More than half (52%) of middle market executives expect moderate to significant hiring needs over the next year even as the U.S. labor market continues to cool, according to the RSM US Middle Market Business Index Special Report: Workforce 2026, released by RSM US LLP in partnership with the U.S. Chamber of Commerce.
The report examines how some middle market firms are responding to persistent workforce challenges by increasing investments in artificial intelligence (AI) and skills training to boost productivity and efficiency.
The survey, conducted in the fourth quarter of 2025, found that hiring needs are more pronounced among companies with annual revenue of $50 million to $1 billion (62%) than those in the $10 million to less than $50 million range (38%). Approximately 10% of all respondents said they do not expect to hire in the next year, and 4% anticipate reducing their workforce.
“The labor market has slowed down materially compared to previous years, though that slowdown is not the same for everybody,” says Tuan Nguyen, economist with RSM US LLP. “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.”
Among executives who anticipate having at least moderate hiring needs, 84% said they expect staffing open positions to be at least somewhat challenging, a sharp increase from 66% in the fourth quarter of 2023, when RSM last conducted its workforce survey. Respondents cited a lack of available qualified workers, labor costs and geographic competition as the top hurdles they face in filling open positions.
“As employers deal with all of these challenges, the ability to more precisely manage the workforce is becoming a bigger priority, and the tools to do that are becoming better,” says Chris Mueller, managing director of a human capital management practice at RSM.
Workplace policies also continue to shift: 31% of firms are mandating a return to the office, 25% are considering it, and 44% are not currently pursuing a mandate.
The report also shows that firms are leveraging outsourcing as they navigate a myriad of labor challenges. Respondents who cited outsourcing as one of their organization’s greatest challenges over the next 12 months identified IT functions, customer service, and payroll as the top areas they may consider outsourcing.
“With the challenge of finding employees with the right skillset for critical roles, middle market businesses are increasingly turning toward co-sourced or outsourced solutions,” says Ross Krusell, RSM principal and leader of RSM Catamaran, the firm’s suite of integrated, outsourced solutions.
Technology investments are also accelerating. Nearly three-quarters (74%) of respondents expect to increase spending on AI over the next two years, with cybersecurity (71%), cloud (63%), communications (62%) and human capital management systems (44%) also ranking high. Among firms planning or considering AI investments, 85% cited boosting employee efficiency or productivity as the primary driver.
Among respondents who said staffing open positions will be at least somewhat challenging, the top three investments planned or under consideration in the next year to respond to staffing challenges were new skills training for existing employees (62%), investing in AI (61%) and preparing for AI (59%).
