5 New Challenges Staffing Firms will Face in 2020

When the clock strikes twelve and the New Year begins, it is natural to want to dive right into your newly set business goals for 2020. However, before you begin rolling out your plan, make sure you are aware of new challenges staffing firms will face in 2020. These changes range from legal and legislative…

When the clock strikes twelve and the New Year begins, it is natural to want to dive right into your newly set business goals for 2020. However, before you begin rolling out your plan, make sure you are aware of new challenges staffing firms will face in 2020. These changes range from legal and legislative to the gig economy and talent shortages. Let’s take a look at some of the more significant staffing changes employers will face this year.

1. Talent Shortages Remains a Top Challenge Talent shortages for staffing firms

This one may come to little or no surprise but 73% of recruiters still say talent shortages remain one of the top challenges for recruiters, according to a survey done by Bullhorn. The reasons for increasing talent shortages are workforce retirement, growing labor demands, increasingly complex skill sets necessary to keep up with technological advancements and last but not least, a large percentage of talented individuals are already employed.

Staffing firms are tackling this issue by turning to LinkedIn to help find qualified candidates who are already working. LinkedIn reports that 87% of people are open to taking on new job opportunities.


2. Legal and legislativelegal and legislative changes for 2020 in the staffing industry

There have been some legal and legislative changes for 2020 that will have an impact on staffing firms as well. Staffing industry attorney George Reardon, states that staffing clients insist their workers be W-2 and not independent contractors. According to Reardon, buyers are realizing how risky 1099s are and the benefits don’t outweigh risks. The concern is primarily related to workplace injury with independent contractors. Additionally, buyers don’t hold the rights to what independent contractors produce on the job.

Secondly, there are newly implemented labor laws occurring in many states. This includes laws that are requiring independent contractor compliance and paid sick leave.

Lastly, there is a trend showing increased activity on noncompete clauses in employment contracts. California has never welcomed noncompetes but other states have. However, this year in many states, employers can no longer have noncompetes with certain employees.


3. The Gig Economy; Good or Bad for the Staffing Industry?Is the gig economy a threat to the staffing industry?

It is no secret that the gig economy, also referred to as the freelancer economy, is an up and coming trend. The gig economy provides a general workforce environment that allows freedom for independent contractors to pick-up a variety of temporary jobs or shifts for different clients or companies. The gig economy runs on technology platforms that have been created to connect with workers looking for flexible work schedules.

To some business leaders, the gig economy is seen as a threat to the future of the staffing industry. On the other hand, some see it as a driving force in the hiring process that they can leverage to remain relevant and competitive. A few advantages the gig economy offers to recruiters are, platforms that could be an alternative way to find new candidates, a resource to enhance their service offerings to employers, and will allow recruitment experts to stand out in the market.

The gig economy is somewhat in an infant state and there is no telling what the future holds. However, as long as staffing firms stay on top of it, they may find that it will work to their advantage.


4. Unrealistic Employer ExpectationsA challenge in the staffing industry is unrealistic employer expectations

Another challenge staffing agencies are facing is dealing with clients who are seeking top talent but are not willing to pay for it. It is a candidate’s market with employment rates at 3.5 percent. Job seekers have a lot of options. Staffing firm’s clients who want to find qualified candidates need to keep in mind that by not offering health benefits, 401k plans, competitive salaries, or covering out-of-state moving costs, can really put them at a disadvantage when trying to find a new hire.


5. Turnover is On the Rise

According to the Bureau of Labor Statistics, the job market is tightening. With compensation steadily increasing and job openings readily available, employees are leaving their current jobs in search of better opportunities. The high turnover leaves employers anticipating filling more roles in 2020. BLS also reports that job openings are happening even faster than people entering the workforce or quitting current jobs. This opens the door to a lot of competition in the workplace. Rather than having several candidates competing for positions due to limited availability, there is now a plethora of positions opening up and not enough applicants to fill them.


Rest assured the job economy holds strong which means staffing agencies will definitely have their work cut out for them in 2020. It will not come without challenges but without challenges, there wouldn’t be room to grow and obstacles to overcome. For more information on the latest staffing industry news and information, check out http://getscalefunding.com/staffing-industry-news/.


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