2025 labor market check-in: Trends, challenges and what’s next

As we move into the middle of Q2, the labor market continues to shift in ways that are reshaping how organizations attract and retain top talent. At Horizontal, we’ve had a front-row seat to the evolving dynamics, supporting clients and consultants across industries ranging from tech and healthcare to financial services and manufacturing.

Based on recent labor market data, here’s are 5 key trends we’re seeing this year:

1. The talent market is still tight, but cooling slightly

The U.S. unemployment rate reached 4.2% in March, signaling a continued softening in the labor market. Still, sectors like tech, healthcare and financial services are seeing steady demand for skilled professionals, particularly in IT, digital and data-focused roles. While the pace of hiring has slowed from the peak years of 2021 to 2023, companies are still expanding their teams with a more intentional, quality-first approach. Candidates are also becoming more selective, taking time to evaluate opportunities before making a move.  

2. Flexibility remains a priority, but preferences still differ 

While hybrid and remote models are still prevalent, we’re seeing more employers pivot toward in-office expectations to foster collaboration and culture. However, this often clashes with candidate preferences: Our recent consultant survey found that 74% would decline a role without some level of flexibility. The challenge ahead: finding the right balance between business needs and employee expectations.  

3. AI is shaping talent strategy, not replacing it

The rise of AI and automation continues to influence job design and workforce planning, but the human element remains irreplaceable. Our clients are asking: How can we upskill our teams, embrace AI thoughtfully and future-proof our workforce? The answer often starts with the right partner and a proactive talent roadmap.

4. Project-based work is on the rise

Organizations are increasingly using blended workforces, mixing full-time employees with consultants, contractors and managed teams. This approach gives companies the agility to respond to business demands quickly, without long-term headcount commitments or taking on unnecessary risk. It’s a space where Horizontal’s team and project solutions are seeing tremendous growth.

5. Market confidence is cautiously optimistic

Economic uncertainty is still part of the conversation. However, many of our clients are taking a measured, forward-thinking approach: investing in top performers, restructuring teams for efficiency and pushing forward on key initiatives, especially in digital transformation and customer experience.

Final thoughts

Despite some headwinds, the labor market remains resilient in 2025, and hiring top talent is still a competitive advantage. Whether you’re building out a new function, tackling a transformation project or simply planning ahead, Horizontal is here to help you achieve your goals more efficiently and strategically.

Whether you'd like to talk labor trends or workforce planning for your team, our team is ready to connect.