Businesses navigate labor challenges, investment priorities in a shifting market

While the U.S. labor market has continued to cool, more than half of middle market executives still anticipate moderate to significant hiring needs over the next year, according to findings from a recent survey by RSM US LLP. Many of those planning to hire cited a lack of available qualified workers, labor costs and geographic competition as top hurdles they face in staffing open positions. These challenges have moderated significantly over the last several years, though.

The findings from the RSM US Middle Market Business Index survey—fielded in the fourth quarter of 2025—come as artificial intelligence continues to make waves throughout the economy. The results show that new skills training and AI investments top the list of expected workforce investments for middle market firms of all sizes. AI investments are highest among firms with higher revenue, but firms with lower revenue are also now prioritizing spending on both AI and cybersecurity.

Some of the key high-level data points:

• 52% of respondents said that they still anticipate moderate to significant hiring needs over the next 12 months.
• That figure is comparable to 55% in the fourth quarter of 2023, when RSM last conducted the workforce survey.
• The need is greater among respondents from firms with revenue of $50 million to $1 billion (62%) than with revenue of $10 million to less than $50 million (38%).
• However, the number of larger firms anticipating significant hiring needs dropped from 23% in 2023 to 14% in 2025.

"The labor market has slowed down materially compared to previous years, and that slowdown is not the same for everybody,” says Tuan Nguyen, an economist at RSM. “We are seeing that K-shaped economy evolving even more; you have bigger firms still in good shape, but smaller firms struggling a little bit more.”

The labor market has slowed down materially, and that slowdown is not the same for everybody. We are seeing that K-shaped economy evolving even more; you have bigger firms still in good shape, but smaller firms struggling a little bit more.

Tuan Nguyen, Economist, RSM US LLP

In charts throughout this report, some numbers may not sum to 100% due to rounding. Others may exceed 100% due to allowing for multiple mentions/responses.

Overall, 10% of firms said they expect to do no hiring in the next 12 months—similar to results from the fourth quarter of 2023. In the 2025 survey, 4% of respondents said they expect to reduce their workforce. Among firms that anticipate at least moderate hiring needs, 84% expect staffing open positions to be at least somewhat challenging, a sharp increase from the fourth quarter of 2023 (66%).

Among respondents who said staffing open positions will be extremely, very, or somewhat challenging, the top three investments planned or under consideration in the next 12 months to respond to staffing challenges were:

The dual focus on technology and skills reflects a shift in what companies are looking for in employees.

“Companies are no longer searching for people who can just do things,” says Ana Minter, an RSM principal who specializes in process improvement, automation and AI. “They are searching for people who can transform how things are done.”

Companies are no longer searching for people who can just do things. They are searching for people who can transform how things are done.

Ana Minter, Principal, RSM US LLP

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