The staffing market isn’t shrinking — Chris Ryan’s CONNECT 2026 keynote shows it’s nearly seven times larger than the traditional temp penetration rate suggests once RPO, EOR, and PEO work are counted.
That provocative question was at the heart of a CONNECT 2026 keynote by Christopher Ryan, Senior Advisor at Avionté, setting the stage for a broader conversation about what’s changing in staffing, where the market is headed, and how agencies can stay ahead.
For three days in Minneapolis, hundreds of staffing and workforce solutions professionals gathered at Avionté CONNECT 2026, one of the industry’s leading events for sharing ideas, connecting with peers, hearing from industry experts, and exploring the technology shaping the future of staffing.
This year’s theme, “Intelligence with Purpose. Expanding What’s Possible.”, reflected how technology is changing what staffing agencies can do, from finding and engaging talent to operating and growing.
Chris’s keynote put the broader shifts happening across the staffing industry into perspective, connecting those changes to the opportunities agencies have to adapt and grow. Rather than offering another forecast on when staffing might “bounce back,” he challenged the room to rethink the assumptions that underpin the industry’s current reality. If the market is changing, he argued, agencies need to reassess where opportunities lie, how they measure success, and what it takes to capture more value from the talent already moving through their systems.
His message was both a warning and an opportunity: the market hasn’t disappeared. It’s evolving. And agencies that are willing to evolve with it have more opportunities ahead than they may realize.
Chris began with a figure that many industry analysts frequently use to gauge the health of the staffing market: the 1.57% temporary employee penetration rate (from the July 2026 US Jobs Report), calculated as the number of temporary employees divided by total U.S. nonfarm employment.
It’s the statistic that measures temporary staffing employment as a percentage of total U.S. nonfarm employment. And on the surface, it tells a somewhat discouraging story.
But Chris challenged the room to look closer at this number, specifically what it doesn’t capture.
The temp employee penetration rate captures only payroll associated with NAICS code 56132. It doesn’t account for RPO, EOR, PEO, or specialized business services that perform staffing functions without being classified as staffing.
As Chris Ryan put it: “This number doesn’t capture RPO volume. It doesn’t capture EOR or PEO hiring. And it doesn’t capture focused business services that often operate like a staffing agency but specialize in one vertical.”
That distinction matters because it changes the question. Instead of asking, How do staffing agencies survive a shrinking market, the better question may be, How do staffing agencies compete in a much larger market being reshaped around them?
Chris then tackled another assumption that has become common in staffing conversations: that the industry’s struggles are simply a reflection of a weak economy.
The numbers don’t quite support that conclusion.
Since 2016, U.S. GDP has grown by 27% and employment by nearly 11%, while temporary staffing employment has declined by roughly 14.5%, including a 21% drop over the last four years. The point isn’t that staffing agencies aren’t facing real headwinds. They absolutely are. But the problem isn’t simply the economy.
“We are not in a recession. Despite all the craziness in the world, growth remains positive. So why does the economy feel so different for staffing agencies? But our industry is changing, and we need to know why.”
Chris RyanSenior Advisor, Avionté
His answer boiled down to several forces acting at once: a shrinking labor pool, AI redirecting investment toward automation and technology, policy uncertainty, and, perhaps most significantly, corporate restructuring.
Companies are increasingly separating functions that once operated under one roof, outsourcing production, distribution, and back-office operations to centralized, highly automated organizations.
That doesn’t just change how work gets done.
It changes who buys labor, how they evaluate vendors, and what they expect from their staffing partners.
Chris brought that shift to life with two characters.
He’s a local hiring manager with a long-standing relationship with the agency, budget authority, and a willingness to take the sales rep’s call.
Then Dave’s plant gets acquired, consolidated, or automated.
Suddenly, labor spend isn’t just a hiring manager’s concern. It’s a corporate number reviewed by finance, procurement, and the board.
Bob owns the labor-cost number. His performance bonus and stock options depend on getting it right, and a bad surprise can have real consequences.
That means Bob isn’t necessarily looking for another staffing vendor. He’s looking for certainty.
As Chris explained: “Bob wants ironclad guarantees, clear lines of accountability, proof of expertise, and one throat to choke.”
And Bob doesn’t wait around for a salesperson to knock on the door. He researches first, often using AI to identify the vendors that lead his category.
Chris’s warning was blunt: “If Bob can’t find you, your sales team won’t stand a chance.”
That is a very different buying process from the one many staffing agencies built their businesses on.
Chris summed it up perfectly: “You think you’re playing tennis. Now you’re on a pickleball court. In other words, you’re playing an entirely different game now.”
This is where Chris’s message shifted from disruption to possibility.
If the traditional 1.57% measurement captures only a portion of the labor market, what happens when you broaden the lens?
Chris’s research team developed the Total Intermediated Labor Index to account for RPO, EOR, PEO, and vertical-specific business services that function like staffing but aren’t included in traditional staffing measurements.
The result: approximately 17.8 million workers, compared with the 2.5 million captured by the traditional temp staffing number.
That’s a market roughly seven times larger than the one the industry has been measuring itself against.
And Chris wasn’t suggesting agencies simply chase a bigger number.
He was challenging them to recognize where the opportunity is moving.
“Your biggest competition moving forward is not the other agencies in this room. It’s coming from firms that don’t think of themselves as staffing agencies.”
