The Staffing Industry In the US - A Statistical Analysis: Is There More Than Just Revenue?

It goes without saying that the US is a big place. Moreover, the US staffing industry is big as well. Nearly 2.4 million workers are placed in roles weekly by the US staffing industry. While the sheer number of people in the US is quite obvious, one thing that staffing agencies can often overlook is the difference between each state.

In a sense, each state in the US functions almost as its own country with hugely different cultures, geography, regulations, industry, and economy. This can make expanding staffing agency operations difficult, as knowing where to target to achieve your goals is hard. 

Each state has its strengths and weaknesses. For example, some states like California have huge margin potential; however, with that comes more competition, while some states may have a lower margin potential but much less competition. 

There is no “best” state, but there is a best fit. Finding this best fit can be daunting for staffing agencies looking to expand their operations in the US for the first time. However, the American Staffing Association (ASA) provides a statistical breakdown of each state so you can see exactly how each state ranks. 

What You Need To Know To Assess a State 

To assess a state's staffing industry, you need to know a few key statistics. Here are the key metrics that the ASA uses to judge each state. 

• Estimated Number of Offices: This refers to the number of staffing agencies within the state and gives you an idea of what competition you’ll be dealing with. 
• Payroll Number: This is exactly as it sounds. The ASA calculates the value of each staffing agency payroll within the state and produces a total figure. The aim is to provide insight into the market's value. 
• Annual Staffing Employment: Analysis of the number of people placed by staffing agencies annually gives an idea of the number of placements available in each state.
• Average Number of Temporary Workers (Per Week): This refers to the average amount of temporary workers each state has available per week. 

The US Average

Before analyzing each state, it’s worth knowing the average across the US to see whether a state is better or worse. 

Here are the US averages: 

Average Number of Offices: 809 

Average Payroll Number: $3 billion

Average Staffing Employment: 322,473

Average Number of Temporary Workers Per Week: 62,135 

Average State-By-State

Here is a look at the averages for each state:

What Can We Learn

On the face of it, this amount of data can be a daunting prospect from which to draw conclusions. However, we can learn a few things that staffing agencies could use to plan their expansion. 

For example, California, Texas, and New York are the top three states with the highest payroll from staffing agencies. California also has the most temporary workers available per week, followed by Texas again. However, Illinois has the third most temporary workers available. 

California once again tops the leaderboard for the highest number of staffing agency offices in the US, followed once again by Texas, with Michigan placing third in this category. California also ranks as the state with the most workers employed by a staffing agency, with Texas again coming in second and Illinois third. 

While California and Texas may seem to be the no-brainer states for expanding operations, it’s worth considering what each variable means. California does have more talent available at a higher payroll; however, it also has the most staffing offices, which can only mean more competition. Consider somewhere like North Carolina, which has a higher-than-average number of temporary workers available and a below-average number of staffing agencies. This means there’ll be more opportunities and potentially less competition to operate with. 

The ASA numbers are based on staffing employment, not sales. Thus, states with more light industrial work will have higher staffing employment. However, this may not translate into higher sales or higher margins since light industrial staffing tends to have lower pay rates and lower markups.

Another thing to note is that each state has a unique mix of industries where staffing agency employees tend to work. New York, for instance, has a heavy cluster of clerical/knowledge workers in the staffing industry, whereas Texas has more workers in the transportation and materials moving space. Be sure to do your research on the state characteristics as you dive into your expansion strategy. One of the best ways to expand in a strategic way is to follow your UK clients wherever they have US operations. Since your relationship is already established, the client will likely trust you for their US needs if they have them.

While there is no best state in the US, it is important to look for one that suits your goals and what you expect from expanding into the US. Focus on your niche and then take the state-by-state statistics to improve your search.

Ascen 

Ascen is built for Staffing Agencies looking to expand; our Employer of Record platform means you don’t have to set up an entity in the US to begin operations. Even if you have an agency in the US, Ascen can help you navigate each state’s employment laws and payroll regulations. 

If you’d like to see a demo, please book one here.