A company needs an accountant for six months. A warehouse needs extra workers for its busiest season. A technology business needs to fill a permanent position but does not want to conduct the entire search itself.

Staffing agencies make money by solving these kinds of hiring problems.

The basic model is straightforward. An agency finds and evaluates workers, connects them with employers, and charges the employer for the service. But the way the agency gets paid depends heavily on the type of placement.

In temporary and contract staffing, the agency often employs the worker itself and bills the client for the worker's time. In permanent recruitment, the agency typically earns a placement fee when a candidate is hired. Larger staffing companies can also generate revenue from outsourced recruiting, contingent workforce management, consulting, training, and other services.

The distinction matters because staffing revenue is not the same as staffing profit. For temporary assignments in particular, a large portion of what an agency bills its clients can ultimately pay for workers' wages and other employment costs.

Temporary staffing creates a three-way relationship between the staffing company, the worker, and the client.

The U.S. Census Bureau defines temporary help services as businesses primarily engaged in supplying workers to clients for limited periods to supplement their workforces. Under the Census definition, the individuals supplied are employees of the temporary help company, while the client generally provides the direct supervision at its workplace.

That employment relationship is central to the business model.

A staffing agency recruits a worker and assigns that person to a client. The worker may spend each day at the client's office, warehouse, factory, or other workplace, but the staffing agency can remain responsible for paying the worker.

The agency then charges the client for the services provided.

Robert Half, one of the largest publicly traded staffing and recruitment companies, offers a useful example. The company says the substantial majority of professionals it places on contract assignments are its legal employees while working for clients. Robert Half pays employment costs including workers' compensation insurance, unemployment taxes, Social Security, and certain benefits. It recognizes contract staffing revenue as its professionals perform services for customers.

This means a staffing company's client bill is not simply a recruiting fee. It can include the money needed to pay the worker as well as the amount needed to cover employment costs and contribute toward the staffing firm's own operating expenses and profit.

For a temporary assignment, two figures are especially important.

The pay rate is the amount paid to the worker. The bill rate is what the staffing agency charges the client.

The difference between them is often called the pay-bill spread. Robert Half identifies this spread as one of the main drivers of gross margin in its contract talent business. It also identifies payroll taxes, benefit costs, and other employment-related expenses as important factors affecting the amount the company ultimately retains.

This is why describing the entire difference between a worker's pay and the client's bill as agency profit would be inaccurate.

Before reaching operating profit, the staffing company may have to cover payroll taxes, benefits, workers' compensation, recruiter compensation, sales staff, advertising, technology, offices, administration, and other expenses.

A higher bill rate therefore does not automatically mean the agency is earning an unusually high profit. The economics depend on both the amount charged to the client and the costs associated with supplying the worker.

Robert Half's latest available quarterly filing shows the distinction clearly.

During the first six months of 2026, its contract talent solutions business generated $1.47 billion in service revenue. The segment recorded approximately $898 million in costs of services, leaving about $574 million in gross margin, equal to 39.0 percent of revenue. Robert Half defines these contract costs primarily as payroll, payroll taxes, benefits, and reimbursable expenses associated with its engagement professionals.

Even that $574 million was not operating profit.

Robert Half reported approximately $547 million of segment selling, general, and administrative expenses for contract talent solutions during the same six-month period. After those expenses, segment income was about $27 million.

The figures are company-specific and should not be treated as an industrywide margin benchmark. Different staffing firms serve different occupations, clients, geographies, and contract structures.

They do, however, demonstrate an important feature of temporary staffing. A staffing company can report substantial revenue while retaining only a relatively small portion as operating income after worker costs and corporate expenses are paid.

Permanent recruitment works differently because the worker normally becomes an employee of the client rather than remaining on the staffing company's payroll.

The agency searches for candidates, evaluates them, introduces suitable people to the employer, and earns a fee for completing the placement.

Robert Half says fees for successful permanent placements are paid by employers and are generally calculated as a percentage of the new employee's annual compensation. Candidates are not charged for the company's permanent placement services.

ManpowerGroup describes a broader range of fee structures. Its 2025 annual filing states that permanent recruitment revenue can be based on either a fixed fee per placement or a percentage of the candidate's salary. The company recognizes the placement revenue when it has placed the qualified candidate and the client has accepted the service.

Because the staffing firm is not usually paying the permanent employee's ongoing salary, permanent placement has a very different cost structure from temporary staffing.

That difference is visible in Robert Half's accounts.

For the first half of 2026, Robert Half reported $227 million in permanent placement revenue and only about $446,000 in segment costs of services. But this does not mean nearly all of the placement revenue became profit. The segment also had roughly $210 million in selling, general, and administrative expenses, much of which related to compensation and other operating costs. Segment income was approximately $17 million.

Recruiters, account managers, advertising, technology, offices, and administrative support still have to be paid even when there is little direct payroll cost attached to a particular placement.

The contrast between temporary staffing and permanent recruitment explains why gross-margin comparisons need careful interpretation.

In Robert Half's audited 2025 results, contract talent solutions produced a reported gross margin of 39.0 percent. Permanent placement produced a reported gross margin of 99.8 percent because reimbursable direct expenses in that business were minimal.

Those percentages measure different cost structures.