Chris RyanSenior Advisor, Avionté
That changes the competitive landscape entirely.
Chris closed with six moves agencies should consider if they want to compete in that new landscape:
Expertise becomes more valuable when buyers are looking for partners who understand their specific labor challenges.
SOW, EOR, and RPO can give agencies more ways to solve workforce problems beyond traditional W-2 staffing.
Being excellent isn’t enough if buyers, including AI-powered search tools, can’t find you.
Buyers increasingly want expertise and advice, not another vendor pitching rates.
New services and new buyers require new skills, structures, and ways of working.
The goal isn’t simply to make the next placement. It’s to build talent relationships that create redeployment, referrals, and long-term value.
This last point came through especially clearly in the data Chris shared from Avionté’s customer base. Job boards account for roughly two-thirds of placed talent yet generate only 25.4% of gross profit over time. By comparison, referrals represent a much smaller pool of candidates but generate 33.9% of total gross profit. Walk-ins, job fairs, and local outreach contribute another 22.4%, nearly matching job boards, while digital marketing accounts for 13.2%.
The lesson goes beyond sourcing efficiency. Even as technology changes how agencies find, screen, and engage candidates, relationships still matter – now more than ever.
As Chris stated: “No matter how much we automate the recruiting process, human relationships remain the bedrock of this industry. AI won’t change that dynamic.”
If Chris’s keynote was the wake-up call, a follow-up session featuring Chris and Tom Kosnick gave attendees a chance to start putting that thinking into practice.
The conversation picked up where the keynote left off: if the buyer has changed, the way agencies sell has to change too.
Cold calls and rate-based pitches aren’t enough when a prospective client has already researched the market, built a vendor shortlist, and formed an opinion before speaking with a salesperson.
Consultative selling means showing up with a point of view. It means understanding a client’s industry, workforce challenges, labor costs, and business goals before talking about filling a single requisition.
It’s also a shift Tom has been advocating for well beyond CONNECT.
In an Avionté interview last year, Tom Kosnick described the change this way: “The staffing industry is not coming back to the way that it was. From the beginning, we have thought transactionally. But that’s not the mindset that’s going to thrive going forward.”
He went on to explain what he sees happening with growing staffing companies: “Your value proposition has got to align with what is now valuable to the buyer.”
That means becoming an advisor on human capital strategy, not simply a company that can “find bodies.”
And that idea connects directly back to Chris’s vision of the market.
If agencies want to compete for a broader range of workforce solutions, they need to bring broader expertise to the table.
That could mean adding SOW, EOR, or RPO capabilities. It could mean specializing more deeply in a particular vertical. It could mean restructuring sales and recruiting teams around specific service lines.
But the common thread is the same: stop selling staffing as a transaction and start selling expertise as a business advantage.
None of this works without visibility.
When sales, recruiting, workforce management, and back-office operations rely on disconnected systems, it becomes difficult to answer even basic questions about where revenue and margin originate.
Which clients are the most profitable? Which sourcing channels deliver the strongest returns? Which talent is most likely to be redeployed? Which service lines are worth expanding?
Those answers become even more important as agencies move beyond traditional staffing into SOW, EOR, and RPO. A connected technology foundation gives agencies a clearer view of the entire business and the data they need to make smarter decisions.
It also gives them a stronger foundation on the talent side of the equation. In a shrinking labor pool, agencies don’t simply need more candidates. They need stronger relationships with the talent they already have.
Tools such as Avionté Mobile and Avionté Chat can help agencies deliver a more connected talent experience across the staffing lifecycle. Avionté Mobile provides talent with a convenient mobile experience for completing onboarding tasks, viewing pay stubs and schedules, receiving important communications and instructions, browsing jobs, and expressing interest in new opportunities.
Agencies can also send notifications about relevant jobs, helping keep talent engaged, and creating more opportunities for redeployment. Avionté Chat centralizes conversations between recruiters and talent, making it faster and easier to communicate, respond to questions, and keep everyone on the same page. Together, these capabilities can reduce friction, accelerate the staffing process, and create a more responsive employee experience that keeps talent connected beyond the initial placement.
Together, these capabilities make it easier for agencies to stay connected with talent while delivering a more convenient experience that can support faster placement, stronger engagement, and ongoing communication.
Technology may not encompass the whole strategy. But it can make the strategy possible at scale.
Chris’s keynote wasn’t really about a statistic. It was about perspective.
The staffing industry isn’t standing still while agencies wait for the market to return to normal. Buyers are changing. Labor models are changing. Competitors are changing. And AI is changing how buyers discover and evaluate the companies they work with.
The agencies that thrive won’t necessarily be the ones with the biggest teams, the most recruiters, or the longest list of traditional staffing clients.
They’ll be the ones willing to ask a harder question: What does our business need to become now?
Because the opportunity isn’t waiting for staffing to go back to the way it was.
The opportunity is in what comes next. And the agencies willing to rebuild for that future won’t just keep up with the market. They’ll help define it.
As Chris pointedly stated at the end of his address: “The agencies who come out ahead over the next few years won’t be the biggest. They’ll be the ones who rebuild themselves fastest to match how their clients actually want to buy.”
WorkN is now Avionté Mobile. Building on the power and functionality of WorkN’s talent mobile app, Avionté Mobile is built for the high-volume staffing and recruiting industry.
