Economists say post-recession growth is sluggish — but the staffing industry is doing great. Read on to learn how staffing growth compares to the overall economy, which sectors are growing fastest, and what to expect in 2016.
Long Recession. Slow Recovery.
Unemployment is down. Job growth is up. So, why are economists complaining? According to a September report from the U.S. Bureau of Labor Statistics, employment has increased by an average of 198,000 jobs per month so far in 2015. It sounds like good news — but compared to last year, when employers added an average of 260,000 jobs per month, the growth is not as impressive. And when you consider the big picture, it’s clear we still have a lot of catching up to do.
It has taken nearly five years to recover jobs lost during the18 months of the Great Recession. During that time, which began in the first quarter of 2008 and ended mid-2009, real gross domestic product (GDP) dropped in five out of six quarters. Overall, the GDP lost 4.3%, making this recession worse than any since the end of WWII. The Great Recession also lasted longer than the 10 prior post-war recessions, which lasted an average of 10 months each. Pair a lengthy recession with a poky recovery, and the result is a slow-growth economy. Since the recovery began in June of 2009, the GDP has shown an average of 2.2 percent annually. It’s good — just not great.
Better-than-Average Growth for the Staffing Industry
Compared to the overall economy, the staffing industry is growing quickly. A new industry forecast by Staffing Industry Analysts predicts industry revenue to reach a record $142.4 billion next year. The industry is projected to grow by 7% this year and 6% in 2016. So, why is staffing doing so well?
For starters, many businesses restructured operations at the beginning of the recession, downsizing staff to offset lower profits. However, as corporate profit rebounded and business confidence increased, the industry began to recover. To reduce risk, more companies began making smaller commitments to staff, using temporary employees instead of permanent full-time employees, and relying on staffing companies to support growth. The trend continues to have a positive effect on the industry.
Healthcare Jobs Boosted by Affordable Care Act
The largest growth is in the healthcare sector, which has reached 17% for 2015. Part of this growth is due to higher bill rates, as a result the Affordable Care Act. In the period from late 2013 until now, we have seen the largest expansion in insurance coverage since the decade following the creation of Medicare and Medicaid. As more individuals are able to access care, healthcare spending has increased, and hospital job growth is surging. This is excellent news for staffing companies — especially those that specialize in healthcare.
Are you ready to grow?
As the economy continues to recover, staffing companies are well positioned to meet growing job needs. However, it’s important to proactively plan so that you may respond quickly. Implementing scalable processes and outsourcing back-office tasks can help.
When it comes to scaling up, access to working capital is a common challenge. If you need cash to cover payroll and “staff up” for large assignments, you may wish to consider invoice factoring. This financial tool is a good one to have if your clients pay reliably, but not as quickly as you might like. Invoice factoring companies like Triumph Business Capital pay cash for your unpaid invoices, and take over collections. This not only provides you with capital — it also reduces the burden of collection from your back-office.
How Long will the Recovery Last?
If there’s one thing we’ve learned from the Great Recession, it’s that we can’t always predict what will happen next. However, analysts are concerned that since the current expansion has lasted longer than pervious ones, it may be coming to a close soon. Most are now predicting that 2016 will see a decline.
Only time will tell how long the recovery will last — so it makes sense to take advantage of today’s good fortune while you can. If your staffing company needs assistance with working capital, give us a call today!