The 2025 ZipRecruiter Annual Employer Survey
What’s Next for the Labor Market
What’s ahead in 2026 for the U.S. labor market? ZipRecruiter’s 2025 Annual Employer Survey offers exclusive insights from 1,500+ talent acquisition professionals surveyed between September 8th and 16th, 2025.
The labor market has entered "The Great Freeze"–a period of unprecedented stagnation where turnover has plummeted and both employers and workers prioritize stability over movement. With strong hiring intentions, AI-driven transformation reshaping skill demands, and potential Fed rate cuts on the horizon, our research suggests that the thaw is coming. However, the government shutdown that kicked off the fourth quarter and another round of tariff increases could further delay this pent up energy from being released into the labor market. Nonetheless, businesses that prepare now through skills-based hiring and strategic workforce development will capture top talent when the market does unlock. Those who wait too long risk being left behind.
Nicole Bachaud, ZipRecruiter Labor Economist“Our research suggests “The Great Freeze” is giving way to “The Great Thaw,” and the most prepared employers are already taking action. We’re seeing businesses ramp up entry-level hiring, drop degree requirements, and incorporate skills assessments into their process. The organizations that adapt to new technologies, prioritize skills, and invest in their workforce will gain a competitive edge in securing top talent as the market shifts.”
THE LABOR MARKET’S
NEXT CHAPTER
"THE GREAT FREEZE"
WILL START TO THAW
Macroeconomic uncertainty from persistent inflation, newly imposed tariffs, and recession fears have turned job hoppers into job huggers and hiring sprees into hiring freezes. In a period where stability seems to outweigh risk, many businesses are turning inward. Layoffs and terminations remain near historic lows as fluctuations in the workforce introduce unnecessary risk. The labor market has entered what could be called "The Great Freeze": a stagnant chapter characterized by employers and workers remaining frozen in place. With slow hiring meeting a shrinking labor force, the current labor market is neither an employers' market nor a workers' market; current conditions are leaving all players on the sidelines.
This preference for stability shows up dramatically in turnover data. The average employer saw turnover plummet from 177.0% in 2023 to just 49.5% in 2025. That's not just a slowdown; it's a fundamental shift. In 2023, businesses were cycling through their entire workforce nearly twice in a single year. Now, less than half their workforce is turning over. The labor market didn't just slow down; it slammed on the brakes. Some of the decrease can be attributed to macroeconomic conditions, with 30.1% of employers in 2025 citing that turnover has decreased due to external economic factors compared to 24.0% in 2024.
The shift has caused businesses to lock in on employee retention, making it their top priority. A vast majority of those surveyed (75.8%) citing employee retention as their primary focus for the next year—far outweighing recruitment and replacement. Only 15.7% cite recruiting new employees for new roles as their main focus, showing a clear preference for maintaining the status quo. But the status quo won’t last forever. With signs from the Fed and this survey, change may be right around the corner. Those unprepared for the inevitable thaw could be left scrambling for talent when movement resumes.
The takeaway: The labor market is frozen—turnover has plummeted from 177.0% to 49.5% as businesses prioritize retention over recruitment. But markets don't stay frozen forever, and those unprepared for the thaw will scramble for talent when movement resumes.
Employer Hiring Plans
Point to Growth
Despite the current stagnant conditions, the labor market shows strong signs of moving to the next chapter. The majority (63.0%) of businesses plan to increase hiring, either by a moderate or significant amount, over the next year. There is pent up demand for businesses to grow as hiring plans have been continuously delayed due to macroeconomic conditions. In last year’s survey, 76.2% of employers planned a hiring increase. Given the direction the last year has taken, much of that hiring did not come to fruition, but the intention remains. As tariff policies shake out and the horizon becomes more visible, industries that have been holding their breath–namely Construction and Transportation–expect to see most employers reaching for new hires come the new year (77.1% and 70.0%, respectively). Workers across industries can expect to see more opportunities, particularly for entry-level roles. More employers plan to see entry-level roles taking a larger share of overall hiring compared to the last year than any other job level, 31.5% of employers plan to see a larger share of overall hires leaning towards entry-level roles.
This focus on entry-level hiring may be a direct result of businesses prioritizing the retention of tenured employees over the last year, which has left a persistent gap at the foundational level. If this trend materializes, younger workers entering the labor market could see their opportunities expanding on the horizon, signaling a shift toward growth.
