A Tale of Two Economies: Trends Shaping the Workforce in 2026

Key Takeaways:

• Indeed’s Director of Economic Research Laura Ullrich shares insights from the Hiring Lab’s 2026 U.S. Jobs & Hiring Trends Report, revealing ~50% of U.S. consumption now comes from the top 10% of earners, while consumer confidence sits near pandemic-era lows. 
•  According to Ullrich, employer demand for talent from other countries remains high, but fewer international candidates are applying — making proactive sponsorship messaging essential. 
• This article dives into the latest labor market trends with actionable tips for employers, such as expanding skills-first hiring to convert displaced talent into hiring gains.

Get ready to see more of the same “low-hire, low-fire” labor market in 2026. Economists say the number of job openings will remain steady and the unemployment rate will rise only slightly. In other words, U.S. hiring trends should look a lot like they did in 2025, with no major moves in either direction — for better or worse.

However, “better or worse” is ultimately a matter of individual perspective. While we’re not in a recession and the perception of top-line trends is one of relative economic health and stability, a clear disconnect is evident when zooming in on today’s lived experience.

The average American is facing an undeniably mounting sense of economic anxiety. Consumer confidence numbers have reached near pandemic-era lows. Gross domestic product (GDP) growth continues to rely disproportionately upon high-income earners to buoy consumer spending as lower- and middle-income groups pull back. 

Additional unknowns surrounding immigration policy, tariffs and AI only contribute to the tension.

“People don’t live in the macroeconomy. Their reality is determined by things like where they live, what sector they work in and how much they make,” says Laura Ullrich, Director of Economic Research in North America at the Indeed Hiring Lab. “It really is a tale of two economies.”

We sat down with Ullrich to discuss what employers need to know about their employees’ and customers’ current economic realities that might not be reflected in the top-line economic trends. Read on to learn which key factors are driving the economic split and why it’s more important than ever that employers look beyond the headlines to guide hiring in 2026 — and beyond.

For a full look at the data, check out the Hiring Lab’s 2026 U.S. Jobs & Hiring Trends Report. 

Laura Ullrich is Director of Economic Research in North America at the Indeed Hiring Lab. Prior to joining Indeed, Laura served as a Senior Regional Economist and Senior Manager at the Federal Reserve Bank of Richmond, primarily focused on research related to higher education and workforce dynamics.

The following interview has been edited for clarity. Recommended employer insights are additions from Indeed’s Editorial team. 

Q1: If we’re not in a recession, why is consumer confidence so low, and what does that mean for employers?

Ullrich: The cost of housing has gone up significantly over the past few years, while the cost of healthcare is expected to increase a lot this year. Inflation continues to be well above the Fed’s 2% target, and wages haven’t kept up with inflation over the past five years. In short, people are losing money in real terms. 

What worries me most is the overdependence on high-income consumption. Roughly 50% of consumption is coming from the top 10% of earners. GDP and the macroeconomy could keep humming along if wealthy people continue to spend or if middle- and lower-income earners increase their spending. But the latter seems much less likely, given current headwinds. 

Leadership at most companies is likely facing a much different economic reality than many of the people who work for them. Employers have to recognize that low-, middle- and even upper middle-class consumers are struggling. The Consumer Confidence Index is almost as low as it was in the heat of the pandemic — and when you think about what that moment felt like, that decline is pretty staggering. 

Q2: Is the rise in return-to-office (RTO) mandates a sign that the remote work trend is reversing?

Permanent shifts are going to happen after something as disruptive as the pandemic, especially in the way people want to work. In February 2020, roughly 3% of jobs were remote or hybrid, and now it's 8.2%. It's not the high of 10% that we had in 2022, but it's still high — and it’s not going back down to prepandemic levels. 

The youngest generation has a very different preference for how they want to work compared to older generations. But surveys largely show that forced RTO isn’t going well — compliance is low and employee dissatisfaction is rising. This tells me that the conversation around remote work isn’t quite done yet. 

Q3: How do regional economic trends affect employers’ hiring strategies?

Choropleth map from the Hiring Lab’s 2026 U.S. Jobs and Hiring Trends Report titled “Smaller MSAs experience more resilient labor demand.” The map represents the Indeed job postings index by Metropolitan Statistical Area (MSA) across the United States as of October 31, 2025. Darker regions indicate a higher index compared to prepandemic levels.

Job postings are much higher in the small to medium-sized metros compared to the largest metros. For example, if you're an employer in a large metro area like Seattle, it's an employer's market, and a lot of talent is sitting on the sidelines. The population in Washington state has grown 5.3% since COVID, but job postings are down about 23%. 

Compare that to South Carolina: their population growth was just around 7% over the same period, yet they have 29% more job postings now. If you’re trying to hire in Charleston, you might have a hard time finding people because its market is still so tight. But if you're willing to have somebody work from Seattle, you could find a great candidate.

Q4: How have recent immigration policy changes impacted how employers recruit and hire foreign talent? 

There’s currently a mismatch between employer demand for foreign workers and job seeker interest. For example, healthcare, a sector that relies heavily on high-skilled immigrant labor, is one of the areas where we've seen the largest decline in the number of applies per job. Yet the overall number of job postings for physicians and surgeons remains really high. 

On the H-1B side of the immigration coin, employers have not actually decreased their willingness to sponsor visas in sectors like healthcare, technology or engineering. It’s harder to gauge in sectors like construction, agriculture or hospitality, where hiring is more informal. Either way, fewer international residents are looking for jobs in the U.S. with its current climate around immigration. They're afraid.

Companies that rely on immigrant labor are going to have to work harder to encourage people to come. If you are willing to pay the H-1B visa sponsorship, you need to clearly and strongly communicate that — and not only in job postings or on your website but to your representatives and relevant professional trade organizations.

Q5: Where do employers have opportunities to set themselves up for success in the current economic climate, both now and in the future?

Employers have an opportunity to attract and source talent differently now than they may have before. Most workers being displaced right now are white-collar and have a tremendous skill set. As an example, tech employment has taken a serious hit, so nontech companies have an opportunity to scoop up incredibly skilled talent.

But you can’t just snap your fingers and go from being a tech worker to a healthcare worker. Reshuffling talent necessitates upskilling or reskilling workers, but interestingly, many of these white-collar roles are the least likely to have on-the-job training. 

Think about retention relative to what’s going on in your industry. If you are anticipating shifts due to AI or if roles are going to change or go away altogether, how do you maintain the quality talent that you want to keep? How do you provide them with the growth opportunities they demand? In either case, you may have to think about training differently than before. 

Q6: How is AI impacting the economy and shaping the workforce in 2026? 

We did not include AI as one of the trends in the report because these other factors are playing a bigger role in the macro labor market. As of November, only 4% of all job postings mention AI at all. 

AI investment is happening, but companies can’t replace workers with AI in large numbers now. When that happens, it’ll cause larger layoffs than what we're seeing. Companies will also need managers who know how to manage AI, and that isn’t showing up in current job postings.

AI is going to transform the labor market eventually — but it’s not happening at a macro level quite yet. 

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