The Job Market Shift That Will Surprise Everyone in 2026

Additional Resources

• ZipRecruiter Economic Research
• Monster WorkWatch Report
• Paychex Small Business Employment Watch

Transcript

Pete Newsome: 0:00

Today’s top job market headlines include 2026 predictions from two major job boards and the latest small business employment data from paychecks. Here’s what the stories essentially tell us: hiring isn’t collapsing and workers aren’t panicking, but confidence on both sides of the market is certainly fragile right now. Let’s jump into it. ZipRecruiter says the biggest constraint on hiring this year won’t be demand, but labor supply. This is according to their 2026 labor market predictions that were published today. They believe we won’t see a major rebound in the year ahead, but rather a gradual recovery with structural labor constraints. And I find that interesting. They’re saying that we’re going to have a recovery, but a limited labor pool will be the reason it’s not better. And I just have a very difficult time buying off on that. And I also found this report to include several contradictions. They seem to be conflating a few things, which I’ll talk about as we go forward. The report cites a shift in demographics, and they reference the that aging workers are delaying retirement.

1:10

Well, that won’t reduce the labor pool. If anything, it’s the opposite. So I find that odd. Now, there is some good news from this report. They expect that 63% of businesses will increase hiring in the year ahead. But another contradiction is they say that there’s going to be an emphasis on entry-level roles. Everything I see shows that entry-level roles are being really affected right now in many ways by AI. Also, I believe by workers who’ve been laid off or not being able to find other jobs are going down and taking roles that they’re overqualified for. Now, I don’t use the word overqualified lightly. I don’t like that word at all typically, but workers are settling for roles they otherwise wouldn’t pursue because of the state of the job market right now. So SIPRECR is saying employers are going to emphasize entry-level roles. I hope that’s accurate. They do have the benefit of seeing the job posting. So they they have the data, but recent reports indicate there’s an increase, and I also see this firsthand an increase of entry-level roles, quote unquote entry-level roles, requiring experience.

2:28

I hope that’s not what’s happening here. I hope the zip recruiter is not claiming that there’s going to be an increase in entry-level roles that aren’t actually entry-level. But look, I’ll I’ll be optimistic right now and hope that they’re right, and that comes to fruition. This report highlights four key areas, and I’ll go through those quickly. One is that wage growth will approach inflation growth, and that’s not a good thing for workers. We don’t want to see those lines uh converge, as I’ll share on the screen here. We of course want to see wage growth outpacing inflation. So they predict that that’s not going to happen. Number two is that skills-based hiring will continue to become the new normal with degrees becoming less of a priority for employers. I believe that trend will absolutely continue. That’s in my predictions for 2026 as well. So I’m aligned with ZipRecruiter there. Number three, jobs in healthcare will continue to outpace pretty much everything else. And the great number that they share, which is just wild to me, 65% of all job growth in the US through November last year came from healthcare. So if you’re early in your career or trying to figure out where you’re going to go in your career, healthcare is where it’s at because the labor market is always about supply and demand.

3:48

And the demand is increasing as the population ages and the supply is limited. There’s just not enough workers. And this is an area where specific degrees are relevant, do matter. You can’t just decide to pivot mid-career into healthcare without going back to school, without getting proper training. So that is definitely to the benefit of anyone who works in the healthcare space. And then the fourth area they highlight, which is another contradiction from this report, is that AI will make workers more productive and mobile. And what I found really odd in this report was that they equate that career mobility to older people staying in the workforce longer. That just makes no sense to me because we know that the older you are, the slower you are to uh uh adopt new technology. All the data on AI shows that the younger uh crowd is definitely using it more than older folks. No surprise to anyone. Um so definitely scratching my head about how they are conflating these things. I I don’t get it. Very odd report. Uh their prediction was that AI will accelerate career mobility by helping workers upskill faster and transition between roles more easily. Okay, so yeah, if you take advantage of AI, certainly that exists. Um learning opportunities and skill development opportunities exist in a way that uh we’ve never seen before. But I would argue through YouTube, the internet as a whole, that workers have had opportunities to um learn on their own prior to AI too.

