Declining job creation, downward revisions to employment figures, and a labor market looking weaker than expected — all signs point to a slowdown.
Throw in uncertainty about the emerging role of AI in the workplace, and it’s no wonder that job seekers are concerned about their futures. Yet, unemployment remains relatively low — far from its 2021 highs — with the labor market actually tightening.
“Talent shortages are coming, and they’re coming soon,” notes chief economist at Indeed, Svenja Gudell.1 And evidence increasingly points to AI, at least, as an unlikely ally on the job front.
That’s because today’s generative AI tools are actually more likely to augment human capabilities than displace them. As just one indicator, among 2,884 job-related skills analyzed by researchers at Indeed Hiring Lab for their AI at Work Report 2025, the number “very likely” to be replaced by today’s AI was just 19, or less than 1% of the total.2
Instead, AI has the potential to help both employers and job seekers navigate a challenging economic environment. That’s because the real challenge in the job market over the longer term will be a shortage of workers to fill a growing number of jobs. And here, AI seems ideally suited to help.
“AI and GenAI could ultimately make a big difference in augmenting human work and boosting productivity,” said Gudell.3
The shrinking workforce is the real challenge
Beyond immediate economic concerns, businesses face a more fundamental long-term challenge: a declining global workforce. Forty percent of employers surveyed for the World Economic Forum’s Future of Jobs Report 2025 said an aging and declining working-age population is already forcing them to reexamine how they do business.4 Among other adjustments, the demographic shift means businesses must implement more effective ways to find and connect with candidates.
Far from replacing recruiters, AI is proving to be a partner in this effort. Modern recruiting platforms use AI to streamline time-consuming tasks such as initial candidate screening and outreach, freeing recruiters to do what they do best — building relationships.
For example, conversational AI agents like Indeed Talent Scout let recruiters describe their ideal candidates and receive near-instant matches,* and provide real-time market insights to help recruiters win top talent through a simple conversation.
But automation doesn’t come without concern. Some candidates may worry about their applications disappearing into the void, filtered out by algorithms that emphasize keywords while missing their full qualifications.
“Everyone wants to know their job application is being fully reviewed and that they’re being seen in the best possible light,” said Hannah Calhoon, head of AI at Indeed.5
Viewed in that light, the most effective recruiting approaches may be the ones that combine AI efficiency with human judgment. Such partnerships can help recruiters make faster, better-informed decisions while maintaining the personal touch that candidates need to shine.
Looking ahead
As workforces age and talent becomes harder to find, human expertise stands to only grow more essential, not less. That means AI won’t replace the need for, say, skilled recruiters who can build relationships, understand company cultures, and make nuanced hiring decisions. Instead, it will amplify their abilities, helping them work smarter in an increasingly tight labor market.
As Calhoon sees it, the very nature of hiring makes it fundamentally human, and that’s not likely to change any time soon.
“These are critical decisions that impact people’s lives,” she said. “We are trying to superpower [hiring professionals] and those in human resources, but we’re not trying to replace their really smart, thoughtful judgment with an algorithm.”6
Better work begins with better hiring. See how.
This post was created by Insider Studios with Indeed.
1″Beyond the Headlines: What the Data Really Says About the Labor Market,” Indeed
2″AI at Work Report 2025,” Indeed
3″Indeed Chief Economist Svenja Gudell: AI Can Do a Lot — But It Can’t Do Your Job,” Indeed
4″The Future of Jobs Report 2025,” World Economic Forum
5″How to Win Over the AI-Skeptical Candidate,” Indeed
6Ibid.
*Talent Scout is currently in beta, and features and availability are subject to change. Only available with Smart Sourcing subscription
