Contingent Talent Trends That Signal What’s Next for the Economy

In today’s climate of constant socioeconomic change, many organizations are facing increased uncertainty when it comes to workforce planning. With the rolling recession continuing to shape business strategy, maintaining flexibility has never been more critical.  Although utilizing contingent talent is a proven method for sustaining workforce agility, a recent decline in temporary hiring may reflect a short-term shift in priorities rather than a change in long-term strategy.

In this blog, we explore key labor market trends over the first quarter of the year that demonstrate how the contingent workforce reflects broader economic shifts—offering early insights into what may be coming next for the labor market and the economy at large.

Temporary Roles Shrink as Hiring Slows

According to Magnit data, fill rates have dropped significantly, with January and February falling 30% year over year. This type of downturn typically occurs right before a recession, and while the steep decline has come, an official recession still has not followed. There are several possible explanations for what might be happening.

One is a shift toward alternative workforce models and Statement of Work (SOW).  Alternatively, the fastest interest rate increase in history locked access to capital, forcing organizations to slow down their projects along with their temporary hiring efforts. It’s important to note that voluntary terminations have also fallen to 13% in Q1 of this year, which is a historical low. With fewer workers quitting, replacement hiring has also decreased. Additionally, we are currently in a rolling recession, where certain industries are contracting while others are expanding at the same time.

Non-healthcare Pay Rates Are Up While Healthcare Is Down

Magnit data shows hourly bill rates in healthcare have decreased by 11% year over year, while the non-healthcare sector is up 10% compared to February of last year. This is due to nursing and healthcare rates expanding more than the non-healthcare sector, and as a result, having a larger fall.  

Meanwhile, non-healthcare wages are holding steady with slight growth while fills have declined in the same time period; this could indicate that lower wage bracket workers (including in light industrial, manufacturing and operations) are seeing improvements in their pay, which is also consistent with trends across industries. Low-wage workers, which often include many temporary workers, have experienced relatively stronger wage growth. Between 2019 and 2024 the hourly wage for the lowest paid workers (bottom 10%) grew by 15.4%, outpacing wage growth at higher levels of the wage distribution.

Time to Fill Ticks Up Despite Lower Demand

The non-healthcare sector has seen time to fill in February of this year increase 5% from the same time last year, an increase from 19.4 days to 20.4 days. The healthcare industry has also seen an 8% increase year over year, from 16.4 days to 17.7 days. Compared to the trends in lower hiring, this is unusual, as time to fill typically increases as demand increases for contingent workers. There are several things that could be occurring to explain this development:

• Skills mismatch: If available candidates do not meet the required qualifications of the organization, it could take longer to find the right candidate.
• Shift in hiring priorities: Organizations take longer to make hiring decisions when there are budget constraints or strategic shifts.
• Technology changes: As Artificial Intelligence (AI) makes its way into recruiting practices, new adoption could create inefficiencies during transitionary periods.
• Remote work: There has been a trend of hybrid and returning to office work, and candidates are less willing to take on-site temporary positions.

Layoffs Climb as Workers Stay Put

Voluntary terminations falling to a historical Q1 low indicates that workers are staying put in their jobs, much of which has to do with the current state of the macro environment. According to a survey Magnit conducted in partnership with Dynata, 59% are not in the process of seeking a new job at the moment. Those that are looking state they are least willing to sacrifice job security, in addition to listing it in their top three priorities when evaluating a new position.

Layoff rates are also at the high level they were at the end of 2022, the bottom of the “great resignation.” Given the uncertainties of a new administration, tariff policies and broader conflicts, workers are deciding to hold tight and taking a “let’s see what happens” approach.

As companies across the world continue to “wait and see” how these new tariff policies, trade wars, a looming recession, and artificial intelligence change the economy, savvy organizations are tapping into flexible labor solutions for both business continuity and to position for future growth.

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Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.