Labor market outlook through year-end 2026: 4 trends to prepare for

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What’s next for the labor market? This article explains 4 trends employers and professionals should know about—and respond to—through year-end 2026, featuring insights from Dawn Fay, operational president at Robert Half.

Hiring momentum was uneven in the first half of 2026. Employers added just 57,000 jobs in June, according to the Bureau of Labor Statistics (BLS), while the unemployment rate edged down to 4.2%. But while many employers remain selective in hiring, Robert Half research finds that 66% of company leaders plan to increase permanent headcount in the second half of the year.

Dawn Fay, operational president at Robert Half, describes the labor market so far this year as “resilient and largely normalized” after several years of extremes. Employers have become more accustomed to adapting as conditions abruptly change, but many continue to operate with lean teams and a full slate of projects, systems implementations and evolving skills needs.

Where is the labor market most likely to move next? Here are 4 emerging trends employers and professionals should be ready to respond to through the end of 2026.

4 emerging labor market trends to watch

More professionals will make a move—creating ‘churn’ that puts more jobs in play
Contract hiring activity will pick up as employers resume delayed projects
AI adoption will continue to expand, changing more jobs than it replaces
Business transitions will drive new hiring needs, especially in the SMB space

1. More professionals will make a move—creating ‘churn’ that puts more jobs in play

Voluntary quits activity has been modest this year. Job Openings and Labor Turnover Survey data from the BLS shows the number of quits held near 3.1 million in May, while the quits rate remained at 1.9%—down from 2.1% a year earlier. But Robert Half research suggests more movement may be on the horizon, with 46% of U.S. professionals planning to look for a new job before year-end.

Fay says some employees who accepted roles during the unusually competitive post-pandemic market—often prioritizing compensation or flexibility—may now feel ready to pursue opportunities that align better with their professional goals and interests. However, that doesn’t necessarily mean we’ll see a return to indiscriminate job hopping.

“Professionals are being selective, too,” Fay says. “But once that ball starts rolling, expect to see the churn create more opportunity in the labor market.”

Even a modest increase in job changes can set off a chain reaction. For example: A resignation creates an open role, staffing it internally opens another position and employers turn to contract talent to keep work moving during the search for a new hire. As that movement builds through year-end, so will the pressure on employers to recruit—and retain—skilled professionals, according to Fay.

What employers can do

Fay says it’s important to begin “re-recruiting” valued staff now. Talk with employees about their career goals, professional development interests and flexibility needs. Also, make internal mobility a real option, because employees who can’t explore a new path within their current organization are likely to pursue it elsewhere.

Employers should also make sure their total rewards package—including salary, benefits and work flexibility—is competitive. Fay cautions that a high volume of applications can create a false sense of leverage. “Don’t assume volumeequals quality,” she says. In other words, a large stack of resumes doesn’t necessarily contain more candidates with the specialized skills and experience the role requires.

Also, keep the close connection between retention and recruitment in mind. As Fay puts it, “The best way to attract good talent to your team is to have good talent on your team that is happy.”

What job seekers can do

Make networking an ongoing habit, not something you turn to only when a job search becomes urgent. Stay connected with former colleagues, friends, family and other contacts, and be clear about the opportunities you are exploring. “Everybody knows somebody,” Fay says.

A referral can help a high-potential candidate gain visibility in a crowded applicant pool, while conversations about a contact’s industries, roles and career paths may uncover internal moves, adjacent fields or stepping-stone opportunities not previously considered. Fay also emphasizes the importance of respecting people’s time, thanking them for their help and following up when they make an introduction.

2. Contract hiring activity will pick up as employers resume delayed projects

Fay says she expects more employers to turn to contract talent in the months ahead as they restart delayed projects and address emerging workforce needs. Many are eager to advance strategic priorities but remain uncertain about the permanent skills or team structure they will require, especially as they implement AI, update systems and respond to changing business conditions.

“Hiring contract talent can be an incredibly effective option when your needs are still evolving,” Fay says. “It gives you room to experiment, access skills that may be difficult to hire permanently and bring in different expertise as the work changes.”

Adopting a flexible staffing strategy can be especially valuable for lean teams, including those at small and midsize businesses (SMBs). It can help keep critical initiatives on track without overloading current staff, while giving leaders time to determine their longer-term hiring needs.

See our data on small business recruitment trends.

What employers can do

Separate immediate project needs from longer-term headcount decisions. A contract professional may be able to stabilize the workload, complete a defined initiative or provide expertise while leaders refine the permanent role. “If you don’t know today exactly what you need, that’s OK,” Fay says. “But don’t run so lean that you burn out employees and end up losing good people.”

