The Road Ahead:
Economic Outlook, Policy, and Moves that Win in 2026
For over 60 years, the American Staffing Association (ASA) has been advancing the interests of the staffing industry through advocacy, research, and education. We recently sat down with President and CEO Stephen Dwyer, as well as Chief Economist Noah Yosif, to talk about recent trends in the economy, legal policy to watch, and what staffing firms can do to win in 2026 and beyond.
The good news for staffing is that 2026 is shaping up to be better than 2025. Early in the year, we’re seeing meaningful opportunities across segments as employers lean into cautious hiring and flexible workforce strategies. The ASA Staffing Index points to that momentum, showing modest year-over-year gains by March/April 2026 compared with the same period last year—evidence that activity is picking up even if demand remains selective. According to the latest U.S. Staffing Industry Forecast, the staffing sector is projected to grow roughly 2% in 2026, reaching an estimated $183 billion in revenue.
One thing 2026 is not: a home run. Uncertainty still weighs on hiring and pricing. Geopolitical shocks like the war in Iran have added volatility, elevated interest rates and persistent inflation continue to pressure costs, and overall hiring has decelerated over the past couple of years. Layer on the industry’s biggest structural shift—AI—and it’s clear leaders need clarity on both markets and mandates.
Enter ASA President & CEO Stephen Dwyer and Chief Economist Noah Yosif. With years of deep industry expertise and a solid research foundation, they have an incredible amount of knowledge to share.
The State of Affairs
When asked about the overall state of the market, Dwyer responded that while uncertainty remains, he sees the industry starting to turn the corner.
“We’re starting to see some positive sequential growth over the last several months, and we expect to see it continue over the course of the year. With fits and starts, of course.”
Yosif points out that in a labor market defined by high costs and increased uncertainty, employers have roles to fill - and the short-term flexible employment arrangements that staffing provides are attractive. But caution often prevails.
“The way that the staffing industry really achieves growth in any part of a business cycle is when there is more hiring in the economy. And so for those very same reasons that I mentioned—elevated labor costs, increased economic uncertainty—businesses are cautious about hiring workers in general.”
"We’re starting to see some positive sequential growth over the last several months, and we expect to see it continue over the course of the year."
Segments to Watch
The jobs and industries beating the broader trend of low hiring tend to meet two conditions, notes Yosif: they face persistent personnel shortages, and they operate in areas still experiencing strong sales and demand.
Healthcare
Persistent shortages and aging demographics are creating durable demand across roles and settings—needs that extend well beyond the current moment.
“There are simply not enough healthcare workers,” notes Dwyer. “With an aging population of workers and a greater need for healthcare workers, that trend will continue not just in 2026, but beyond.”
IT/ Technology After a long plateau, IT and adjacent tech categories are showing signs of a breakout—especially for niche talent in AI, cloud, and cybersecurity. The AI build-out is also fueling industrial/commercial demand as data centers and related infrastructure go up across the country. Professional and technical roles— engineers, IT, and scientific services—remain critical to integrating these technologies.
“Companies are instituting AI, but they also need engineers, computer scientists, folks that really understand those technologies and how to best integrate them within the overall company. And so those particular roles, despite what we’re seeing in the economy, are still very much in demand,” notes Yosif.
Admin/Clerical/White Collar Support functions benefit from the ongoing reshoring of manufacturing and logistics operations, particularly in supply chain hubs. At the same time, firms should monitor AI’s impact closely and diversify if concentrated in roles most susceptible to automation and workflow redesign.
Light Industrial Historically tied to the overall health of the economy, today the light industrial market is defined by caution, flexibility, and operational efficiency. The explosive post-pandemic hiring in warehousing and logistics has cooled from peak levels, but demand for flexible labor persists across manufacturing, distribution, fulfillment, and broader supply chain operations. Challenges include talent scarcity, turnover, wage pressure, and shifting workforce dem ographics—while technology continues to reshape processes on the floor.
And AI has im pacts across all industries.
“Anyone who says they know exactly how AI will impact our industry—be skeptical,” notes Dwyer. “Some think it will completely disrupt, while in some sectors you see people think it won’t im pact at all. As with most things, it’s somewhere in between.”
Staffing as a Leading Indicator
Yosif notes that an often overlooked dynamic is how closely staffing leads the broader labor market. While the labor market has had stronger growth than staffing the last few years and unemployment generally remains low, data trends indicate the overall economy is likely to experience a brief decline.
“What we’ve seen over the last couple years is that the staffing industry has seen declines in employment, whereas the labor market has continued to experience growth. But when you actually look at the data, what you see is that growth within the labor market is declining at a really fast pace. Staffing has essentially forewarned this decline we are seeing.”
But the good news, says Yosif, is that the recovery staffing is posting now is also a signal. If history holds, it suggests the broader labor market could experience a brief dip in growth and then rebound quickly.
Cost Pressure and Policy Shocks
Yosif and Dwyer both point to recent policy and geopolitical shocks that have hindered growth and raised prices across the board.
