Economists predict tough times ahead for workers in 2026 — should you be worried?
Over the past few years, the tech sector in America has faced spates of layoffs that have left hundreds of thousands jobless. The surge of AI has not made things any better, as it has triggered fears of automation replacing workers. With 2026 right around the corner, some economists have made grim predictions about more employees getting laid off to cut costs.
In the words of Federal Reserve Chair Jerome Powell, 2025 saw a culture of ‘low hire, low fire.’ As the name suggests, companies refrained from laying people off, but did not open up a lot of opportunities either. Towards the end of the year, however, several employers participated in massive layoff drives, which left thousands without a job ahead of the holiday season. As far as next year’s outlook is concerned, the opinions are varied.
First of all, economists and analysts have all been left in the dark due to the administration’s delay in releasing several crucial economic reports owing to the government shutdown. As a result, not everyone has a clear idea of how things will turn out from an employment standpoint in 2026. Some believe that things will get better with more hiring programs and fewer layoffs. This will be partly due to an expanding healthcare sector, according to a report in Newsweek.
Others, however, do not share such a positive outlook. Economist Daniel Hamermesh believes that the tariffs would affect jobs in 2026, and compared it to the 1973 oil crisis, which saw huge unemployment numbers and high costs. He also believes that the retail and services sectors would be most affected by these layoffs due to consumer spending going down.
Aaron Sojourner, senior researcher at the W.E. Upjohn Institute for Employment Research, believes that every single sector would be at risk in 2026. “Unemployment is rising, and job growth is slowing broadly across sectors. Wage growth has decelerated versus a year ago,” he explained. Another thing that could drive unemployment rates to unprecedented highs would be AI.
The technology built with the vision of helping people could push thousands into unemployment. Already in 2025, Amazon spoke about the potential of having AI while eliminating around 14,000 corporate roles. Salesforce’s CEO also said that they were able to cut 4,000 roles, which were taken over by AI chatbots. Experts believe that those who have to do repetitive cognitive work could be at great risk.
“Roles built on predictable, rules-based knowledge work—accounting, basic legal drafting, contract review, compliance monitoring, junior software development, financial modeling, paralegal summarization—are directly in the crosshairs,” Eric Woodard, CEO at the career coaching firm Win At Work, said. “Current-generation AI now handles these workflows quickly and accurately, and companies are waking up to how many steps no longer require human involvement,” he mentioned.
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