Temporary staffing includes substantial worker payroll and employment costs within costs of services. Permanent recruitment does not carry the ongoing salary of the person being hired, so most recruiter and operating costs appear further down the income statement as selling, general, and administrative expenses.

A 99.8 percent gross margin therefore does not mean the company kept 99.8 cents of every permanent-placement dollar as profit.

This is also why markup, gross margin, operating margin, and net profit should not be used interchangeably when discussing staffing companies. Each measures a different stage in the economics of the business.

Temporary placements can sometimes create another source of revenue.

A client may decide that a temporary or contract worker is a good long-term fit and hire that person permanently. Staffing agreements can provide for a conversion fee when this happens.

Robert Half specifically identifies conversion revenue earned when contract positions convert to permanent positions with clients as one of the components affecting gross margin in its contract talent solutions business.

This creates another path from a successful match to agency revenue.

Rather than earning solely from the hours worked during the temporary assignment, the agency may also receive compensation if the worker transitions onto the client's permanent payroll, depending on the commercial agreement.

Modern staffing firms can do considerably more than fill individual vacancies.

ManpowerGroup, for example, offers recruitment process outsourcing, commonly known as RPO. Under these arrangements, it can manage one part or all of a client's permanent hiring process, from job profiling through onboarding.

Its managed service program, or MSP, operations can manage contingent workforces through activities such as reporting, supplier management, and distributing staffing orders. The company recognizes MSP revenue over time as the services are provided.

These models change what the customer is purchasing.

Instead of paying solely for one worker or one successful hire, an employer may pay a staffing company to operate part of its recruiting or workforce-management infrastructure.

Large providers can therefore combine several revenue streams, including temporary staffing, permanent recruitment, outsourced recruiting, workforce management, consulting, training, and other services.

The mix varies substantially among companies. ManpowerGroup reported that staffing and interim services generated the majority of revenue across its geographic segments in 2025, while permanent recruitment and other workforce services accounted for smaller portions.

Temporary staffing is sometimes described simply as finding a worker and adding a markup. That description leaves out much of what the agency actually does.

When the agency is the worker's employer, its responsibilities can extend well beyond recruiting and issuing a paycheck.

Robert Half, for example, reports responsibility for workers' compensation insurance, unemployment taxes, Social Security, and certain benefits for most of the professionals it places on contract assignments.

Workplace safety responsibilities can also be shared.

The U.S. Occupational Safety and Health Administration says staffing agencies and their clients can be joint employers of temporary workers. Both parties have responsibilities for providing and maintaining a safe working environment, although the specific division of responsibility depends on the circumstances. OSHA recommends that staffing agencies and host employers clearly define their respective safety responsibilities.

The staffing company is therefore being paid not just for finding a person. Depending on the arrangement, it can be taking on recruiting work, payroll administration, employment costs, compliance responsibilities, and the financial risk associated with supplying labor to the client.

Permanent staffing has its own version of productivity.

Robert Half identifies two principal drivers of permanent placement revenue as the number of candidates placed and the average fee earned per placement. For contract staffing, the key revenue drivers are average hourly bill rates and the number of hours worked by assigned professionals.

These differences help explain how staffing companies manage their businesses.

A contract staffing operation benefits from keeping qualified workers on revenue-producing assignments and maintaining enough demand to generate billable hours.

Permanent recruiters need to turn searches into completed placements. Time spent sourcing and interviewing candidates does not necessarily generate revenue unless the commercial terms of the search provide for payment or a successful placement ultimately occurs.

Recruiting technology and candidate databases can make the matching process more efficient, but the underlying economics remain tied to filling client needs and generating billable activity.

The staffing industry is sensitive to changes in employers' demand for labor.

Businesses can use temporary workers to expand their workforces without immediately committing to permanent hiring, while recruitment agencies depend on employers continuing to open and fill permanent positions.

Recent industry data illustrate how those conditions can change.

The American Staffing Association reported that U.S. staffing employment increased 0.6 percent from a year earlier in the second quarter of 2026, while total staffing revenue increased 3.3 percent. ASA said this was the first quarter since late 2022 in which its survey recorded year-over-year growth in employment, sales, and payroll.

These are survey-based industry estimates, not a census of every U.S. staffing company.

ASA's quarterly Staffing Employment and Sales Survey estimates temporary and contract staffing employment, sales, and payroll using a model originally developed for the association by Standard & Poor's DRI and McGraw-Hill in 1992. The model draws on responses from staffing companies of different sizes, and a market research firm collects and reports the results in aggregate.

The figures therefore provide an industry indicator rather than audited financial results from the entire staffing sector.

For employers, staffing agencies offer access to recruiting expertise, candidate networks, and a workforce that can be expanded or reduced as business needs change.

For workers, they provide another route into temporary assignments, contract work, and permanent jobs.

The agency earns its place between the two by making the connection commercially valuable.

In temporary staffing, revenue is primarily generated as workers perform billable work, with the agency paying employment costs and retaining the remaining gross margin to cover its own operating expenses and profit.

In permanent recruitment, revenue generally comes from placement fees, with the worker joining the client's payroll rather than the staffing company's.

Larger firms add outsourced recruiting and workforce-management services to those core models.

The mechanics differ, but the economic principle remains simple. Staffing agencies make money by finding workers employers need and turning successful matches into billable labor, placement fees, or workforce-service revenue.