While the current picture shows limited movement, this survey reaffirms that businesses remain optimistic about the future. Job seekers aren't feeling the warm embrace from businesses quite yet as job openings and overall churn remain low, but the appetite from employers to ramp up is there, for when the time is right. Recent signals from the Fed show that the thaw could be just around the corner, as potential rate cuts aim to ramp up hiring activity. What matters now is how employers will prepare for the changing conditions. Workers are scrutinizing pay and benefit offerings, side-stepping higher education, and are struggling to keep pace with changing skills needs. Employers who focus on these shifts will be best positioned to seize a competitive edge once the market is unlocked.
The takeaway: Despite current stagnation, 63.0% of businesses plan to increase hiring in the next year, with the strongest focus on entry level roles. Younger workers could see expanding opportunities on the horizon as the market unlocks, so it’s essential for emerging talent to prepare now for the market to shift in their favor.
THE EVOLVING NATURE OF
PAY, BENEFITS, & SKILLS
Wages Stall as
Expectations Rise
Pay remains a crucial consideration for workers, with ZipRecruiter’s New Hires Survey showing that 53.4% of new hires accepted their role in Q3 due to higher pay (up from 33.7% in Q2). As wages continue to outpace inflation, candidates are asking for more money than some businesses are able to afford. One-third (33.6%) of employers were prevented from hiring because candidates demanded higher pay than they could offer. And four in ten employers (39.7%) say candidates rejected their offers due to low pay.
While employers struggle to meet these expectations, pay isn’t necessarily falling, at least not for all. The majority of employers (57.3%) have kept base pay flat over the past year for new hires, with fewer employers (38.1%) increasing base pay. For existing employees, however, more employers bumped up salaries (49.9%) than kept them flat (45.8%). This echoes the emphasis on retention, with more businesses boosting pay—like the 22.5% of employers that increased retention bonuses in 2025—to keep the existing workforce stable.
Expectations for the year ahead are rosier. Most businesses (61.2%) plan on increasing pay in the next 12 months. Combined with the high share of businesses looking to increase hiring, the economic outlook for employers, and thus for job seekers, is set to improve.
With pay at the top of job seekers’ minds, knowing what a job will pay is a vital data point in many job searches. Employers seem to understand the importance of this transparency, as 67.2% believe that providing pay information on a job posting helps companies find quality candidates. And 55.1% believe that adding pay information can streamline recruiting by discouraging mismatched candidates from applying. On ZipRecruiter’s job posting marketplace, the majority (53.3%) of jobs included pay information in September 2025. Pay transparency can help support a more diverse workforce, which can help the 24.3% of employers who say lacking female applicants causes barriers in recruiting. More employers should embrace this practice to streamline the hiring process and set up all candidates for success.
The takeaway: There’s a growing gap between what workers expect to earn and what employers are willing to pay, causing businesses to lose top candidates. As the market thaws and pay increases resume, transparency will be the key differentiator in attracting talent.
The pay and benefits lag
Flat pay isn't just a temporary phenomenon, it's part of a broader pattern of stagnation that could have serious consequences for employers. While the hiring outlook is optimistic, the market has not fully entered its growth phase yet. This continued embrace of stability without investment carries a significant risk: those who remain stuck in place, prioritizing retention without offering career progression or competitive compensation, will be left behind when the market accelerates.
The Great Freeze carries real consequences for those who wait too long to thaw. Employers who focus primarily on keeping current employees in their roles are less likely to increase pay and benefits offerings than those prioritizing new recruitment. This stagnant work environment gives top-performing workers less reason to stay and more reason to seek opportunities elsewhere, ultimately creating an environment for the very turnover these employers are trying to avoid.
Given their smaller scale, Small and Medium-Sized Businesses (SMBs, less than 5,000 employees) have an easier time changing direction, adding new practices, and adopting new technologies than their larger enterprise peers. They are more likely to have increased pay (including base pay, bonuses, and equity) and benefits offerings over the past year, and are more likely to focus on growth by upskilling current employees and hiring for new roles.
This focus could prove advantageous for SMBs, who will be in a better position to compete against enterprise businesses for top talent than they have in the past, given the large gaps that skills exist in the offerings provided by these different employer types. SMBs still have a lot of catching up to do in terms of overall benefits packages. As more workers pay mind to the full offer package, perks like wellness benefits and tuition assistance see especially large gaps. Only 44.1% of SMBs offer wellness benefits, and only 19.4% provide tuition assistance, compared to 70.2% and 45.1% of enterprise businesses, respectively. This is pulling talent away from SMBs, who see 16.8% of candidates rejecting offers due to lacking benefits, compared to only 12.1% for enterprise businesses.
