The Hiring Paradox: US Staffing Jobs Rise, But Sales Fall

ALEXANDRIA, VA – December 29, 2025 – The U.S. staffing industry is sending a complex and potentially cautionary signal about the health of the American economy. A new report from the American Staffing Association (ASA) reveals a perplexing divergence in the third quarter of 2025: while the number of temporary and contract jobs increased modestly, the sales generated from this employment fell, pointing to a significant squeeze on corporate profitability that could have broader implications.

According to the ASA's quarterly Staffing Employment and Sales Survey, U.S. staffing companies employed an average of just under two million temporary and contract workers per week in the third quarter. This represents a slight 0.3% increase from the second quarter, adding approximately 6,400 workers to payrolls. Yet, during the same period, industry-wide sales declined by 1.3%, totaling $28.1 billion. This paradox highlights a crucial trend where businesses, though still in need of labor, are operating under severe financial constraints.

A Tale of Two Metrics

The data paints a picture of an industry, and by extension a national economy, walking a tightrope. On one hand, the demand for flexible labor appears to be stabilizing. The year-to-year decline in staffing employment narrowed significantly, from a 9.4% drop in the second quarter to a 7.5% decline in the third. More encouragingly, the ASA Staffing Index, which tracks weekly data, showed a late-quarter surge, recording 14 consecutive weeks of year-to-year growth beginning in mid-September. This suggests a building momentum in hiring that could carry into the final months of the year.

However, the revenue side of the ledger tells a different story. The 1.3% quarter-over-quarter sales decline marks a concerning trend. The year-to-year comparison for sales also deteriorated slightly, with the 8.5% decline in Q3 2025 being worse than the 8.0% drop recorded in Q2. This indicates that even as staffing firms place more workers, their ability to generate revenue from those placements is diminishing.

"The third quarter showed signs of recovery for staffing employment, even as sales remained soft," said Stephen Dwyer, ASA president, in the official release. "Although staffing hiring may be stabilizing, thin profit margins and fiercer competition are keeping revenue growth constrained."

The Squeeze on Corporate America

The staffing industry's revenue struggles serve as a clear bellwether for the intense cost pressures facing businesses across the nation. The ASA attributes the soft sales to a combination of high borrowing costs, rising labor expenses, and the persistent impact of tariffs. Broader economic data from the third quarter validates this assessment.

Despite the Federal Reserve initiating a series of modest 25-basis-point interest rate cuts in the latter half of 2025, borrowing costs remain elevated compared to historical norms. The federal funds rate, even after cuts, stood in a range of 3.50%-3.75% by December, continuing to make capital expensive for businesses looking to invest or manage cash flow.

Simultaneously, labor costs have continued their upward march. According to the Bureau of Labor Statistics, compensation costs for civilian workers rose 3.5% for the 12-month period ending in September 2025. This persistent wage growth, while beneficial for workers, adds another layer of expense for employers, forcing them to find efficiencies elsewhere. In this environment, companies are turning to temporary and contract workers to maintain operational flexibility without committing to the higher fixed costs of permanent hires. However, their own strained budgets mean they are negotiating harder on rates, directly impacting the revenue and profitability of their staffing partners.

A Patchwork Economy in Motion

The staffing industry's mixed results reflect the contradictory nature of the U.S. economy in late 2025. The third quarter posted surprisingly robust real GDP growth of 4.3%, fueled largely by strong consumer spending. This suggests a surface-level resilience that seemingly defies the underlying pressures felt by businesses.

However, a look at the labor market reveals the cracks. The national unemployment rate has been steadily ticking upward, rising from 4.2% in the second quarter to 4.4% in September, and further to 4.6% by November. This cooling of the labor market aligns with the corporate caution reflected in the staffing report. The Federal Reserve's decision to begin cutting rates was a direct acknowledgment of this softening, a move described as a "risk management" strategy to support employment without reigniting inflation.

This creates a complex landscape for businesses to navigate. They see strong consumer demand but also face rising unemployment, high costs, and an uncertain policy environment. The result is a cautious approach to hiring, where the flexibility of temporary staff becomes highly valuable, but only at a price point that doesn't further erode their already thin margins.

A Leading Indicator for 2026

As 2025 draws to a close, the trends within the staffing industry offer a crucial preview of the economic challenges and adaptations likely to define the coming year. The sustained demand for temporary workers underscores a fundamental shift in how companies manage their workforce in an era of volatility. Flexibility is no longer a luxury but a core strategy for survival.

The key question moving into 2026 is whether the hiring momentum seen late in the third quarter can be sustained and, more importantly, if it will eventually translate into healthier revenue growth for staffing firms. This will depend on whether the cost pressures on American businesses begin to ease. With economists forecasting a continued, albeit slow, cooling of inflation and a cautious Federal Reserve, many companies may continue to favor contingent labor, making the staffing industry's performance a vital indicator to watch for signs of either broader economic stabilization or further strain.