Welcome to this week’s StaffingHub Brief, your strategic intelligence roundup for staffing agency leaders. In this week’s issue:
- Staffing revenue hit its highest growth rate in three years, with commercial hours at a year-to-date high and manufacturing expansion fueling industrial demand.
- AI is doubling recruiter call time, but the 2026 State of Staffing Report shows operational discipline is what actually separates growth agencies from contracting ones.
- A Massachusetts owner pleaded guilty to a $1.5M payroll tax scheme, New York’s budget targets healthcare staffing profits, and Connecticut’s new AI employment law puts disclosure deadlines on the clock.
Revenue is climbing and manufacturing is pulling the rope
US staffing revenue grew at a median 5% year over year in April, the highest rate in three years, according to the SIA Pulse Survey Report. Engineering and industrial led all segments, both at 5% growth. New orders jumped 45% net, up from 9% in February and the highest reading since April 2022. The share of firms reporting positive revenue growth hit 33%, versus 13% just two months earlier. No segments posted a median decline. (Learn more)
Underlying that revenue story, commercial staffing hours hit a year-to-date high in the week ended May 23, rising 7% year over year, with industrial hours up 10%. The SIA | Bullhorn Staffing Indicator credits manufacturing and logistics demand as well as data center investment. Office/clerical remained the outlier, falling 8% year over year. The backdrop is a manufacturing sector in expansion: the ISM Manufacturing PMI reached 55.9% in May, its highest reading since May 2022, with five straight months of growth. (Learn more on commercial hours) (Learn more on manufacturing PMI)
Why it matters: Industrial demand is giving staffing firms real pricing power right now, but manufacturing respondents to the ISM survey flagged supply chain disruption and energy cost pressure tied to the Iran conflict as near-term risks. Clients in those sectors may get skittish fast.
AI is making recruiters more productive, not redundant
Recruiter call time reached 286 minutes per week in Q1 2026, the highest on record and double what it was in Q1 2024, according to the ASA’s Staffing Productivity Report, produced in partnership with Prodoscore. Recruiters also averaged 1.36 AI tools in use, up from one tool two years ago. The report, which draws on approximately 1.6 million monthly data points across recruiter activity, reads as a direct counter-argument to fears about AI replacing headcount in staffing: firms using more AI tools are pushing more human interaction, not less. (Learn more)
A separate BCG survey of 11,749 workers across 14 markets adds useful texture to that picture. Nearly half (47%) of respondents say they now spend more time managing and directing AI than doing the actual work. Among frontline employees, 74% are regular AI users, up more than 20 percentage points in two years. But 66% report getting little or no guidance on what to do with the time AI saves them, and most don’t redirect it into higher-value work. Strategic clarity around AI, BCG found, lifts measurable business impact by 25 percentage points. Better tools alone, without that strategic direction, move the needle by only about 5. (Learn more)
Why it matters: ASA and BCG data reveal that while AI boosts recruiter productivity, firms only see revenue gains if they strategically redirect saved time. Without clear plans for extra capacity, these efficiency gains often vanish rather than driving business impact.
What separated growth agencies from contracting ones in 2025
The 2026 State of Staffing Benchmarking Report is now live, based on 231 respondents across executive, director, manager, and VP-level roles. Last year, 42% of agencies lost revenue. Growth agencies outpaced contracting ones with a 4.56 operational maturity score versus 3.56, excelling in KPI reviews and SOPs. Heavy AI adoption lowered contraction rates from 56% to 31%. Furthermore, 50% of growth agencies relied entirely on owned sourcing channels, compared to just 27% of slower-growth firms. (Learn more)
Why it matters: The report identifies a consistent success pattern: operational discipline, AI integration, and owned sourcing. Agencies that relied primarily on job boards and lacked structured reviews underperformed last year.
Compliance risk on two fronts: payroll fraud and profit caps
A Massachusetts staffing firm owner pleaded guilty to hiding more than $6.1 million in payroll and avoiding more than $1.5 million in federal payroll taxes. Henry Lam, 68, of HL Temporary Services in Lowell, Massachusetts, paid temporary workers in cash and cashed client checks through check-cashing businesses to obscure payroll figures. The firm also used false payroll numbers to reduce workers’ compensation insurance premiums. Lam was convicted on 15 counts of failure to collect and pay taxes and one count of mail fraud; sentencing is set for August 27. (Learn more)
Healthcare staffing firms operating in New York are facing renewed pressure after the state budget included language giving the health commissioner authority to cap profits. New York healthcare facilities paid $2.6 billion to healthcare staffing firms in 2024, according to Gov. Hochul’s office, which claimed staffing firms kept $1 billion of that in profit. The New York Staffing Association disputes that figure, saying it ignores pass-through costs and that typical agency profit margins are in the single digits. The ASA plans to push for industry involvement in the rulemaking process if the commissioner moves forward. Industry advocates warn that a profit cap could push firms to exit the state, leaving hospitals short of coverage when patient volumes spike. (Learn more)
Why it matters: Staffing faces dual compliance pressures this week. A recent payroll case highlights active enforcement, while New York’s healthcare profit caps suggest a growing regulatory appetite for industry-specific rules.
AI employment laws are moving faster than most firms are ready for
Connecticut signed one of the most comprehensive state AI employment laws in the country, with some provisions taking effect October 1, 2026. The law requires employers to disclose when automated employment-related decision technology plays a “substantial factor” in hiring, promotion, discipline, or discharge decisions. It also bars employers from using AI as a defense in discrimination claims, mandates that WARN Act notices specify whether reductions in force are tied to AI adoption, and provides whistleblower protections for employees of frontier AI developers. Employers have a short runway: disclosure requirements for employees and applicants take effect October 1, 2027, but WARN Act transparency obligations begin just four months from now. (Learn more)
Why it matters: Connecticut now joins Colorado, New York, and California in a growing patchwork of state AI employment regulations. Staffing firms face a unique challenge as both AI deployers in hiring and suppliers to clients who use the technology. Determining which specific rules govern your internal workflows versus your clients’ operations is a priority that should be addressed before the October implementation.
The retirement wave is not a future problem
Workers aged 55 and older now make up 23.2% of the US workforce, up 17.3% since 2014, according to a new Workforce Aging Report from MyPerfectResume based on Bureau of Labor Statistics data. Workers 65 and older increased by more than 40% over the past decade. Some occupations now have 30% to 50% of their workforce at or near retirement age. Financial pressure is keeping many of these workers employed longer than they planned, but the concentration in specific roles and industries means the eventual turnover will be clustered, not gradual. (Learn more)
Why it matters: This is primarily a sourcing challenge rather than a simple workforce trend. Agencies that proactively map retirement-related talent gaps in client accounts will gain a significant sourcing advantage over those forced to react only when essential roles suddenly become vacant.
The StaffingHub Brief provides weekly insights for staffing agency leaders and publishes every Friday.