The takeaway: Employers focused solely on retention without offering career progression or competitive pay increases are setting themselves up for turnover once the market thaws. Retention-focused employers are less likely to increase compensation than recruitment-focused ones. Workers in stagnant roles should watch for signs the market is warming.
From Degree Requirements to
Skills-Based Hiring
There is a clear divide in the survey data between employers who are looking ahead and those who are looking within. Businesses prioritizing recruitment are already honing in on what the future workforce requires, and that means a major shift in hiring practices necessary for the next chapter.
As a growing number of young workers forgo the traditional college degree, recruitment-oriented businesses are more likely to drop degree requirements from their job postings in the last year. Nearly a third (31.7%) of businesses who prioritized recruitment in the last year dropped degree requirements.
This strategic move helps position forward looking businesses to quickly find talent, especially considering that ZipRecruiter's recent New Hires Survey shows over 70% of recently hired workers have less than a Bachelor's degree. The vast majority of entry-level job postings on ZipRecruiter’s marketplace platform don’t mention specific degree requirements, giving job seekers more opportunities to find the right fit without needing to check additional boxes.
With fewer workers pursuing higher education, businesses who adapt their hiring strategies to cast a net beyond formally educated candidates can capture a greater share of top talent. Skills-based hiring will become more prominent as the labor market enters this new chapter. Many businesses (38%) are already shifting to focus on skills by using candidate assessments in the hiring process to evaluate skills earlier on. This tactic could be set to increase as more employers seek ways to gauge candidate skills, especially in a world where candidates are increasingly using AI to adapt their application materials.
Notably, SMBs are leading the charge in positioning themselves to adapt to the changing labor force dynamics introduced by AI. While a similar share of SMB and enterprise businesses are utilizing recruitment tools like video interviews, SMBs are more likely to utilize candidate skills assessments (41.0% vs. 31.8% for enterprise businesses), pointing to a greater emphasis on skills-based hiring.
The takeaway: As fewer workers pursue traditional degrees, forward-thinking businesses, notably SMBs, are dropping degree requirements and adopting skills-based hiring. Skills assessments can capture wider talent pools for employers.
Soft Skills Take Center Stage
Skills-based hiring will become even more essential as the labor market continues its rapid transformation at the hands of AI. As AI takes on more automated and administrative tasks, the human element of work will take the spotlight.
While most businesses report an equally hard time finding a good balance of hard and soft skills, the top skills they see lacking are all soft skills: time management, attention to detail, critical thinking, and professionalism.
According to ZipRecruiter's internal marketplace data on job postings, the top skills in demand for the current job market reflect this shift. The top three skills across the ZipRecruiter platform in 2025 are all related to how candidates work with other people.
Top 10 in-demand skills according to ZipRecruiter’s job posting marketplace in September 2025:
Collaboration
Customer Service
Communication
Innovation
Technical
Documentation
Compliance
Flexibility
Detail Oriented
Scheduling
The takeaway: As AI automates tasks, the most in-demand skills are human-centered: collaboration, customer service, and communication top the list. Employers report soft skills (time management, critical thinking, professionalism) are hardest to find. Job seekers should showcase soft skills with concrete examples, giving them a competitive advantage.
Sam DeMase, ZipRecruiter Career Expert“Employers need to see examples of your aligned skills in action. Instead of simply listing your soft skills, use your resume bullets to prove them. When crafting each point, clearly articulate the specific skill you used to drive that result.”
AI’S ROLE IN THE
HIRING LANDSCAPE
The AI Debate: Replacing Jobs or Creating Jobs?
AI is not only changing the skills employers desire, it's shifting the entire hiring landscape. Employers now see AI as having a larger impact on their hiring outlook than macroeconomic conditions. Nearly half (45%) of employers say that changes in technology, like AI, will affect headcount, compared to 39.1% who cite macroeconomic conditions.
