A Look at the Trends That Shaped the Staffing Industry in 2025

Key takeaways:

• The 2025 staffing market stabilized but stayed uneven: modest job and wage growth overall, with healthcare and professional services driving much of the demand for contingent and contract talent.
• AI and automation moved from “experiments” to everyday tools in staffing, while new AI hiring laws and audits forced agencies to professionalize compliance and data governance.
• Mergers and acquisitions (M&A) rebounded, and client expectations around speed and flexibility rose sharply, widening the gap between tech‑enabled, data‑driven staffing firms and everyone else.

The 2025 staffing market at a glance

After several years of sharp swings, 2025 was a year of normalization for staffing. The U.S. economy kept adding jobs, but at a slower, bumpier pace than in the post‑pandemic rebound.

The U.S. Bureau of Labor Statistics (BLS) reported that total nonfarm payroll employment rose by about 119,000 in September 2025, with unemployment hovering in the mid‑4% range, a sign of a cooler but still relatively tight labor market. Real average hourly earnings ticked up about 0.8% over the year to September 2025 once inflation is taken into account, meaning workers finally saw small but real income gains.

For staffing firms, demand was not uniform:

• Healthcare and education continued to add jobs at a healthy clip, reflecting demographic pressures and post‑pandemic backlogs.
• Professional and business services, including IT, finance, and consulting, showed steady but more selective hiring, with clients often preferring contract and project‑based arrangements over permanent roles.
• Industrial and logistics hiring stabilized after the boom of 2021-2022 and the correction that followed, but expectations around speed of fill and pay transparency tightened.

Within the staffing industry itself, the American Staffing Association (ASA) Staffing Index showed a gradual but clear recovery. In November 2025, the index rose to 93, with staffing employment roughly 4.7% higher than the same week in 2024, which signals modest volume growth.

ASA’s long‑running statistics also highlight the sector’s structural importance: U.S. staffing companies connect around 11 million temporary and contract employees with work in a typical year. For agency leaders, the 2025 story was less about whether there was demand and more about where, on what terms, and at what margins.

Wage trends and bill‑rate dynamics shifted

With inflation slowing back toward the 2-3% range, wage and bill‑rate negotiations looked very different than they did in 2022-2023.

BLS data show that real average hourly earnings rose about 0.8% year‑over‑year as of September 2025, following several months where real pay gains were even slightly stronger. Employers are still facing upward pressure on wages but without the “wage shock” of the earlier inflation spike.

Implications for staffing firms:

• Margins are harder to defend when wage growth is moderate but clients are laser‑focused on cost after several years of inflation. Many buyers benchmark suppliers more aggressively, sometimes using their own procurement analytics or third‑party data.
• Rate cards are more granular. Instead of broad percentage increases, large buyers are demanding role‑, skill‑, and location‑specific justification tied to market data (for example, BLS wage series, ASA wage tools, or proprietary benchmarks).
• Pay transparency and equity rules in states like California further compress the room for “quiet” bill‑rate adjustments.

Leading agencies are responding by:

• Building internal pricing committees or “deal desks” that use wage data, historical margin, and client lifetime value to approve discounts.
• Equipping sales teams with simple, visual explanations of what goes into a bill rate (like wages, statutory costs, benefits, overhead, and target profit) so that rate discussions are framed as a business decision, not a concession.
• Using technology to track real‑time gross margin by client, desk, and recruiter and tying incentives to profitable growth instead of just revenue.

AI and automation moved from pilots to production

If 2023-2024 were the years of experimentation with generative AI, 2025 was when AI quietly became part of the staffing infrastructure.

A clear majority of mid‑ to large‑sized employers now use AI‑enabled tools somewhere in their hiring process, particularly for sourcing, resume screening, and candidate communications. Staffing firms, which live or die on volume and speed, were often among the earliest adopters.

Common 2025 use cases inside agencies include:

• AI‑assisted sourcing to continuously mine job boards, social platforms, and internal databases for candidates that match open roles.
• Automated shortlisting and screening powered by natural‑language parsing of resumes and job descriptions, flagging likely matches and potential compliance risks.
• Chatbots and conversational interfaces to handle FAQs, schedule interviews, and nudge candidates to complete onboarding steps.
• Predictive analytics to forecast fill probability, prioritize hot orders, and identify at‑risk assignments before they end.

But adoption has come with a trust and brand challenge. ASA’s Workforce Monitor research found that nearly half of employed U.S. job seekers believe AI recruiting tools are more biased than human recruiters. That perception matters for agencies whose main product is their judgment and candidate experience.

The winning pattern in 2025 has AI doing the busywork while humans drive the relationship work.

High‑performing firms are explicit with candidates that AI may help route applications or schedule interviews, but that critical decisions still involve human review. They are also standing up internal “AI councils” to approve use cases, maintain documentation, and coordinate with legal and compliance teams, anticipating that audits and discovery requests will become routine.

