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 today by RSM US LLP (“RSM”) 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%). Ten percent 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,” said 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.”
Available Qualified Workers and Labor Costs Among Top Workforce Challenges
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,” said 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,” said Ross Krusell, RSM principal and leader of RSM Catamaran, the firm’s suite of integrated, outsourced solutions. “Our RSM Catamaran practice is seeing particular interest right now from clients—across multiple industries—needing outsourced HR, payroll, financial accounting, cybersecurity and managed IT services.”
Tech and AI Emerge as Key Productivity Levers
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%).
“The nation’s workforce development programs should align with tools like AI and automation as these technologies continue to transform the modern workplace,” says Stephanie Ferguson Melhorn, executive director of workforce and international labor policy at the U.S. Chamber of Commerce, which is a partner in the survey research. “That means pairing innovation with skills training and credentialing opportunities so employees can shape how these technologies serve them through their expertise, insights, and experiences. By doing so, we can unlock new growth and build a 21st-century workforce that delivers for communities across America while leading on the global stage.”
The survey data informing this report was gathered from 405 respondents at middle market firms in the United States from Oct. 1 to Oct. 22, 2025.
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