Americans are becoming increasingly anxious about the future job market, even though unemployment rates stay relatively low and applications for unemployment benefits have reached their lowest point in about sixty years. Workers are facing swift advancements in artificial intelligence, ongoing corporate reorganizations, and growing concerns about their job security should they lose their current positions. The Federal Reserve Bank of New York reported that in August, a rising percentage of Americans anticipated an increase in unemployment over the next year—this expectation hit its highest level since the peak of the COVID-19 pandemic.
Maruf Ahmed, CEO of staffing company Dexian, suggested this apparent discrepancy might highlight a split between the current state of the labor market and what workers fear might happen in the future. He noted, “Low layoffs and high worker anxiety can exist at the same time because they’re measuring two different things: Layoff numbers reflect past events, while worker anxiety is increasingly about future possibilities.” The anxiety seems, in part, driven by the rapid evolution of AI and its potential impact on job roles and required skills.
In August, the average probability assigned by Americans to the likelihood of higher unemployment rates a year later climbed to 44.4%, which is an increase from the previous month and marks the highest since April 2020.
Despite these feelings, actual unemployment remained stable at 4.1% in August, with employers having added around 162,000 jobs, according to the Bureau of Labor Statistics. Initial claims for unemployment benefits maintained their historically low levels, dipping to 187,000 in mid-July before rising slightly in September. Economists describe this situation as a “low-hire, low-fire” market, where individuals currently employed are less likely to be laid off, while job seekers face greater challenges in finding new work.
Brad Hershbein, a senior economist, explained that the lack of worker confidence can still exist alongside strong labor statistics because workers are influenced by a mix of pressures beyond just layoffs. “Many workers don’t see people like them making progress or being successful, even as costs go up, which understandably impacts their confidence,” he noted. He identified factors like cumulative inflation, stagnant wages for some, and higher borrowing costs as contributing to this anxiety. Moreover, uncertainty regarding AI continues to add to worker concerns, GDP even with limited immediate job losses.
A significant portion of surveyed workers in Dexian’s 2026 Work Futures research expressed fears that AI and automation could jeopardize their job security. Federal Reserve research echoed these findings, showing an increase in the percentage of individuals worried about losing their jobs to AI over the past couple of years. In fact, around 60% of those surveyed believed that their industries would see job reductions due to AI.
AI’s presence has already been noted in layoff announcements, with employers citing plans to cut jobs due to AI developments. For instance, Oracle announced budget increases for its restructuring plan, associating spending cuts with ramped-up investments in AI.
Additionally, major companies like Microsoft engaged in recent layoffs primarily affecting their gaming division while also reorganizing their cloud and AI operations. While corporate restructuring surely adds another layer of uncertainty for workers, Hershbein argued that broader worries about compensation and advancement are more pressing.
Overall, the layoff landscape remains less dire, with job cuts announced in 2026 significantly lower than those from the previous year. Nonetheless, public sentiment regarding job recovery after losing a position has dimmed slightly. Most workers believe they have a 45.4% chance of securing another job post-layoff, which is a bit below the past year’s average.
This feeling of insecurity is particularly pronounced among younger individuals entering the job market. The unemployment rate for recent graduates was reported at about 5.6%, while a prominent underemployment rate persisted as well. Hershbein discussed the detrimental effects of this low-hire environment on younger workers, who often miss out on essential job opportunities that facilitate future earnings and career growth.
Research released by the Census Bureau revealed that job prospects for graduates from AI-impacted majors have deteriorated, with significant declines in initial employment likelihood and earnings following the introduction of new AI technologies.
This economic unease is mirrored in the shifting political behavior of younger voters. Many are seeking candidates aligned with more progressive views, reflecting deeper discontent with the status quo. Trust in major American institutions has also plummeted, with a mere fraction of Americans expressing confidence in them.
For younger adults, soaring housing costs continue to push back traditional economic milestones, with the median age for a first-time homebuyer climbing to a record high.
Ahmed proposed that, while companies might struggle to offer stability amidst technological shifts, clarifying pathways for skill development could help mitigate some of these fears. A significant percentage of surveyed workers expressed that enhancing their skills could lead to better pay or more engaging job opportunities.
