Covid-19 jolts the industry, economy, election and more; looking back at 2020


Covid-19 and its economic impact ranked as the top topic in 2020 affecting the staffing industry. Of course, there was a contentious presidential election, legislative changes and more. SIA took a look back at some of the top stories and trends affecting the industry in 2020; here is what we found.

The downturn

It starts with the pandemic and economic downturn brought by the shutdown orders.

SIA estimated US staffing industry revenue will be down 17% this year compared to 2019, according to the “US Staffing Industry Forecast: September 2020 Update.” It noted that Covid-19 brought an abrupt end to sustained growth in the US industry. The staffing industry had grown 3% in 2019 and 4% in 2018. Next year does contain some better news with the industry revenue projected to increase by 12%.

Jobs. At the start of the year, there were reports of staffing employees being furloughed and pay cuts taking place as the pandemic began. The lockdowns hit many industries hard, and the US lost 20.8 million jobs in April compared to March, according to seasonally adjusted numbers from the US Bureau of Labor Statistics. The US has added back 12.3 million jobs since then; however, the pace of increases has slowed as of late.

Economy. Looking at the economy, real gross domestic product fell at an annual rate of 31.4% in the second quarter before rising at an annual rate of 33.4% in the third, according to the US Bureau of Economic Analysis.

Industry growth. Only two staffing segments are forecast to post growth in 2020: travel nursing and life sciences.

Travel nursing was the stronger of the two, projected to grow 10% as healthcare organizations struggle to staff operations amid the pandemic. One healthcare staffing executive said he had not seen this number of job orders before, according to an article last month in the Staffing Industry Review Online Showcase. The surge in Covid-19 is raising demand across the country. In a separate story this week, a state official in Tennessee said staffing firms were maxed out.

Covid-19’s disruption continues, but few at the start of the year thought things would turn out this way. Though the severity of the situation became more and more apparent. A Feb. 24 news posting pointed to an article by CNN titled “Coronavirus is fast becoming an ‘economic pandemic.’” It quoted an expert that cautioned the spread of the virus into Italy at the time made it a European issue and “possibly a global issue that could upset the supply chain for months or years to come.” US shutdowns came in mid-March.

For many workers still on the job, “work from home” became the new normal and words such as Zoom joined everyday vocabulary. Though words such as “burnout” are also becoming more common in the latter part of the pandemic. One survey cited 76% of workers are experiencing burnout.

Sociopolitical Issues

Covid-19 wasn’t the only thing on people’s minds in 2020. There was the presidential election and a divided country.

Diversity became more important than ever with the killings of George Floyd, Ahmaud Arbery and Breonna Taylor making headlines along with the Black Lives Matter protests. Staffing client companies had been concerned about diversity even before 2020, but the events of this year focused their attention on it more tightly, Staffing Industry Review magazine reported.

Independent contractor classification. Independent contractor compliance also made headlines. California’s AB 5 law that gets tough on independent contractor misclassification went into effect on Jan. 1.

Human cloud firms such as Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (NASDAQ: LYFT) faced questions on whether they would have to reclassify their California drivers as employees. Then the state’s voters approved Proposition 22 in November, allowing the human cloud firms to continue classifying the drivers as independent contractors.

Separately, the US Department of Labor in September proposed a rule aimed at clarifying who is an employee and who is an independent contractor under the Fair Labor Standards Act. A group of 24 attorneys general sent a letter to Labor Secretary Eugene Scalia opposing the rule. As of press time, the final rule has not been issued, though the Trump administration is expected to issue it in its final days.

The legislative front had other events as well.

Joint employment. Final rules on joint employment were released this year by both the Department of Labor and the National Labor Relations Board. The Department of Labor’s rule, announced in January and effective March 16, updated regulations interpreting joint employment status under the Fair Labor Standards Act. The final rule includes a four-factor test for determining FLSA joint-employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. However, a federal judge in September determined the rule is “arbitrary and capricious,” vacating the department’s new test under the law for determining “vertical employment” when a worker enters a relationship with one company, such as a staffing firm, but is economically dependent on another employer.

The National Labor Relations Board released its final rule covering joint-employer status in February, reversing the 2015 Browning-Ferris ruling by the Obama-era NLRB. The new rule, which went into effect April 27, applies to issues involving the National Labor Relations Act.

Immigration and work visas. H-1B visas were an issue as well.

The Trump administration this year moved forward with long-touted immigration reform — including changes to the program for H-1B visas, which are used to bring in highly skilled workers, such as IT and healthcare professionals, on a temporary basis. Although some of the restrictions remain tied up in the court system, denials for H-1B petitions have remained at high levels.

H-1B actions that faced legal backlash included wages, occupations and itineraries. The Department of Labor issued a rule that required employers using H-1B visas to pay the workers the higher of either the prevailing wage or the actual wage paid to other employees with similar experience and qualifications. In addition, the US Department of Homeland Security enacted a regulation to revise the definition of specialty occupation and also make it more difficult for H-1B professionals to conduct work at third-party customer locations. And US Citizenship and Immigration Services instructed officers to stop applying previous policies that required staffing firms to provide detailed itineraries and job duties for H-1B candidates; a bona fide job offer must exist at the time of filing, and “benching” remains prohibited except in certain limited circumstances.

However, The US Chamber of Commerce and other plaintiffs filed separate actions opposing both the Department of Labor prevailing wage rule and the Department of Homeland Security specialty occupation rule. These cases were combined into one case and a California federal judge on Dec. 1 set aside the rule, The National Law Review reported.

Mergers and acquisitions

2020 also saw several large deals in the workforce ecosystem. Here are a few examples:

Human cloud platform Grubhub Inc. struck a $7.3 billion deal to be acquired by Just Eat Uber struck a $2.65 billion deal to acquire human cloud firm Postmates Inc. Human cloud firm DoorDash Inc. (NYSE: DASH) had an initial public offering.

In February, healthcare staffing firm AMN Healthcare Services Inc. (NYSE: AMN) struck a deal to pay $475 million to acquire Stratus Video, a provider of video language interpretation services for the healthcare industry.

As 2020 ends, Covid-19 is showing a resurgence even as distribution of a vaccine has begun. Vaccinations will, of course, continue in 2021, but the memories of 2020 will not likely fade soon.