Key Takeaways
- The future job market will remain competitive for employers, especially when hiring for low-wage, skill-based and in-person jobs.
- An aging population and an expected decline in immigration will likely shrink the labor force in the coming years.
- Adoption of generative AI will need to spread beyond a handful of high-tech sectors for the tool’s full productivity-boosting potential to be realized.
What goes up must come down, as the saying goes. Can the same be said about interest rates and inflation in 2025? And, if so, how would that impact the U.S. economy and labor market?
For Indeed’s 2025 U.S. Jobs and Hiring Trends Report, the team of Indeed Hiring Lab economists crunched the numbers for this year’s economic outlook. The results are reassuringly positive. The team sees a soft landing — in which interest rates drop and the economy cools but stops short of a recession — as a likely outcome. And that’s just one reason to be optimistic.
We asked Indeed economist Cory Stahle about the report’s key findings and what employers can expect from the 2025 job market.
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Q: What needs to happen for the economy to stick a soft landing in 2025?
Stahle: At a high level, we want to see both job seekers and employers feel confident about the economy. That means we need to see both hiring and quitting activity stay robust. We’re monitoring job postings to track employer demand and hope to see opportunities for job seekers continue throughout 2025. And we want to see wage growth stay about where it is right now so people are earning enough to stay ahead of inflation. Keeping a close eye on inflation will be very important: The Federal Reserve’s 2% target is within reach, but will we get there?
The other linchpins to watch are layoffs and unemployment. We’ve heard stories about layoffs in technology and other knowledge-based jobs. Despite the headlines, layoffs have been at or below all-time lows, and unemployment remains relatively low. A soft landing is not guaranteed, but as of now, we’re on the right trajectory.
Job growth is currently declining. Does that weigh on your optimism for 2025?
You have to remember: The hiring slowdown is relative to the all-time highs we saw in 2022. We’ve been coming down from the top of the mountain, but overall, job postings are still at a much higher elevation than they were in 2020, before the pandemic.
Finding a job in 2025 might feel trickier than in 2022, when the labor market was red hot. However, job postings in certain skilled-labor sectors — construction, manufacturing and health care — are still strong, and workers in those sectors will continue to have the upper hand in 2025.
On average, most employers have pulled back on hiring, but they’ve focused on keeping their existing workers, and they’ve mostly been able to strike a good balance. The slowdown in job gains is not hurting spending right now. Gross domestic product is strong, and the U.S. economy is well positioned heading into next year.

What needs to happen in the coming year to maintain that strong position while job growth slows?
We need to stay above 100,000 job gains per month to sustain a healthy economy, and we are currently hovering around 180,000. Over the last year or two, however, government hiring has been an important contributor to the resilience in the labor market, and the incoming administration has set a goal to create efficiency by cutting back on government employment. That could significantly impact overall job gain numbers and move us closer to a point where we’re not creating enough new jobs to support the economy.
One of the main challenges you discuss in the report is a looming labor shortage. Why is that happening, and what will it mean for the job market?
The U.S. population is getting older. That’s a fact. Life expectancies are going up, and birth rates are going down. The labor force participation rate, which measures how many people in the population are working, is declining. In the next decade or two, we will start seeing the number of people available to work shrink. That creates challenges for employers. If they want to grow, they need to continue to add jobs, but there will be fewer and fewer people to fill those jobs. That’s a massive headwind on the economy right now, but it’s still far enough down the road that it’s not getting too much attention.
The other thing that may affect labor supply is immigration. We’ve heard a lot about the potential for stricter immigration policies under President-elect Trump. But it’s important to note that, even without policy change, the Congressional Budget Office has projected a decrease in immigration. Foreign-born workers tend to be younger, so immigration has helped to counteract some of the effects of our aging population in the short term. But if those younger workers stop coming to the U.S. to get jobs, the headwinds of our aging population will start to pick back up.

What can employers do to prepare for those headwinds?
Attracting workers will be more challenging over the long term. With that in mind, there are a few trends that employers need to embrace in 2025 if they want to succeed.
- Offering remote and hybrid work options is still important because job seekers value flexibility.
- Pay transparency is also important and is becoming the norm in the hiring process: As of September 2024, 57.8% of job postings on Indeed listed some type of pay information, up from 52.2% in September 2023. Employers who are not yet doing this should seriously consider it.
- Finally, when possible, rethink educational requirements on job postings and focus on skills-first hiring to expand talent pools.
What will the impact of GenAI be on the economy and labor market?
GenAI has received much more attention — especially related to its labor market impacts — than is necessarily warranted at this point.
I divide GenAI users into two categories: those making the tools and those in jobs that stand to benefit from using those tools. If we look at Indeed’s data, we see that most adoption thus far has been among the people building the tools. That group is growing quickly, but it’s very small — only two out of every 1,000 jobs are asking for GenAI skills or tooling right now. We won’t see a major shift in the labor market until we see AI enter more concretely and more broadly into various roles and sectors, like marketing, banking and sales. There’s still a long way to go.
What would you tell employers and workers who are anxious about AI adoption at work?
AI won’t steal your job. Hiring Lab evaluated 2,800 different skills and found that GenAI is not likely to replace a single one of those skills. That shows that humans are still vital to the labor market.
It’s important to shift more toward a productivity mindset around AI. While AI is not likely to displace workers, an employee who has GenAI skills and is more productive as a result could displace a worker who lacks those skills. For employers facing a shrinking labor pool, increasing individual productivity will benefit their business and the economy as a whole.
Get the Full Hiring Lab U.S. Jobs & Hiring Trends Report
What else do employers need to know to prepare for success in 2025? Visit Hiring Lab to read the full report, which offers an even deeper dive into the key economic trends that will shape the labor market, along with the data to inform your hiring strategies. test
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