Regulation caught up with AI and flexible work

2025 was also the year when AI in hiring stopped being a legal grey area.

New global regulations are making AI in hiring a high-stakes, regulated area. New York City Local Law 144, California’s FEHA regulations (effective October 1, 2025), and the EU’s AI Act (classifying recruitment AI as “high-risk”) all mandate bias audits, transparency, and strict documentation for employment-related AI tools. Staffing agencies must now treat AI as regulated infrastructure, making vendor due diligence, bias testing, data retention, and candidate notifications standard client expectations.

California’s 2025 employment law changes, which go beyond AI to expand pay data reporting, increase penalties for wage-and-hour violations, strengthen pay-equity rules, and broaden whistleblower protections, significantly impact staffing firms by raising the stakes on misclassification, overtime, and expense reimbursement. The changes also emphasize the need for robust timekeeping, payroll, and onboarding systems to withstand audits and making local legal expertise and industry body membership more critical.

In short, regulatory risk around AI and employment is no longer hypothetical. Forward‑thinking agencies are:

• Inventorizing all tools that influence hiring decisions, including resume parsers and ranking algorithms.
• Getting written assurances (and audit support) from technology vendors.
• Updating contracts to clarify who bears what risk for AI‑assisted decisions.
• Training recruiters to use AI within documented policies, rather than as informal workarounds.

M&A and market consolidation was selective but active

After record deal volume in 2022 and a marked slowdown in 2023-2024, 2025 saw staffing M&A settle into a more sustainable (but still active) rhythm.

Griffin Financial Group’s Staffing Market M&A Report for Q4 2025 describes the mood as one of “cautious optimism.” Deal volume fell to 93 staffing transactions in 2024 but rebounded with a roughly 25% year‑over‑year increase in deals in the first quarter of 2025, the strongest pace since late 2022. Analysts there forecast 85-100 deals for the full year 2025, below the 2022 peak of 139, but roughly in line with the post‑2018 average.

A few clear patterns emerged:

• Valuations are stable, but structures are creative. Griffin’s data show mid‑market staffing firms (with EBITDA of roughly $3-4 million) trading around 4.0-4.5x EBITDA for light‑industrial/commercial businesses, 5.0-6.0x for professional staffing, and higher multiples for fast‑growing IT and healthcare firms. Earn‑outs, deferred consideration, and performance ratchets are common.
• Private equity is more selective. After a decade of aggressive roll‑ups, the 2025 deals skew toward add‑ons that deepen a platform’s sector or geographic specialization rather than broad “land grab” acquisitions.
• Strategic buyers are prioritizing tech and niche expertise. Firms with modern tech stacks, strong client concentration profiles, and defensible niche positions (for example, cybersecurity contractors, locum tenens, or skilled trades in specific regions) attract the most interest.

2025 is still a seller’s market if your firm is profitable, specialized, and demonstrably tech‑enabled. Generic, low‑margin, analog staffing firms find fewer eager buyers and more pressure to either niche down or join a larger platform.

Workforce preferences rewrote recruiting playbooks

Worker expectations in 2025 can be summed up in three words: flexibility, security, and meaning.

Gallup’s recent work on remote‑capable jobs shows that about six in ten such employees prefer a hybrid arrangement, roughly one‑third want fully remote work, and fewer than one in ten want to work on‑site full‑time. At the same time, ASA Workforce Monitor research found rising economic anxiety, with about 64% of Americans considering taking a second job or starting a side hustle to keep up with costs.

Multiple surveys in late 2024 and 2025 point in the same direction: more than 70% of job seekers say flexible work arrangements are now “non‑negotiable” when evaluating opportunities.

What this means for staffing:

• Hybrid and flexible schedules are now a core differentiator. Agencies that can credibly present hybrid or flexible options (even in traditionally on‑site sectors) win more candidates.
• Same‑day or weekly pay options matter. Especially in light industrial, logistics, and hospitality, instant‑pay and earned‑wage access programs have become table stakes for attracting and retaining workers.
• Side hustles are normal. Many candidates are intentionally piecing together multiple roles. Agencies that insist on rigid availability windows without explaining why often lose talent to gig platforms or more flexible competitors.

Recruiting strategies that worked even three years ago, like long application forms, slow feedback, generic job ads, now visibly underperform. The best staffing firms rewrote their playbooks in 2025 to emphasize:

• Clear, upfront information on pay ranges and schedule flexibility.
• Short, mobile‑friendly application flows.
• Proactive communication via text, messaging apps, and self‑service portals.
• Candidate “loyalty programs” that reward redeployment, referrals, and upskilling.

