Key takeaways:
- Job postings rose 5% and applications 7% year-over-year, but hiring dropped 10%.
- Gen Z’s share of applicants is shrinking (40% vs. 44% last year) while millennials re-emerge (23%), bringing different expectations.
- Employers increasingly use AI for screening and matching, but candidates remain skeptical about its fairness, especially older generations.
Hiring fell 10% this July compared to last year, even as companies posted 5% more job openings and candidates submitted 7% more applications, according to the latest iCIMS Workforce Report. For staffing agencies, this means longer sales cycles, frustrated clients sitting on unfilled requisitions, and candidates growing impatient with drawn-out processes.
And with 33 applicants competing for every opening (up from 28 last year), candidates face longer waits while companies become increasingly selective. Time-to-fill metrics have plateaued at 41 days, suggesting that despite having more options, employers aren’t moving faster on hiring decisions.
Generation shifts in the candidate pool
Gen Z continues to hold the largest share of the job market at 40%, but that percentage is down from 44% last year.
Meanwhile, millennials (ages 25 to 34) show renewed job search activity, now representing 23% of all applicants. Millennial candidates often have different expectations around compensation, work-life balance, and career progression than their younger counterparts. They’re also more experienced, potentially requiring higher placement fees but offering clients more immediate value.
The AI revolution creates new dynamics
Employers are increasingly integrating artificial intelligence into hiring processes. More than half (55%) see significant value in using AI for candidate screening and assessment, 40% use it for candidate matching, and 37% leverage it for sourcing and outreach.
The most successful AI implementations focus on “automating the search, not the selection.” Employers use AI for high-volume screening tasks but still rely on human judgment for final hiring decisions. This is an opportunity for staffing agencies to position themselves as the human layer that AI cannot replace—providing relationship building, cultural fit assessment, and strategic workforce planning.
How do job seekers feel about this increasing use of AI? While most believe it speeds up the hiring process, candidates are skeptical about algorithmic fairness. Only 24% of candidates overall believe AI makes hiring decisions more equitable, with younger candidates are more likely to say AI-driven processes are fair than older candidates (44% for Gen Z and millennials compared to 21% for Gen X and 18% for baby boomers). So human-centered approaches will be even more critical for agencies placing senior-level talent or serving industries with more experienced workforces.
Preventing recruiter burnout with smart AI use
The combination of increased applicant volume and stagnant hiring creates a perfect storm for recruiter burnout. With more candidates to manage but fewer actual placements, productivity metrics suffer while workload increases.
Agencies can address this by implementing AI tools strategically—not to replace recruiters, but to handle repetitive tasks like initial screening and scheduling. Use technology to handle volume, while your recruiters focus on relationship building and strategic consultation, activities that command higher fees and create stronger client partnerships.
Other strategies worth exploring include:
- Develop different engagement strategies for different age groups. Younger candidates may appreciate AI-driven efficiency, while experienced professionals value personal attention and transparency about where technology is used in the process.
- Focus on time-to-value, not just time-to-fill. With hiring decisions taking longer despite increased candidate volume, differentiate by focusing on candidate quality over quantity. Clients will pay premium fees for pre-screened, interview-ready candidates who move through their process efficiently.
- As employers become more selective, generalist approaches become less effective. Consider specializing in specific industries, skill sets, or experience levels where you can develop deep expertise and command higher fees.
- Use transparency as a competitive advantage. Agencies that help candidates understand how AI evaluates their applications and clearly communicate during hiring processes—both technological and human—will build stronger candidate relationships and employer trust.
In short, high application volumes no longer translate to quick placements, AI is handling initial screening for many employers, and candidates across generations demand transparency about automated processes. The 33-to-1 applicant-to-opening ratio means competition is fierce, but it also means agencies will find success if they can efficiently identify and present the best-matched candidates—rather than just the most candidates.
