US Businesses Enter 2026 with Optimism but Face Skills Shortages and AI-Driven Challenges

As 2026 approaches, a survey suggests that U.S. businesses are stepping into the year with renewed enthusiasm and ambitious hiring plans. According to the recent Express Employment Professionals-Harris Poll, the confidence in hiring is palpable, with many companies ramping up their workforce efforts to adapt to emerging market demands, even as significant hurdles loom ahead.

Positive Hiring Sentiments

The survey reveals that 85% of hiring managers have a bright outlook for the upcoming year, aligning closely with the optimism observed in late 2024. Furthermore, two-thirds of participants plan to increase their headcount in the first half of 2026, marking the highest level since this series of surveys began in 2020. A notable 39% of these companies aim to expand into new markets, highlighting the strategic shift toward growth and adaptation. Additionally, 38% are looking to hire for new skill sets, indicating a clear focus on innovation and evolving operational needs.

Temporary and contract staffing is gaining traction, with over a quarter (26%) of surveyed companies planning to utilize contingent workers in their hiring practices. The global trend mirrors this local shift, with 65% of company leaders willing to expand their contingent workforce in 2026.

While the interest in new college graduates remains strong at 51%, there is a discernible decline in the expectation to hire college students (33%) and retirees (10%), suggesting a more refined recruitment strategy.

The Impact of Technology and Automation

As businesses continue to embrace technology, automation, and artificial intelligence, the workforce landscape is shifting significantly. The survey indicates that 39% of organizations planning staff reductions attribute this to greater reliance on technology, and another 33% express that they will not replace departing employees due to increased automation. This reflects a growing trend where technological advancements influence not just hiring but also employee retention strategies.

However, despite the robust hiring intentions, companies continue to grapple with challenges. A surprising 36% report struggling to fill open positions, primarily due to deficiencies in relevant qualifications among applicants. In fact, 50% cite a lack of relevant experience as the main barrier, up from previous years. There’s also a struggle to assess informal or self-taught skills, impacting the hiring process. On the compensation front, the pressure appears to be easing, with fewer employers citing competitive pay and benefits as a major obstacle to hiring.

Anticipated Challenges Ahead

Looking forward to 2026, almost all hiring managers (91%) anticipate encountering challenges. The foremost concerns revolve around the complexities introduced by artificial intelligence (46%), difficulties in finding qualified candidates (40%), and intensified competition for talent (28%). Notably, fewer hiring managers (20%) report a mismatch between available talent and the needs of their companies compared to earlier this year, indicating some improvements in alignment.

Bob Funk Jr., CEO of Express Employment International, emphasizes that companies that prioritize investment in their workforce and embrace adaptability will succeed in this evolving landscape. He notes, “While technology will continue to transform our approaches to work, the value of human creativity and expertise remains irreplaceable. Addressing skill gaps poses not only challenges but also presents strategic opportunities for sustained growth.”

Conclusion

As we usher in 2026, the situation is a paradox of optimism shadowed by potential difficulties. Employers seek to harness talent in the face of technology-driven transformation while strategizing to overcome the educational and experiential gaps that remain prevalent. It is an intriguing time for businesses, as agility and innovation remain fundamental to navigating the evolving labor market landscape. Maintaining focus on attracting and nurturing talent will be the key to long-term success in an increasingly competitive market environment.