A new study from Express Employment Professionals (EEP) offers a more optimistic view of the U.S. labor market than many recent reports, suggesting that a growing number of employers plan to expand their workforces in 2026. While this outlook is encouraging for new graduates and job changers, hiring managers remain concerned about the overall quality of the available talent pool.
The research, conducted by Harris Poll for EEP, found that nearly two-thirds of hiring decision-makers intend to increase headcount in the first half of the year—the highest level of projected hiring growth since the surveys began in 2020. Additionally, 85 percent of respondents reported a positive outlook for 2026, approaching the confidence levels seen in late 2024. Although 37 percent reported a more negative sentiment, that figure is consistent with last year’s results.
Many organizations are hiring to support expansion into new markets and to acquire emerging skills. The data indicate that 39 percent of hiring managers are focused on market growth, while 38 percent prioritize the acquisition of new expertise.
Despite this optimism, employers continue to face significant staffing challenges. While interest in hiring recent graduates remains steady, companies are becoming more selective about their workforce strategies. Fewer employers expect to hire college students or retirees, while the use of temporary and contract workers is increasing. Twenty-six percent of companies plan to hire contingent workers in 2026, and 83 percent say they are willing to use them to meet business needs—an increase from 2025.
Skills shortages remain a major obstacle. Thirty-six percent of employers report having open roles they cannot fill, primarily due to a lack of qualified candidates rather than compensation issues. Half of hiring managers say applicants lack relevant experience, a rise from last year, and 26 percent say they struggle to assess informal or self-taught skills.
Looking ahead, 91 percent of hiring managers expect obstacles to meeting their growth targets. Among them, 40 percent cite difficulty finding qualified talent, 26 percent point to AI-related complexities, and 28 percent anticipate increased competition for skilled workers. This suggests that candidates with in-demand, especially AI-related, skills may face a more favorable job market.
However, this employer optimism contrasts with recent government labor data. According to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, there were 7.15 million job openings at the end of November 2025, the same month unemployment reached a four-year high of 4.6 percent. Economists had expected more than 7.6 million openings, leading analysts to describe the labor market as being in a “no-hire, no-fire” stalemate.
For employers, this mixed picture means hiring in 2026 could be more competitive and time-consuming, particularly for specialized or AI-skilled talent. Companies may need to adjust compensation, benefits, or hiring strategies if demand for these workers continues to rise and the more optimistic hiring outlook proves accurate.
The U.S. economy is booming with efficiency.
But that’s not the best news for the labor market.
New numbers out Thursday showed that the economy is indeed booming as individuals become more efficient workers within their companies.
The Atlanta Fed estimates that real GDP growth will come in at 5.4 percent for the fourth quarter of 2025. At the same time, government data show labor productivity surged at an eye-watering 4.9 percent annual rate in the third quarter, even as hours worked rose just 0.5 percent.
That is the arithmetic that Wall Street loves — more output without additional labor.
It’s close to a Goldilocks setup for both Corporate America and the Federal Reserve.
Productivity-driven growth is less inflationary than growth fueled by hiring sprees and rising wages. It keeps unit labor costs contained, supports profit margins, and makes it easier for policymakers to move forward with rate cuts.
Yet it also means the economy can expand quickly without much job creation.
Indeed, analysts forecast that the US economy added 55,000 jobs in December, which would be lower than the 12-month trailing average of 77,000, according to FactSet.
When efficiency rises this fast, companies can meet demand by doing more with the workers they already employ.
That means the economy can still run “hot” on GDP even as the labor market cools.
That dynamic helps explain why headline growth can still feel disconnected from the strain facing middle-class households.
The data describe an economy doing more with less.
Over time, that is the equation that pushes living standards higher. In the near term, though, it’s a far bigger win for investors and Fed watchers than for workers looking for jobs and pay raises.
America’s unemployment rate remains relatively low, but job growth has slowed sharply. The result is a labor market stuck in a low-hire, low-fire equilibrium that leaves millions of Americans unable to secure stable, full-time work.
New data released this week shows the U.S. began the year with an unemployment rate of 4.4%, even as monthly job creation fell to its weakest pace outside a recession since 2003. Workers without jobs are facing longer searches, while millions who are employed are stitching together multiple part-time and gig roles to survive.
For Monique Battiste, that reality begins before dawn. After earning two master’s degrees in human resources and marketing, she now starts her day at 4:30 a.m., leading personal training sessions in Dallas. After taking her 10-year-old daughter to school, she logs in to work as a part-time marketing assistant, then later heads to an Amazon warehouse for a six-and-a-half-hour overnight shift. Her day often ends after 10 p.m.
“It’s very tiring. It’s not healthy,” said Battiste, 40, who lost her full-time marketing job nearly a year ago. “But there’s nothing else I can do.”
Last month, more than 5.3 million Americans were working part-time because they could not find full-time jobs. While that number declined slightly from November, it still left about 3.1% of the labor force in involuntary part-time work, up from 2.6% a year earlier.
Job seekers are also staying unemployed longer. In December, the median length of unemployment rose to 11.4 weeks, the highest since late 2021. Those out of work for at least 27 weeks now make up 26% of all unemployed workers, up from 22% a year ago.
“It’s not a robust job market by any means,” said Mike Taiano, a vice president at Moody’s Ratings. “It looks like a stagnated labor market.”
Corrie O’Banion, 39, experienced that stagnation firsthand after losing a $120,000-a-year job administering federal grants. She now earns $14 an hour as a school paraprofessional in Oklahoma, while her husband struggles to find steady work after a workplace injury. The couple and their five children rely on food stamps.
“We can’t live off $1,300 a month for seven people forever,” O’Banion said.
The financial toll of prolonged joblessness compounds over time. Workers miss retirement contributions, drain savings, and lose opportunities to build skills that lead to higher pay. “There are long-term scarring effects,” said Brad Hershbein of the W.E. Upjohn Institute.
Jeff Lind, 55, knows that cost well. Once earning $250,000 as a sales executive for a pharmaceutical company, he has applied to more than 800 jobs since being laid off last year. To pay his bills, he withdrew $100,000 from his 401(k), losing $40,000 to taxes and penalties. Two of his children transferred to a community college to save money.
“I’m at the age where I’m supposed to be making the most,” Lind said. “And it’s just not happening.”
White-collar workers have grown increasingly anxious as companies announce layoffs and suggest artificial intelligence may replace some roles. Among Americans age 25 and older with a bachelor’s degree or higher, unemployment has risen to 2.8%, up from 2.5% a year ago.
Even those who find jobs are often forced to accept lower pay. Nicole Duffy, a former marketing manager in California, now earns $37,000 a year, down from $58,000 before her layoff. She has cut back on groceries and eliminated small luxuries like movie outings.
“I’d gotten far enough ahead to be comfortable,” she said. “Now I’m living like I did right out of college.”
Economists describe the economy as increasingly divided. Workers who have jobs, homes, and investments are largely holding steady, while those trying to enter or reenter the workforce are struggling to gain a foothold.
Glenn Jones, 33, once earned $90,000 a year in sales. After a layoff in 2024, he has applied to more than 1,000 jobs, including gig work like DoorDash, but has yet to secure steady employment. Even delivery platforms have waiting lists.
“We just want work,” Jones said. “Any work.”