5:28

But look, my takeaway from this is that ZipRecruiter does have direct vis visibility to job postings. So I want to believe their data were where at all possible. Um so let’s just go with that. That they’re right. Uh we’re gonna see an increase in entry level, job demand. Um, and look, that is a great signal, if accurate, and everything else in the market will take care of itself. And the next headline: workers aren’t rushing to change jobs in 2026. Instead, they’re prioritizing stability. Monster’s 2026 WorkWatch report just came out, and it captures a major shift in worker psychology. Only 43% planned a job search in 2026, which is down from 93% last year. Think about that for a second. About half of the workers, less than half of workers who this time of year ago planned to search jobs, have just ruled that out altogether, have no intention of doing so. That is a shocking number to me. And for anyone listening, I will tell you, you should always be searching if you’re an employee somewhere. Always keep one eye open. I’m not saying you need to do it actively, but at least at some passive level, be aware of what’s out there so you don’t have some great opportunity pass you by.

6:46

Also, nearly 40% expect the job market to get worse, and 52% believe layoffs will increase even if they haven’t been personally affected. I think that’s about right. Um now, it sounds dramatic to say 40% expect the job market to get worse. That means 60% don’t think the job market will get worse. So I I I believe that. I mean, I think we’re trending in a good direction. I know a lot of workers are frustrated right now. A lot of people who are on the job market aren’t having success. Um, in many ways, technology has worked against you in that regard. But um I also believe that AI is going to greatly, greatly improve the efficiency of the job search process, how recruiting happens. That’s a story for a different day. And I know not everyone will agree with me on that, but hold me to that, check back with me next year, and you will see a vast improvement as a result of companies implementing AI the right way, the ones who do it. So those who don’t are gonna fall behind, um, and rightfully so.

7:49

No excuse not to be taken advantage of how AI can improve the recruiting process right now. Also, financial stress remains a central theme. A majority of workers, 58%, worry their salaries won’t keep up with inflation. That’s consistent with the Zip Recruiter report that came out today. And 57% report their pay already trails inflation. So, as a response to that, many people are pursuing a second job or a side hustle or have intention of doing that uh throughout the next year. Um, and many people intend to try and upskill to safeguard their careers, just like looking for another job or at least being aware of what’s out there on the market, you should always be looking to upskill. You should all always be looking to improve what you’re able to do and your value in the market. I mean, that is incumbent upon everyone individually to do. So don’t expect anyone to take care of your career.

8:46

Do you that’s that is on you to do. I mean, that’s the message there for sure. Uh also, flexibility still matters a lot, even though many companies are pushing return to office. 31% who took this survey say they won’t even apply to roles that are fully on site. That is such a huge shift from where we were pre-COVID. I get it. I like working at home. I, you know, it would be hypocritical for me to say otherwise, but I have the luxury of working from home. My team has the luxury of working from home. But if you’re desperate, if you’re don’t cut your nose off, spite your face either. Yes, it’s a luxury. It is not a given. So if you want to hold out uh for that, just make sure you know where you are in the supply and demand curve of the labor market. Maybe you need to go in the office to find a job that’ll pay your bills and take care of you. So I I 31%, one out of three people say they won’t go into the work at all. It’s also limiting for your career in terms of relationship building and networking and learning. So I know younger people don’t want to go in the office. It’s there’s there’s a downside to it as well. That that’s something I believe in very, very strongly. And I say that as an employer whose employees are at home, as I just referenced, and we’re not gonna change it.

10:09

I I’m self-serving, I admit it. I like being home, so I’m not gonna make anyone go back. But I feel in many respects that I’m doing my younger workers a disservice, my young employees, including my own daughter who’s who works for us, who’s worked for um my company since she was 16 and has worked for us full-time since graduating from college. Um I hate that she works remotely. I hate that it limits her career development in many ways. So that is something that I encourage anyone who’s on the job market, don’t be so tied to wanting to work from home. There’s a lot of upside to being in the office and being around your peers and being able to learn that way. And the data is showing that it’s limiting to your career advancement, that out of sight, out of mind is a real thing as it relates to those who choose to go in the office versus those who don’t when an option exists. So I’ll leave that soapbox alone for now, too. But then finally, there’s AI. Almost half who took the survey fear AI could threaten their job or industry, which adds another layer of uncertainty to uh our already cautious career decisions that are being made.

