An Overview of the Staffing Industry for 2022 and What it Means for Factors

Olivia Hudson of Sallyport Commercial Finance checks in on the staffing industry, which has experienced steady improvement since a shortfall in 2020, while providing a perspective on what changes in the industry mean for factors.

BY OLIVIA HUDSON, ACCOUNT EXECUTIVE, SALLYPORT COMMERCIAL FINANCE

Over the course of the last two years, there have been dramatic changes in the staffing industry, as an 11% decline in revenue in 2020 was reversed with a 16% increase in 2021, followed by an expected 4% increase in 2022.

Throughout this period, the COVID-19 pandemic has created a work setting many have not experienced before. With mandatory work-from-home orders, essential and non-essential businesses offering hybrid options and back to the office mandates, workers have developed a newfound sense of work-life balance and particularly what that means to them and their families. COVID-19 introduced a spike in employee burnouts both in the work environment and in their personal lives with juggling new technology, home schooling and childcare issues in addition to maintaining full-time employment.  Employers are having to adapt to what is now a worker’s market and the “new norm.”

A Worker’s Market

After working from home for almost a year (or more), employees are experiencing a desire to have a positive work-life balance. As an employer, recruiting and retaining the right talent in 2022 means being more people-centric and providing the flexibility that employees are valuing most while also having to offer higher salaries. Employers have to work harder and ultimately spend more money to acquire and retain skilled and valuable employees. Flexibility is key for employees and salaries are higher than they have been in decades. On average, there are two open positions for every worker, resulting in candidates holding the power. Employers who embrace this current culture will find their desired talent much more easily than those who choose to continue to enforce the traditional nine to five, in-office work environment. Employers have to focus on retention strategies and incentives to try to curb “the Great Resignation”.

With a work-from-home mindset instilled in many employee’s minds and some employers not fully embracing this shift, the United States is experiencing a quick turnover in employment. U.S. employees are switching jobs much more frequently, while Canadian workers are remaining in their jobs for a much longer period. In addition, while self-employment rates in Canada are dropping, they are higher than pre-pandemic levels in the United States. Canada has experienced strict and long lockdowns and restrictions and is finding that in order to recover from those periods, offering a hybrid work lifestyle has become a necessity to retain employees. Perhaps as a result of the requirement for Canadian employers to embrace this new work lifestyle, they have recovered faster than the U.S. market with human resources, banking and finance, software development and nursing now being stronger than average industries. Much like the United States, Canada is also experiencing a decline in the retail, hospitality and food and beverage industries. 

Sallyport’s Perspective

Sallyport Commercial Finance has a wide range of staffing clients in both the United States and Canada operating in a variety of industries. As expected, our clients in the nursing staffing industry benefited tremendously from COVID-19 and continue to experience growth throughout 2022. The high demand in the industry paired with nurses leaving full-time employment during the pandemic gave our clients the opportunity to recruit and place temporary nurses in nursing homes to fill these vacancies. With Sallyport’s support, our clients have also been able to offer a higher hourly wage throughout the pandemic and beyond, which has contributed to their continued growth.

In contrast, the oil and gas sector experienced a drop in volume across the board for 2020. While oil prices and demand were low, there were some consolidation and acquisitions in that market, which led to a reduced need for staff. The energy sector is a volatile industry and this lull in 2020 resulted in mass layoffs. During 2021, this rebounded and now in 2022, the industry is experiencing a significant boom. Opportunities in this sector are outstripping resources. One of our staffing clients in this industry reported that companies are willing to hire people with zero experience and from any background just to fill positions. There has been a change from fixed job descriptions seeking skilled labor to looking for employees that has the potential to be trained and retained. With the support of Sallyport, our client has been able to successfully open two new entities across the United States and Canada and is able to take advantage of opportunities to continue its growth trajectory.  

Staffing companies in the energy sector are doing extremely well. This is great for factoring companies, as where there is dramatic growth, there is a need for funding. Credit information in this sector has not been able to keep pace with the changing landscape of mergers and acquisitions and COVID-impacted businesses, so care is needed and alternative information should be sought to support exposure to this sector. Portfolio and ledger concentration is also a consideration in this sector given its volatility.

2022 and Beyond

The staffing industry is well placed to take advantage of the current economic climate and fared very well last year. It has recovered tremendously from 2020 and is predicted to continue to increase. The housing market boom we have experienced over the last two years, with multiple bids over asking price and houses being snapped up, is coming to an end. The bubble is bursting, and we are seeing the mortgage industry already making cuts. JPMorgan Chase, along with others, recently announced that more than 1,000 of its employees would be affected due to “cyclical changes in the mortgage market.” This creates opportunities for staffing agencies who can recruit and replace these workers.

In the current economic environment, we are experiencing an after effect of what was, for a lot of companies, an extremely successful 2021. Some companies are embracing the work-from-home culture because they are financially stable after coming out of a particularly good 2021 fiscally. However, as all signs suggest that we are heading toward a recession, we may see a step back into the traditional work setting. In a recession, companies will need to refocus on efficiency, productivity and output from all employees, and the work-from-home model will become unattractive to employers who may very well adopt more strict measures when it comes to getting employees back in the office.