The Dark Side of the Staffing Industry: What Candidates and Employers Don’t See

Disclaimer: This article describes practices observed across the staffing industry based on insider accounts, public records, and industry analysis. Not all agencies engage in all practices described. Individual experiences may vary. This article is for informational purposes and should not be considered legal or professional advice.

The staffing and recruitment industry is a $150+ billion business in the United States alone, connecting millions of workers with employers every year. For candidates, these agencies promise career opportunities and professional guidance. For employers, they promise qualified talent and reduced hiring headaches.

But behind the polished LinkedIn profiles and professional office spaces, there’s a side of the industry that neither candidates nor employers fully understand—and it’s costing both groups far more than they realize.

This isn’t about a single bad actor. It’s about systemic practices embedded in the business model itself, where the incentive structures create outcomes that benefit the agency while leaving both candidates and employers wondering why the results don’t match the promises.

The Commission-Driven Reality

Let’s start with how staffing agencies actually make money, because understanding the incentives explains everything else.

For contract/temporary placements:

• Agency pays worker $70/hour
• Agency bills employer $100/hour
• Agency keeps $30/hour “spread” (their profit margin)
• This continues for the entire duration of the contract

For permanent placements:

• Employer has budgeted $120,000 for a role
• Agency places candidate at $100,000
• Agency collects 20% fee: $20,000
• Candidate never knows the real budget was higher

For recruiters themselves:

• Base salary: $40,000-$70,000
• Commission structure: 8-16% of what they generate
• Top performers: $200,000-$500,000+ annually
• A single good year can make someone financially set

When individual recruiters can make half a million dollars in a year through commissions, you create an environment where volume and speed matter far more than quality or ethics.

The Information Asymmetry Problem

Here’s the fundamental issue: staffing agencies know what both sides will accept, but neither side knows what the other is thinking.

What Happens to Candidates

A software developer applies for a contract role. The conversation goes like this:

Recruiter: “Great news! The client is offering $75/hour for this position.”

Candidate: “That sounds fair for the market.”

What the candidate doesn’t know: The employer’s budget was $105/hour. The agency is taking a $30/hour markup (40% margin) instead of the more typical 25%.

The candidate could have negotiated for $85/hour and still left the agency with a reasonable profit. But they don’t have that information.

This is completely legal. There’s no law requiring agencies to disclose the client’s budget or their markup percentage to candidates.

What Happens to Employers

An employer needs five customer service representatives. The conversation goes like this:

Sales Rep: “We can fill all five positions within two weeks. Our bill rate is $28/hour per worker.”

Employer: “Perfect, that’s in our budget.”

What the employer doesn’t know: The agency is paying those workers $18/hour and pocketing $10/hour per person ($50/hour total, $2,000/week, $104,000/year in pure margin).

The employer also doesn’t know that the agency’s “rigorous screening process” consists of a 15-minute phone call and a pulse check, because the recruiter has a quota to hit and needs to place 10 people this week to make their numbers.

This is also completely legal. The employer agreed to the bill rate. How much the agency pays the worker is “not their concern.”

The Sales Machine: How Contracts Are Actually Won

One of the least understood aspects of the staffing industry is how agencies actually acquire corporate clients. It’s not just posting on LinkedIn and waiting for companies to call.

The Business Development Role

At most mid-to-large staffing firms, there’s a split between:

1. Recruiters — Find and screen candidates (desk work, phone calls, database searches)
2. Account Managers/Sales Reps — Win new corporate clients (field work, relationship building, entertainment)

The account managers are the ones actually going to companies, and their job is pure sales.

