What 100+ Economists Expect From the Labor Market in the Next 12 Months

In this highly volatile labor market, employers and workers alike are struggling to understand how AI is impacting jobs and hiring. It’s a complex question without a simple answer, especially as positions and mindsets shift among industry leaders and economists alike. In response, Indeed is leaning into new data to help navigate this moment and answer the question of what’s coming next.

The Indeed Hiring Lab Labor Market Outlook survey, conducted by Pulsenomics, is a quarterly market analysis that draws on the insights and expertise of more than 100 U.S. economists to project macro shifts in the market. 

“This survey is a great complement to the content our economists produce at the Hiring Lab,” says Laura Ullrich, director of economic research at Indeed. “Employers and workers are getting a lot of conflicting signals about AI and hiring right now, and this panel gives us a clearer, consensus read on where things are actually headed.”

Baseline projections anticipate a cooling labor market. Economists expect July unemployment to increase slightly to 4.3% (from 4.2%), finish the year at 4.4% and stay there through mid-2027.

In part, the economists’ projections draw on the Indeed Job Postings Index (JPI) — a daily measure of labor market activity based on fluctuations in job postings on Indeed. Those surveyed project the overall JPI to decline 0.5% through September 30, dropping a total of 1.4% by June 2027. 

Behind the macroeconomic numbers lies an AI-driven structural shift. As concerns increase about the technology displacing college-educated workers, economists forecast a market where white-collar pay faces downward pressure even as demand for human-centric skills spikes.

"We’re looking at a labor market in mid-realignment," says Terry Loebs, founder of Pulsenomics. "As overall hiring activity moderates through 2027, the underlying dynamics will continue to shift, redefining which skills will command a premium as AI integration accelerates."

To help you navigate this tumultuous terrain with confidence, here’s a breakdown of the panel’s key projections and what these shifts may mean for your talent strategy.

Balancing tech automation with human skill demand

The main character of the labor market story is and has been AI: How will it impact jobs? How are employers bringing it into the workplace? How worried should workers be?

For this inaugural survey, Hiring Lab asked economists to gauge how their opinions on these questions have changed over the past 12 months. Nearly two-thirds (61%) reported that their concern over AI’s potential to displace college-educated workers has increased compared to just a year ago.

But the survey probed deeper, asking about AI’s potential impacts on specific occupations over the next 12 months. 

Hiring demand is shifting dramatically across industries. Economists forecast the largest drops in job postings to be in software development, administrative assistance and banking and finance. Posting gains, meanwhile, are expected in personal care and home health, nursing and IT infrastructure, operations and support.

Within those outlooks, though, is a structural tug-of-war, especially in tech.

Take software development, for instance. Nearly 1 in 4 economists (23%) expect it to experience the largest net job losses from AI over the next year. At the same time, it ranks third for net AI-driven job gains (cited by 12% of the panel), just behind data and analytics (15%) and IT infrastructure/operations (19%).

This data highlights that, while tech roles are changing, AI doesn't replace the worker. It simply demands a different set of human strengths.

“AI is redefining how technology is built and maintained," says Loebs. "While automation streamlines routine software development, it’s simultaneously creating new demand for people who can govern data, secure infrastructure and bridge the gap between AI capabilities and desired business outcomes."

How will AI automation impact white-collar wages and corporate pay structures?

Those structural changes will be felt in wages, too. 

About 1 in 3 respondents (34%) anticipate downward wage pressure for non-college-educated workers, with a larger portion (43%) predicting an outright wage increase. Less than a quarter (23%) expect no pressure at all. 

But tension arises in their outlook for the highly skilled and college-educated. Overall, 52% of the respondents expect AI to widen the wage gap between high-skill and low-skill workers, while 36% expect it to narrow. At the same time, more than half (57%) expect AI to exert downward pressure on the median real wages of college-educated workers, which would imply a narrowing of the wage gap.

“This aligns with other research we’ve produced this year, including our 2040 outlook piece,” Ullrich says. “If AI-impacted sectors are oversupplied with workers, we might expect wages to fall in fields like software development, finance and marketing. At the same time, demographic shifts will create labor supply shortages in sectors that are less likely to be AI-impacted, including healthcare and manufacturing. In those sectors, wage gains are likely.”

But even as tasks shift to automation, fields built on empathy and critical judgment that an algorithm can’t mimic will see the fastest growth, particularly in personal care and home health, and nursing.

"If expertise is increasingly built into the tools people use every day, employers are going to have to get more discerning about what they value in people," says Matt Berndt, who leads Indeed’s Job Search Academy. "Credentials and output still matter, but they’re no longer enough on their own. The real differentiator is whether someone can work fluently with AI while bringing the judgment and human capabilities that technology can’t substitute."

Hiring strategies for the AI era

This environment asks more of talent leaders, but it also creates an opportunity to rethink how organizations invest in people. As the value of some traditional corporate skills evolves, leaders can build total rewards strategies that recognize the capabilities driving business results today while preparing teams for what comes next.

Some simple steps leaders can consider:

• Rewarding impact and adaptability. As roles change, total rewards can better reflect the skills that help employees create value now, such as using AI effectively, collaborating across teams, learning quickly and driving strategic outcomes. This approach focuses investment on the capabilities organizations need most today.
• Trading traditional hiring practices for real work scenarios. Instead of a typical interview, consider day-in-the-life workplace simulations and practical scenarios that test problem-solving and the ability to navigate human dynamics.

“AI may help you move faster, but it won’t help you hire better,” says Kyle M.K., Indeed senior talent strategy advisor. “The real shift is proactively engaging candidates who have the skills, context and motivation to do the work.”

Navigating this shift requires a deep commitment to learning and development. Instead of trying to substitute software for human talent, leaders can focus on upskilling strategies. By keeping your team highly adaptable and agile with new tools, you ensure that your tech stack, business and workforce grow side by side.

Indeed provides this information as a courtesy to users of this site. Please note that we are not your recruiting or legal advisor, we are not responsible for the content of your job descriptions, and none of the information provided herein guarantees performance.
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