The business of serving as a broker between employers and those seeking employment has existed for centuries, beginning perhaps as early as the fifteenth century. The English practice of indentured servitude would fall under this definition because it involved men acting as employment brokers or agents of free workers. These brokers acted on behalf of employers who did not have easy access to laborers. They negotiated the contracts that bound these free people to work for a specified period. Indentured servants agreed to work in exchange for benefits that ranged from free passage to the New World to food and lodging.

The first known private employment agencies were called "intelligence offices," which began sometime in the early nineteenth century. In his book, Martinez cites the "Employers and Servants Protestant agency"—established in 1819 for the "better regulation of Domestic Servants"—as the earliest reference to a bona fide employment agency. Martinez also notes that the first large scale employment agency appeared in 1863 as the American Emigrant Company, created to "secure laborers and skilled workers for a number of American employers." Fees were collected from employers and registration fees exacted from European job seekers. The agency paid for transportation to the United States then was reimbursed via future deductions from the immigrant worker's wages. Private employment agencies appear with more frequency in the latter nineteenth century as evidenced by classified advertising in newspapers of the period. Before World War I, private employment agencies recruited manual laborers or female domestics. Almost anyone could be an employment agent—the middleman and often the only source of information between employers and prospective workers.

After incredibly successful years during the 1990s, fueled in part by the dot-com and technology industry boom, employment agencies entered the 2000s at a slowed pace. Just as insiders were analyzing the potential effects of an oncoming recession, the terrorist attacks of September 11, 2001 slowed the U.S. economy markedly. With nearly no new hiring taking place and an ongoing rash of layoffs and downsizing, employment agencies were deluged with people looking for jobs and few business clients looking for workers. The impact on the employment services sector was substantial. According to the U.S. Department of Labor, Bureau of Labor Statistics, the number of temporary jobs fell to 2.87 million by November 2002, down from a high of 3.95 million during the summer of 2000.

Previously, many temp jobs resulted in full-time employment. It was a way for both the employer and the employee to take a test drive before signing the final papers. Many workers used temp positions with the stated intention of landing a permanent position within a company. However, the recession altered this basic assumption, and temporary suddenly actually meant temporary. By the end of 2002, some firms reported that temp-to-permanent opportunities had fallen by 50 percent. With fewer jobs available, unemployed skilled workers were being offered much lower paying positions, often well below their ability level.

At best, many workers became "permatemps," that is, workers who are, for all practical purposes, permanently employed but are laundered through a temp agency to a business client. This situation tends to leave workers with no job security, and they are seldom provided the same level of benefits as regular employees. According to The American Prospect, temporary workers between the ages of 20 and 34 earn around 16 percent less than their peers who are regular employees doing the same work. Despite employment agencies touting available employee benefits, only 5 percent of this group is covered by employer-provided health insurance. In all, less than one in five temporary workers receives regular benefits such as health insurance coverage.