Common Sales Tactics (All Legal, All Questionable)

Client entertainment:

• Taking hiring managers to expensive dinners
• Golf outings, sporting events, concerts
• Open bar networking events
• The goal: Build personal relationships that lead to signed contracts

Strategic hiring practices:

• Some agencies deliberately hire attractive, charismatic salespeople
• Young, energetic teams that “fit” with the corporate culture they’re targeting
• The pitch is as much about the relationship as the service quality

The “test placement” strategy:

• Offer to fill one role at a reduced rate to “prove value”
• Once they have a foot in the door, upsell to larger contracts
• The first placement might be high-quality; subsequent ones less so

Volume promises:

• “We can fill 20 positions in 30 days”
• What they don’t mention: 2-3 will quit in the first month, another 3-4 will be marginal performers
• But by then the contract is signed and they’re getting paid

None of this is illegal. It’s sales. But it creates situations where:

• Hiring managers sign contracts based on relationships rather than actual capability
• The agency’s sales skills exceed their delivery quality
• Both parties are locked into agreements that may not serve the employer’s best interests

The High-Pressure Culture Inside

Multiple industry insiders have described working at staffing agencies as “toxic,” “cult-like,” or “soul-crushing.” Why?

The Metrics-Driven Environment

Recruiters are typically measured on:

• Submittals per day (candidates sent to clients): Often 2-3 daily minimum
• Placements per month: 3-5 for newer recruiters, 8-12 for experienced
• Revenue generated: The ultimate scorecard

When you’re expected to submit 2-3 candidates every single day, quality becomes impossible. You’re not carefully matching people to roles—you’re filling a quota.

The Churn Model

One former recruiter described it as: “Hire 10 recruiters, 2 will succeed, the rest burn out in 6-12 months.”

This isn’t a bug—it’s the business model:

• Hire cheap (young, inexperienced, hungry for commission)
• Work them brutally hard
• The 80% who can’t hack it leave
• The 20% who thrive make the company millions
• Repeat

Real Quotes from Industry Insiders

“We’d literally have to work 24/7 to actually help every candidate who submits a resume. There’s just too much volume. So you focus on the ones who match current jobs and ghost everyone else.”

“The amount we were lowballing candidates was insane. I found out one guy I placed for $85K was in a role budgeted at $115K. I felt sick, but my manager said ‘that’s the business.'”

“My job wasn’t to find the BEST person. It was to find someone good enough to get hired so I could hit my numbers and make commission.”

“They taught us to always lowball the first offer. If someone accepted immediately, we knew we could have gone lower. If they negotiated, we’d go up $5K and act like we fought hard for them.”

How Both Sides Lose

Candidates Get:

• Underpaid — 10-30% below what the employer actually budgeted
• Ghosted — Unless you match a current job, you’re invisible
• Misled — Promised “great opportunities” that turn into dead-end contract roles
• Disposable — Once you’re placed, you’re often forgotten until the contract ends
• Benefit manipulation — Contract terms changed, PTO “reset,” health insurance deductibles restarted

Employers Get:

• Overcharged — Paying 30-75% markup on hourly rates
• Mediocre talent — Speed and volume prioritized over quality fit
• High turnover — Workers placed in roles they’re not suited for quit quickly
• No accountability — Once the placement is made, the relationship often goes cold
• Bait and switch — The “A-team” that sold the contract isn’t the “B-team” doing the actual recruiting

The Agency Gets:

• Massive margins — 25-75% on temp/contract, 15-30% on permanent
• Volume revenue — Even mediocre placements generate income
• Limited risk — Contingency model means they only get paid on success
• Information advantage — They know what both sides will accept

Why This Persists (And Why It’s All Legal)

You might be wondering: If this is so problematic, why isn’t it illegal?

The Legal Gray Areas

Information asymmetry isn’t fraud:

• Agencies aren’t required to disclose budgets to candidates
• Agencies aren’t required to disclose pay rates to employers
• As long as both parties agree to their respective terms, it’s legal

High-pressure sales isn’t illegal:

• Taking clients to dinner is networking, not bribery
• Hiring attractive salespeople isn’t discrimination (they’re selling, not being sold)
• Entertainment and relationship-building are standard B2B practices

Commission structures aren’t exploitative:

• If someone can make $500K through commissions, that’s capitalism
• High-pressure environments aren’t illegal, just unpleasant
• Burnout and turnover aren’t crimes

Employment-at-will protects agencies:

• Contract workers can be let go anytime
• Benefit changes and contract modifications are often within legal bounds
• As long as workers are paid for hours worked, the agency is compliant

Why Companies Keep Using Them

Despite the issues, employers continue using staffing agencies because:

1. Convenience — Filling 10 positions in-house takes months; agencies promise weeks
2. Risk transfer — If the hire doesn’t work out, it’s the agency’s problem (in theory)
3. Budget games — “Contractor budget” vs “headcount” lets companies play accounting games
4. Lack of HR resources — Small/mid-size companies often don’t have recruiting teams
5. Flexibility — Can scale workforce up/down without permanent commitments

Why Candidates Keep Using Them

Despite the issues, job seekers continue working with staffing agencies because:

1. Access to hidden jobs — Some roles are only filled through agencies
2. It’s free — Candidates pay nothing, so why not?
3. Speed — Can get placed in days vs months of solo job searching
4. Desperation — When you need income, you take what you can get
5. Lack of alternatives — In some industries (IT contracting, healthcare, light industrial), agencies dominate

The Exceptions: Good Actors Do Exist

Not every agency operates this way. There are firms that:

• Maintain transparent markup policies
• Focus on quality placements over volume
• Build long-term relationships with both candidates and clients
• Pay recruiters well enough that they don’t need to churn and burn
• Specialize deeply in niche areas where expertise matters

These tend to be smaller, boutique firms or highly specialized agencies where reputation matters more than quarterly revenue targets.

How to identify them:

• Established reputation in a specific niche (not generalists)
• Lower recruiter turnover (check LinkedIn tenure)
• Transparent about their process and timeline
• Don’t pressure you to accept offers immediately
• Follow up even when you’re not actively looking
• Can articulate why they’re better than competitors beyond “we care more”

But these are the minority. The dominant players in the industry operate on the volume model described above.

What Can Be Done?

For Candidates:

1. Research the company’s budget

• Use Glassdoor, Levels.fyi, Payscale to know market rates
• Ask the agency directly: “What’s the client’s budget for this role?”
• If they won’t tell you, ask: “What’s your standard markup percentage?”

2. Negotiate everything

• Never accept the first offer
• Push back on lowball rates: “I’ve seen this role posted at $X elsewhere”
• Request benefits in writing before accepting

3. Get multiple agencies working for you

• Don’t be exclusive to one agency
• Play them against each other (legally)
• See who brings better opportunities

4. Go direct when possible

• Apply directly to companies as well as through agencies
• Many companies prefer direct hires (saves them the fee)
• Use agencies as one tool, not your only strategy

For Employers:

1. Demand transparency

• Ask: “What are you paying the worker?”
• Request itemized breakdowns of the markup
• Compare rates across multiple agencies

2. Set quality standards

• Require retention guarantees (candidate stays 90+ days or free replacement)
• Measure agency performance (time-to-fill, offer acceptance rate, retention)
• Drop agencies that consistently deliver poor candidates

3. Consider alternatives

• Build internal recruiting capacity for key roles
• Use agencies only for high-volume or hard-to-fill positions
• Try direct sourcing through LinkedIn, job boards, employee referrals

4. Negotiate better terms

• Exclusive contracts should come with reduced fees
• High-volume clients should get volume discounts
• Consider flat-fee models for predictable hiring needs

For the Industry:

Regulatory considerations (not currently required, but could be):

• Mandate markup disclosure to candidates
• Require pay transparency in contract staffing
• Limit markup percentages for certain industries
• Stronger protections for contract workers’ benefits

Market-based solutions:

• Platforms that increase transparency (salary data, agency reviews)
• Direct-hire marketplaces that bypass traditional agencies
• Employer coalitions that demand better standards
• Professional associations with ethical codes

The Bottom Line

The staffing industry provides a legitimate service: connecting workers with employers efficiently. When done well, everyone wins.

But the current business model—high commissions, information asymmetry, volume-over-quality incentives, and high-pressure sales tactics—creates systemic problems that hurt both candidates and employers while enriching the agencies.

This isn’t about “bad apples.” It’s about an industry structure that rewards behaviors that don’t serve either of its supposed customers well.

The candidates aren’t the customer—they’re the product.

The employers are the customer—but they’re often getting a product they didn’t really ask for.

The agency is the only one consistently winning.

Until either regulation or market forces change the underlying incentives, these practices will continue. Both candidates and employers need to understand what they’re really getting when they engage with the staffing industry—and approach these relationships with their eyes wide open.