11:26

So to that, I’ll say you should be concerned. AI is going to take a lot of jobs, despite what we hear from many people who are in power, many people in the federal government. They say it’s much ado about nothing. I couldn’t disagree more. I believe AI will increase, it will take an increasing amount of jobs in the year ahead and beyond that. So protect yourself against that. Be involved in your company’s AI evolution, whatever that is going to be. Be on the forefront of that. Use it yourself, use it personally, use it professionally, use it to elevate your ability to do your job, use it to uh how your industry is going to benefit from it. So maybe it’ll help you in another company or even on your own. Take advantage of AI, make sure you’re using it, don’t get left behind that curve. It’s only picking up speed. So, yeah, you should you should be a little cautious about that. So there’s the monster uh report for 2026. I think they’re pretty much on point with where things are right now.

12:31

And the final headline today: small businesses aren’t expanding their workforces, they’re holding the line. This is based on Paychec’s small business employment uh watch. It tracks job and wage trends among businesses with fewer than 50 employees based on actual payroll data collected from their clients. Throughout 2025, small business employment barely moved month to month. That tells us employers are maintaining headcount. Uh, they’re not expanding payroll, but they’re not really cutting it either. Small businesses seem to be operating sort of in this hurry up and wait mode that we’ve seen, and I say we being a staffing company owner, my peers uh in the industry have all been feeling this just hurry up and wait uh mode that companies have been in. It seems like years now we keep waiting for a catalyst for that to change. Hasn’t happened yet. Fingers crossed that 2026 uh takes us in a much better direction. The the wages also uh tell a similar story. Hourly pay growth stayed below 3% for 17 straight months, which explains why workers continue to feel squeezed even without mass layoffs. Um important signal stands out from this report weekly hours increased, hitting some of the strongest growth since 2021.

13:46

And what that tells us is that small businesses in particular, that’s who uh whose data is in this report, uh, are asking more from existing workers instead of adding new ones, doing more with less. That seems to also have been a trend that has existed for a long time. Um interesting report for sure. I always like these reports to show actual data from companies that really have no uh reason to uh to tell a story that’s manipulated in any way or it or not 100% factual. They’re just reporting based on their own payroll data. Maybe the federal government does that, maybe they don’t. You can leave that up to uh yourself to figure out. But I I like the story. This is, I like the accuracy of the story uh this data tells us. Uh regionally, the Midwest continues to lead small business job growth, which um tells us that local markets ultimately always matter more than national headlines. I try to use a mix of both when assessing the job market. What do I see nationally?

14:50

What do I see from my peers in local markets around the country who I speak with on a very regular basis? And what do I see firsthand from my own staffing numbers and growth? And we do um a lot of uh we’re very active from a digital marketing standpoint, so our web traffic almost always tells the story of how the job market is going at any given time. I’ll probably do a show on that at some point if anyone’s interested. But the bottom line is this from all these stories, this is a labor market that is all about caution, efficiency, retention, not big contraction right now, but not expansion either. And that’s just the overall theme for what we’re seeing right now. But I believe the winners in 2026 will be companies and individuals who adapt early. Uh, don’t wait for some big magical story to come down uh to give you confidence that things are gonna change. I don’t see we’re going think we’re going to see just a big flip at any given moment. I think it’s gonna be gradual, but we’re trending in a mostly good direction right now, and we’ll take it.

15:55

That’s better than trending in the wrong direction for now. But before we go, here’s your workplace fun fact for today. The first email was sent in 1971 by Ray Tomlinson, and he has no idea what he wrote. He’s completely forgotten what the email said. We will never know. 1971, though. That was my birth year, so good year we like 1971 for sure. And the year Disney World was open here in Orlando. So, two fun facts today. It’s a bonus, three. If you include my birthday, birth year. So there we are. Thanks for listening. Please like, subscribe, share with anyone who you think might be interested. I’ll always keep you informed with the job market news, and I’ll be back tomorrow. We have some big labor reports coming out this week, so stay tuned for that. Thanks again.