Labor Forecast Predicts 1.5% Increase in Demand for Temporary Workers for 2023 First Quarter, Again Signaling Continued Tight Labor Market Ahead

  By news release  |    Monday January 23, 2023

Category: Trends


 -- Industry Consulting Firm G. Palmer & Associates’ Quarterly Forecast Assists in Previewing Near-Term Hiring Patterns –

Demand for temporary workers in the United States is expected to increase 1.1% on a seasonally adjusted basis for the 2023 first quarter, when compared with the same period in 2022, according to the Palmer Forecast™, released today. The rate of increase in demand has been softening since the fourth quarter of 2022.

The Palmer Forecast™ indicated a 6.2.% increase in temporary help for the 2022 fourth quarter. Actual results as reported by the Bureau of Labor Statistics (BLS) came in considerably lower, with an increase of 1.1%, reflecting actual GDP growth that came in below what was previously expected.

A total of 10.5 million open jobs was reported by the BLS, as of January 4, 2023, for data through the month of November 2022. However, the non-farm payroll growth has seen a steady softening throughout the second half of 2022, and this trend is likely to continue as the year progresses, until GDP growth picks back up.


                      Source: G. Palmer & Associates; Bureau of Labor Statistics (BLS)  


  Source: Bureau of Labor Statistics (BLS)


The BLS reported that temp help jobs decreased by 35,000 in December 2022, a loss of 1.1% year-over-year. For the year 2022, there have been 32,400 jobs lost, or 2,700 average jobs lost per month. Temp help jobs growth in 2021 was strong, with a total gain of 302,000 jobs, and an average of 25,200 jobs added per month, compared with the prior two years, when 201,000 temp jobs were lost in 2020 and 27,000 temp jobs were lost in 2019, according to the BLS. In 2018, more than 99,000 temp help jobs were added over 2017.

The Labor Department reported that non-farm payroll employment increased by 223,000 jobs in December 2022, which was slightly ahead of consensus estimate increases of 200,000 jobs. For the 2022 fourth quarter, there were 742,000 non-farm jobs added, averaging 247,000 per month, up 3.02% on a year-over-year basis. For the 2022 full year, there were 4.5 million jobs added, an average of 375,000 jobs per month. Fourth quarter growth clearly indicates a softening in the labor market. In 2021, non-farm employment was up by 6.4 million jobs, compared with 2020. To put this in perspective, there were 9.4 million jobs lost in 2020, and 2.1 million total jobs added for 2019. For 2018, a total of 2.6 million new jobs were created, versus 2.1 million new jobs in 2017.


The key categories of jobs created are as follows:

  • Total Non-Farm: +223,000
  • Private Sector: +220,000
  • Private service – providing: +180,000
  • Leisure and Hospitality: +67,000
  • Healthcare: +55,000
  • Construction: +28,000
  • Manufacturing: +8,000
  • Government: +3,000
  • Professional and Business Services: -6,000
  • Temp Help: -35,000


                                  Source: Bureau of Labor Statistics (BLS)


In December 2022, the labor participation rate increased 10 bps from November 2022 to 62.3%, and it has been in a narrow range of 64.4% to 61.9% since June of 2020. The U3, commonly referred to as the unemployment rate, decreased 10 bps to 3.5% in December versus November.

As reported by the BLS, the rate of unemployment for workers with college degrees decreased 10 bps in December 2022 versus November 2022, to 1.9%, and the unemployment rate for workers with less than a high school education increased 50 bps to 5.0%. The U6 unemployment rate, which tracks those who are unemployed, as well as those who are underemployed and are working part-time for economic reasons, was down 20 bps to 6.5% in December versus November. The U6 rate is considered the rate that most broadly depicts those most affected by the last economic downturn and measures the rate of discouraged workers.

“The temp help employment market is showing clear signs of slowing down, and until GDP growth resumes to a strong level, growth will be somewhat moderated,” said Greg Palmer, founder and managing director of G. Palmer & Associates, an Orange County, California-based human capital advisory firm that specializes in workforce solutions. “A further indicator to watch is the temp help penetration rate, because it measures temp help as a percentage of total employment. In December, the temp help penetration rate decreased slightly to 1.98% of the total labor market, compared with an all-time high of 2.08%, achieved in February, and a pre-pandemic level of 1.57%, a further sign of temporary jobs lessening.

“The penetration rate cycle last peaked at 2.05% in December 2015 and was at a low of 1.3% in June 2009. The American Staffing Association (ASA) Staffing Index remained flat, closing at a value of 106 on December 28, 2022, which was 0.3% higher than the same period last year,” Palmer added.


                                Source: Bureau of Labor Statistics (BLS)


About the Palmer Forecast™

The Palmer Forecast™ is based, in part, on BLS and other key indicators. The model was initially developed by the A. Gary Anderson Center for Economic Research at Chapman University and serves as an indicator of economic activity. Companies that employ temporary staff use the forecast as a guide to navigate through fluctuating economic conditions in managing their workforce to meet business demands.


About G. Palmer & Associates

G. Palmer & Associates, founded in 2006, provides advisory services in the human capital sector. Founder Greg Palmer has served on the board of the American Staffing Association and was president and chief executive officer of RemedyTemp, Inc., one of the nation’s largest temporary staffing companies, prior to its sale in June 2006. For more information, visit

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