalties.

However, a number of factors will continue to constrain revenues. For instance, the ACA has increased costs for staffing agencies with 50 or more employees, which places upward pressure on prices.

Employment services revenues are projected to see an 18% drop in 2022, falling from an elevated 2021 base year caused by extensive corporate spending on talent acquisition and HR services. Companies faced difficulties rehiring workers as the economy bounced back from COVID-19 restrictions in 2021. However, in 2022, more workers are expected to rejoin the labor market as extended unemployment benefits have ended and the severity of the pandemic declines. As a result, pressure on the US labor market is expected to slacken, reducing revenues for employment services.

These and other key insights are featured in Employment Services: United States. This report forecasts to 2022 and 2026 US employment services revenues in nominal US dollars, the number of workers employed by employment services firms, and total US nonfarm employment. Total revenues are segmented by service in terms of:

temporary help services
professional employer organizations
employment placement agencies

Total employment service workers are segmented by occupation as follows:

transport and material moving
manufacturing
office and administration
healthcare
business and financial
construction and extraction
other occupations such as architecture, education, and personal care

Total nonfarm employment is segmented in terms of service providing and goods producing.

To illustrate historical trends, total revenues, the various segments, total employment services workers, and nonfarm employment are provided in annual series from 2011 to 2021.

Employment service firm worker totals include personnel and corporate staff at employment service firms. Workers co-employed by professional employer organizations, or PEOs (who are classified as employees of the client company), and persons who perform work for a company on a limited basis but are technically classified as self-employed are excluded.

More information about the report is available at:
https://www.freedoniafocusreports.com/Employment-Services-United-States-FF95011/?progid=91541

About Freedonia Focus Reports
Each month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Services & Industries reports can be purchased at Freedonia Focus Reports or MarketResearch.com.

Analysis is intended to guide the busy reader through pertinent topics in rapid succession, including: