How Staffing Firms Fared in the Great Recession of 2008 and the COVID-19 pandemic

“I remember in 2008, you saw a lot of staffing agencies close their doors. And I think the big take away from that for me was that you need to diversify your client roster. You need to be listening to what’s going on in the market, and you need to be ready to adapt.”
-David H., COO of an IT staffing company based in New Hampshire

The Great Recession of 2008 is still fresh in the minds of many in the staffing industry.

During the last major recession, the US overall saw a drop of 4.3 in GDP and 8.2 million jobs lost total, including 2 million construction jobs and 2.1 million in manufacturing. It took almost five years to recover the jobs lost during the 18 months of the Great Recession, and US staffing revenue declined 28% in 2009. More than a third of staffing employees lost their jobs.

TEMPORARY LABOR IN A RECESSION

Temporary labor in a recession can be described as FIFO: first in, first out. Flexible labor is first out the door at the beginning of an economic downturn, and the first ones back in when recovery starts. For example, as the economy began to recover in 2010, the staffing industry quickly bounced back and grew 13%. This was in contrast to the rest of the US labor market, which did not recover fully until 2014. Staffing revenue has grown ever since as a tightening labor market and skills gaps made such services even more in demand, since then nearly doubling the revenue since the dip in 2009.

“We’ve been there. We started the company in 2006, I left corporate America and right after that, the economy went down. So I changed gears and started doing outplacement because nobody was hiring. We try to diversify our business quite a bit to make sure we’re prepared for different things.”
-Rick H., CEO of a general staffing firm based in South Carolina

COVID-19 and Staffing

By the Numbers

The pandemic and lockdowns of 2020 resulted in devastating economic consequences, which we are still feeling years later. The resulting economic downturn numbers surpassed those of the Great Recession - which, if you recall, spanned 18 months from 2007-2009.

  • 114 million jobs lost worldwide: The COVID-19 pandemic and the resulting lockdown caused 114 million people to lose their jobs over the course of 2020. 22 million were lost in the US.
  • 14.8% national unemployment rate: In May of 2020, the unemployment rate was the highest it had been since the Great Depression in the 1920s.
  • US employment fell by 22 million
  • 3.7 trillion in lost labor income: working hours lost in 2020, equivalent to 255 million full-time jobs
  • 86% decline in non-farm employment: from pre-recession levels