“The economy has had to weather quite a few policy-induced supply shocks in the last couple years,” says Yosif. “In 2021, very low interest rates fueled demand as the economy reopened, lifting prices. In 2022, Russia’s invasion of Ukraine sent oil and gas costs soaring. In 2025, tariffs added another layer of inflation. And now, in 2026, the closure of the Strait of Hormuz is once again driving prices higher.”
Those shocks are translating into higher labor costs and operating expenses for employers. With the Federal Reserve signaling that rate cuts may be delayed, financing costs and wage pressure could remain elevated longer than expected. For staffing owners, the imperative is clear: protect margin.
Policy & Legislation: What to Watch in 2026
In terms of policy, Dwyer says that ASA is very active in monitoring legislation, at the national and state level, that would impact or impede staffing.
The staffing industry is at particular risk because of the sheer volume of people employed. Compliance com plexity m eans the goal posts are constantly shifting, and many staffing firms are on the hook for environments they don’t control: Multiple work sites and clients, various timekeeping practices, and joint employer rules that broaden liability. Not to mention, high turnover increases error rates and data gaps.
And that’s why it’s more important than ever to keep an eye on legislative trends, says Dwyer. He points to several areas to watch:
AI While at the national level the current administration seems positive about AI with a “light touch” approach, many states have filled the federal policy vacuum with over 1,200 bills introduced in 2025. For staffing, state legislation to watch focuses on proliferating rules on automated decision tools and bias. In terms of compliance, using AI to assist with employment can be a high risk endeavor, says Dwyer. And he also says to expect more.
“Artificial intelligence measures at the state level will absolutely continue to proliferate.”
Immigration At the Federal level, the enforcement on immigration is very aggressive and staffing firms that hire many nationalities can expect more worksite visits and audits. There is also proposed legislation to change H- 1B visa rules, which could affect certain industries like tech.
Employment As always, it’s crucial to look at what your state requires for E-Verify. 10 states require all public and private employers to use it, and many more have limited rules. We are also seeing a rise in I- 9 audit trends amid an intensifying enforcement environment driven by ICE (Immigration and Customs Enforcement), with a significant increase in audits focusing on technical errors reclassified as substantive violations. The Department of Labor and the US Equal Employment Commission are cracking down on pay and overtime laws as well as Title VII employment discrimination.
Tax The One Big Beautiful Bill Act (OBBBA), passed in July 2025, had several provisions of interest to staffing. It made permanent several expiring portions of the Tax Cuts and Jobs Act, including the individual tax rate structure, an increase in the Section 199A Qualified Business Income passthrough deduction. Dwyer notes that ASA was very involved in making sure staffing qualified for this deduction. Notably excluded from the OBBBA was the Work Opportunity Tax Credit (WOTC), which expired at the end of 2025. There is proposed legislation around it called the “Improve and Enhance the Work Opportunity Tax Credit Act” (H.R.1177/ S.3265). While there is no guarantee it will be expanded, Dwyer advises that staffing firms should continue documentation to maximize the credit should it be passed and retroactively extended.
Dwyer also mentioned that he would not be surprised if we see sales tax legislation proposed because states need revenues.
“One way to do that is to impose taxes on services. We’ve had a successful track record in arguing that sales taxes on staffing are taxes on jobs, and we will continue to do so.”
And one way staffing owners can engage more in advocacy, says Dwyer, is to work with the ASA Government Relations Team, headed by Toby Malara.
“We will do everything we can to help you be engaged. We can make arrangements for you to meet with your representatives, give talking points, and brief you on the legislative process. We can help prepare you, and it’s never too late to get involved.”
How Staffing Firms Win in 2026
When asked how staffing firms should respond to the challenges of the moment, Dwyer said the key is to prove your value in terms of quality, reliability, and risk mitigation.
“Staffing firms win by consistently proving their value to clients, over and over again. And that goes way beyond price.”
Yosif recommended that firms diversify beyond a single line of business or buyer concentration.
“It’s also crucial to maintain credibility with clients, and also have the flexibility to go beyond the traditional placement staffing model."
The Road Ahead
The road ahead looks steadier than the year behind it. While 2026 won’t be a banner year for staffing, signals are improving: measured gains in the ASA Staffing Index, durable demand in healthcare and professional/technical roles, and an industry recovery that often leads the broader labor market. At the same time, cost pressures and policy shocks remain real, and AI is reshaping work in ways that require clear-eyed planning rather than doom or denial.
As Dwyer and Yosif reminded us, this is a year to act with both optimism and rigor—adapting to change, aligning to what works, and accelerating where the return is clear. For owners, the throughline is discipline. If you can prove your value to clients, protect margin, and stay on top of the rules of the game when it comes to policy, success will follow.
And an ASA m em bership certainly doesn’t hurt.
“I would encourage anyone in staffing to tap into the research and many resources ASA can provide. We exist simply to advance the interests of this industry, always."