Despite headlines sounding the alarm that AI is replacing jobs, the data tells a more nuanced story. The majority of employers surveyed (51.6%) say that AI is creating new roles in their organizations. And demand for AI skills is accelerating: ZipRecruiter's marketplace data shows that AI is a required skill for 1.7% of job postings in September 2025 (the highest it has ever been in ZipRecruiter’s data), up from 1.1% a year ago. The top industries driving this demand are Professional, Scientific, and Technical Services (including technology), Information, Management, Finance, and Utilities, all with over 3% of job postings requiring AI skills in September.
What sets successful AI candidates apart is versatility. The top skills accompanying AI requirements in job postings are collaboration, innovation, machine learning, and Python—demonstrating that even in AI-centered roles, employers value candidates who blend technical prowess with essential soft skills.
But the net impact on jobs remains uncertain. Despite new role creation, more employers expect technological advancements to decrease overall headcount than increase it (25.8% expect it to decrease vs. 19.3%). AI's impact is confirmed in the present, with 38.0% of businesses having already replaced roles. However, opinion is more divided on the future: while just over half of businesses surveyed (52.1%) expect AI to replace roles in the near future, this finding is not statistically conclusive and suggests that future expectations are still highly uncertain. This impact is expected to vary by industry: Finance & Financial Services and Transportation employers anticipate the biggest downside, with the share of employers anticipating a reduction in headcount from AI at 31.5% and 30.0%, respectively.
Telecommunications, Technology, Internet & Electronics, Advertising & Marketing, and Professional and Business Services employers see the biggest upside, with the share of employers anticipating an increase in headcount due to AI at 37.7%, 30.0%, and 24.4%, respectively.
Many unknowns remain about how AI will continue to reshape the labor market. What's clear is that some jobs and skills may become obsolete, but new jobs and new skills will rise to replace them. Businesses that can adapt quickly by focusing on changing skills and demands will maintain a competitive edge in the next chapter, and job seekers can focus on soft skills that supplement technological advancements.
The takeaway: AI's impact on jobs is uncertain. While most businesses say it's creating new roles, more expect net headcount reductions. What's clear: success requires versatility, blending technical skills with soft skills that AI can't replicate.
SMBs Lead in AI Adoption
ZipRecruiter’s Employer Survey reveals a gap between the perceived value of AI and its actual adoption. While 71.7% of employers believe AI can help streamline the recruitment process, only 43.1% actually used AI in their hiring process in the last year. The awareness of AI’s benefits are there, but some businesses are missing the steps on how to take advantage of them.
Interestingly, SMBs are leading the charge in adoption. 47.1% of SMBs used some form of AI in the hiring process in the past year, compared to just 35.0% of enterprise businesses. This difference is rooted in perception: only 67.6% of enterprise businesses think AI can streamline recruiting, compared to nearly three in four (73.7%) of SMBs.
As for enterprise businesses, AI presents a great opportunity to increase their pace of hiring. The median time to fill an open position is a month (30 days) for enterprise businesses, compared to SMBs, who get the job done a full week faster (23 days). This slow pace leads directly to candidate loss: 21.1% of enterprise businesses report having candidates reject them due to slow response time, versus 17.3% of SMBs.
The takeaway: SMBs are outpacing enterprise businesses in AI adoption, skills-based hiring, and speed to hire. As the market thaws, their agility positions them to compete effectively for top talent and offer faster opportunities to job seekers.
WHAT COMES NEXT?
What the Labor Market Holds in 2026
ZipRecruiter’s research suggests that The Great Freeze is beginning to thaw. While employers have spent the past few years prioritizing stability through retention, the appetite for growth and hiring is strong, signaled by optimistic hiring forecasts and a rising interest in entry-level roles. This desire for growth, coupled with the rapid, skill-based transformation driven by AI, confirms that the market is moving on. Businesses that prepare for the next chapter of labor now—by prioritizing skills-based hiring, adapting to the impact of AI, and focusing on proactive growth—will be the first to secure the talent needed to thrive in this inevitable new environment.
Survey Methodology
ZipRecruiter conducted a national online survey between September 8 and 16, 2025, to explore employer attitudes toward recent hiring trends and their experiences of current U.S. labor market conditions. The survey was administered to a PureSpectrum panel of 1,500+ verified talent acquisition professionals and hiring managers, each with considerable responsibility for hiring processes and decisions. They were drawn from businesses of various sizes across a wide range of industries. In addition to standard screening and demographic questions, respondents were asked about their recruiting, hiring, employment, and retention practices, as well as their expectations, desires, and requirements for future talent acquisition activities.