Once the role is defined, use a skills-based hiring approach to identify the capabilities that are truly essential and distinguish them from qualifications that can be developed on the job.

What job seekers can do

Consider contract work as more than a stopgap while searching for a permanent role. For some professionals, project-based work becomes a rewarding long-term career, offering flexibility, variety and opportunities to build expertise across organizations.

Individual engagements can provide exposure to new systems and industries, strengthen in-demand skills, expand your professional network and help you demonstrate your value to employers that may be cautious about adding to permanent headcount.

Keep pace with labor market trends—with Robert Half

Go to Labor Market Overview

Visit Robert Half’s Labor Market Overview page now and in the months ahead to access the latest insights on industries hiring, employers’ talent recruitment challenges and more.

3. AI adoption will continue to expand, changing more jobs than it replaces

AI will continue to influence hiring and work through the rest of the year, Fay says, noting that sudden, widespread job displacement is unlikely. AI implementation and measurable returns from those investments are taking longer than many expected, giving organizations more time to test use cases, redesign work and identify where human expertise is still critical.

Robert Half research suggests some employers have moved too quickly to reduce headcount after adopting AI capabilities: 32% of U.S. hiring managers who eliminated positions later had to reinstate the same or similar roles. Hiring managers who made these “AI correction hires” say the positions they reinstated:

Required institutional knowledge or context AI couldn’t replace: 40%

Involved relationship management AI couldn’t replicate: 39%

Were needed as business demand increased: 39%

Required more human oversight and quality control than expected: 38%

These findings reinforce the risks of treating AI as a substitute for employees in roles that still depend on context, relationships and judgment.

What employers can do

Before reducing headcount, carefully consider which tasks AI can support and which capabilities still depend on people. Retaining employees with institutional knowledge, customer relationships and sound judgment is easier than rebuilding those strengths later.

As needs evolve, redesign roles, upskill current staff and prioritize functional expertise, adaptability and practical AI literacy when hiring. Use technology to support sourcing and screening, but keep human judgment at the center of candidate evaluation.

Understand AI’s impact on recruiting.

What job seekers can do

It’s never been more important to show hiring managers what you’ve accomplished—not simply the responsibilities you held or tools you’ve used.

“Too often, professionals’ resumes read like job descriptions and not accomplishments—what they’ve achieved and what they can really bring to an organization to add value,” Fay says.

Rather than simply listing that you’ve worked with an AI platform, for example, explain how you used it and what changed as a result. Specific examples of improved efficiency, stronger analysis or better service will help you stand out more than keywords alone.

Learn more about how AI literacy can give you an edge in today’s hiring market.

4. Business transitions will drive new hiring needs, especially in the SMB space

One less obvious source of labor market activity through year-end may be the SMB sector. “As more baby boomer owners consider succession, a sale or a merger, we could see significant activity in the SMB market—and new demand for the talent needed to manage those transitions,” Fay explains.

If that activity picks up, businesses may accelerate hiring of finance and accounting, legal, technology, HR and project professionals to support valuation and due diligence, integrate systems and workforces, and maintain momentum throughout the transition.

Leadership changes may also require companies to transfer institutional knowledge, develop future executives, formalize processes or bring in interim expertise as the business develops longer-term plans.

What employers can do

Plan early for the roles, relationships and institutional knowledge that could be disrupted by a major transition. Identify and begin developing future leaders, document critical processes and determine where interim or outside expertise may be needed.

Businesses considering a transaction should also prepare for the work that follows, including systems and data integration, workforce planning and business continuity.

What job seekers can do

Look beyond large, familiar employers for career opportunities. Smaller organizations undergoing change may offer broader responsibilities, closer access to business decision makers and more opportunities to make a direct and immediate impact.

Highlight experience with integrations, systems implementations, process improvement or change management—and be specific about the results you helped deliver. Candidates who can adapt quickly, work across functions and help a business navigate uncertainty can be especially valuable during a transition.

Get ready for a more active labor market

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The second half of 2026 is unlikely to bring a return to the post-pandemic hiring frenzy, but activity may pick up in targeted areas as professionals pursue roles that better align with their interests and goals, businesses restart delayed projects, AI continues to change workforce needs and company transitions create new talent demands.

Employers should not mistake cautious hiring for an abundance of qualified talent. Competitive compensation, efficient recruiting, internal development and flexible staffing will remain important to securing the skills they need. For employers and professionals alike, adaptability will be essential. “You’ve got to be able to change with the market, pivot and keep moving,” Fay says.

Professionals navigating a selective market should maintain an active network, stay open to different career paths and show clear evidence of what they have accomplished. The labor market may have normalized, but the months ahead are unlikely to be static.

Follow Dawn Fay on LinkedIn.

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