ILPC 2026

The temporary staffing industry (TSI) has long been regarded as a leading indicator of macroeconomic change.  TSI employment tends to decline shortly before the economy begins a downturn and it rebounds in advance of a recovery, a pattern that has been observed over the last several business cycles.  But the TSI’s role in labor market adjustment appears to have evolved beyond its traditional “shock absorber” function.  By the early 2000s, the TSI had achieved a new newfound capacity to mediate cycles of boom and bust.  This could be observed during the 2001 recession, which represented both the TSI’s stiffest test and its crowning achievement: the shedding of more than half a million temporary jobs in the downturn was accompanied by the shuttering of hundreds of small agencies; yet the extent of these losses is also testimony to the TSI’s “institutional” capacity as a large-scale labor-market intermediary.  The TSI’s capacity to absorb employment losses was again put to the test during the 2007-09 Great Recession.  And again it shouldered a significantly disproportionate share of unemployment and job displacement.

Looking across the last two recessions and the jobless recoveries that followed, this paper examines the TSI’s changing capacity to manage and mediate labor-market adjustment.  Over the course of several decades, the TSI has moved from the role of stopgap-staffing provider to a more systematic and continuous function, mediating between companies’ HR departments and their preferred labor supplies across an increasingly broad array of industries and occupations.  The TSI’s success in embedding itself within the American economy has been remarkable, and it can now be seen as a purveyor of flexibility not just at the “micro” level (meeting the needs of individual enterprises) but also at the “macro” level—mediating macroeconomic pressures and socio-economic risks across the labor market as a whole.  The paper quantifies this change by examining the timing and extent of cycles of job loss and gain, and it considers changes in the wage distribution of highly temped out occupations and what these mean for low-wage workers.  The paper concludes with reflections on the TSI’s role in the jobless recoveries that have followed the two most recent “flexible” recessions.