Faster placements drove profitability

While every agency operates differently, several 2025 benchmarks offer a useful performance yardstick. According to the 2025 Staffing Speed Report from Staftr, agencies fill temporary roles in about 6 days, contract roles in 8 days, and permanent placements in roughly 32 days. Yet speed varies widely: top-performing permanent placement firms fill jobs 14 days faster than laggards, and more than 60% of candidates drop off if they wait over two weeks for a response. Speed, in other words, is a growth strategy.

Expectations are even higher in light-industrial staffing. An Everee-sponsored 2025 study found that 61% of manufacturing, logistics, and construction companies expect roles filled within 48 hours, and 13% expect same-day placement.

Across sectors, patterns emerge:

• Light industrial and logistics: 24-48 hour fill expectations; key metrics include time-to-submit, fill rate, redeployment, and pay competitiveness.
• Healthcare: slightly longer lead times but near-perfect shift coverage and credentialing accuracy.
• Professional, IT, and engineering: clients want a curated shortlist and strong quality-of-hire, supported by ratios like submittal-to-interview and interview-to-offer.

At the same time, quality-of-hire now outranks raw speed or cost as the metric that matters most. Leading agencies track both — speed and throughput as well as outcomes like retention, client satisfaction, and long-term profitability.

What this means for staffing leaders in 2026 and beyond

Putting these 2025 trends together, a few strategic imperatives stand out for staffing agency leaders:

• Get serious about data and pricing. Use wage data, staffing index trends, and your own margin analytics to move beyond “gut feel.” Train your commercial teams to talk confidently about bill‑rate economics.
• Treat AI as both an accelerator and a compliance topic. Invest in AI where it clearly amplifies recruiter productivity (like sourcing, screening, and scheduling), but wrap those tools in governance that satisfies New York City, California, the European Union, and future regulators.
• Compete on speed and experience. In a world where industrial clients expect 48‑hour fills and candidates vanish after two weeks without feedback, redesign processes for responsiveness and transparency.
• Lean into specialization and differentiation. Whether you plan to acquire, be acquired, or remain independent, clear sector niches, compelling client value propositions, and visible tech maturity all increase your strategic options.
• Design around worker flexibility. Flexible schedules, hybrid options where possible, and fast, predictable pay are now core parts of your employment brand, not optional perks.

The dominant theme this year was not “boom” or “bust,” but sorting. Clients, candidates, investors, and regulators all raised their expectations at once. Staffing firms that invested early in technology, data, compliance, and specialization are getting ahead, while those still operating on spreadsheets and heroics are feeling the squeeze.

The opportunity in 2026 is to use these trends as a roadmap: sharpen where you compete, modernize how you operate, and double down on the human relationships that no algorithm can replace.

FAQ for staffing agency leaders

Q: Is the staffing industry actually growing in 2025 or just treading water?

A: In most major markets, the industry is growing modestly rather than booming. U.S. employment is up slightly, real wages are positive, and ASA’s Staffing Index shows temp and contract employment several percentage points above 2024 levels. However, growth is uneven by sector and geography. Firms positioned in healthcare, professional services, and high‑growth Sun Belt markets generally saw better results than those concentrated in slower, high‑cost metros or heavily cyclical industrial niches.

Q: Where should I focus my technology investments now?

A: Highest-return priorities for agencies in 2025-2026 include: an integrated modern ATS/CRM; automation for repetitive tasks (like sourcing, outreach, scheduling, and document collection); and analytics for real-time KPIs (including time-to-submit, time-to-fill, margin, and recruiter productivity). Advanced AI is beneficial, but only when built on a foundation of clean data, structured workflows, and clear compliance.

Q: How worried should I be about AI hiring regulations?

A: You do not need to panic, but you do need a plan. Laws like NYC’s Local Law 144, California’s AI‑related FEHA regulations, and the EU AI Act all push in the same direction: more transparency, bias testing, documentation, and human oversight in AI‑assisted employment decisions.

Q: Does geographic expansion still make sense given uneven growth?

A: Yes, but only with a data‑driven, portfolio mindset. BLS county‑level data shows many counties, particularly in the Southeast and Mountain West, are outpacing national growth, while some large coastal metros are stagnant or shrinking.

High-performing staffing firms are focusing on existing regional strengths, using remote/hybrid models to serve national clients from fewer physical hubs, and entering new markets only with a clear niche (e.g., specialized trades, healthcare, or digital skills), avoiding generic general staffing.

Q: Should I be thinking about buying, selling, or staying independent?

A: The 2025 M&A environment is active but selective, with deal volume up, stable valuations, and strong buyer interest in specialized, profitable, tech-enabled staffing firms. To succeed, even without selling, run your firm as if you might: clean financials, consistent margins, and low client concentration increase strategic options and a clear sector focus and scalable tech stack attract acquirers and large clients. When acquiring, be realistic about integration capacity, especially for tech and culture.