US Workforce Trends – 2025

(originally posted 6.10.25)

What’s the temperature of the U.S. workforce landscape in the first half of 2025?

Great question!! There has been a lot going on with a convergence of economic conditions, evolving work models, demographic shifts, and technological advancements.

We did some research drawing on the latest reports from Gallagher, Gallup, BambooHR, Forbes, and other leading organizations. Check out some of the key trends that have defined the first half of 2025.

Employee Engagement and Burnout: "The Great Detachment"

Have you noticed anything shift in your workplace? The Great Detachment is the new-ish term for how employees react to their current work situation. Globally, employee engagement declined to 21% in 2024, with managers experiencing the largest drop. This marks only the second decline in engagement in the past 12 years, a worrying sign for organizations already struggling with productivity (Gallup - State of the Global Workplace).

As of mid-year in the US, according to Gallup, data shows that only 32% of employees are engaged in their work, 17% are actively disengaged. The remaining 51% of workers were classified as "not engaged" meaning they are psychologically unattached to their work and company and do the minimum required.

• Gallagher identifies turnover and retention as the top HR concerns in 2025. We’re not seeing the same chaos from the "Great Resignation", but many organizations face persistent challenges with employee engagement and detachment. About 66% of HR executives still rank retention as their prime challenge, with disengagement, rather than outright resignation, emerging as the main risk. Employees, especially Millennials and Gen Z (now 51% of the workforce), aren’t leaving jobs for better pay, they’re leaving due to lack of connection and meaning in their roles. Engagement levels are at an 11-year low in the U.S., as reported by Gallup. 

  
  

• Gallagher’s Workplace Wellbeing Index further highlights an increase in employee burnout, with over a quarter of employees reporting burnout symptoms. Employees are not only less likely to stay long-term, but they are also less confident their feedback will result in workplace change.

Fall in Engagement and Manager Wellbeing

• Gallup found in Q2 2025 that 47% of employees strongly agree that they know what is expected of them at work, 31% strongly agree that someone at work encourages their development, 32% feel strongly connected to their organization’s mission or purpose, 28% strongly agree that their opinions count at work, and to further complicating things, fewer than one in five employees (19%) are extremely satisfied with their employer as a place to work, and most (51%) are still actively looking or keeping an eye out for job openings elsewhere.

• Gallup’s reasons for Why Employees Are Detached by asking thousands of employees, “What’s missing from your current work experience that would make you feel more connected to your employer?”. 

  • The first is Organizational Culture - 32% describe their workplace as isolated or impersonal, lacking the conditions that help people feel emotionally connected to their teams. For Gen Z workers (44%) and remote employees (41%), the lack of cohesion is even more stark.

  • Secondly, Leadership Transparency - 29% say they lack clear, honest or consistent communication from leaders.

  • Third, Resource Investment - 25% say their organizations underinvest in people, pay, tools or staffing. Finally, Performance Management – 14% cite a lack of feedback, recognition or development opportunities.

    
    

• Challenges Faced by Middle Managers in 2025: Nearly one-third of middle managers are actively disengaged, 62% report unsustainable stress levels, 45% experience burnout, and only 21% report thriving in their roles. Managers are experiencing the sharpest decline in engagement compared to other groups, according to a recent Gallup survey.

  
  

• Per Gallup’s State of the Global Workplace study, disengagement cost the world economy $438 billion in 2024.

Turnover Benchmarks and Industry Specifics

• BambooHR's turnover benchmarking finds an average turnover rate of 2.0% across industries by March 2025 (six month average from Oct 2024-March 2025). The travel and hospitality sector exhibit the highest turnover (2.8%), while government and education maintain the lowest rates. Construction saw a seasonal spike, influenced by cyclical project completions. Overall, turnover has stabilized compared to previous years, but underlying engagement remains a critical concern.

  
  

• Based on Bureau of Labor Statistics (BLS) data (April 2025), this number has increased to 3.3%. Please note that most organizations base their findings on BLS reporting. It’s too early to draw a straight line until the numbers shake out via the revisions.   

AI, Upskilling, and Skills-Based Hiring

• Forbes highlights the rapid integration of AI tools as a workforce game changer. Companies are turning to generative AI to both boost productivity and offset the impact of a constrained labor supply. Skills-based hiring is increasingly prevalent, with less emphasis on traditional degree requirements. AI fluency, machine learning, and related competencies are now among the most sought-after skills. Companies are also investing in personalized, AI-driven coaching and continuous upskilling platforms to support development. 

• According to McKinsey, only 35% of employees have received AI training in the past year. Companies that extensively train their employees in AI are 43% more likely to successfully integrate AI. 50% of employers say they struggle to find candidates with advanced AI and data science skills.

Diversity, Equity, and Mental Health

• Forbes and industry experts note a distinct surge in prioritizing employee well-being, DEI (Diversity, Equity, and Inclusion), and mental health in 2025. Employers are developing more holistic benefit packages, expanding mental health support, and seeking to create inclusive environments to attract and retain talent in a highly competitive labor market.^[13][7]

Labor Force Participation and Demographics

• Labor force participation among "prime age" workers (25-54) remains at multi-decade highs. Despite this, the aging population and slowing immigration (due to changes in government policy) have kept the labor supply tight, intensifying competition for talent and requiring companies to address these headwinds through innovation, flexibility, and improved workplace culture. (Indeed) 

Remote and Hybrid Work Models

• Robert Half and Forbes report that remote and hybrid arrangements have stabilized. In Q1 2025, about 40% of U.S. jobs allowed some remote work. However, preferences are shifting; Gen Z employees favor more time in the office compared to previous generations, while the demand for flexibility, especially around location and hours, remains a strong talent attraction and retention tool. 

Wrap up

What lessons are we learning as 2025 blows by?

There are obvious and persistent challenges with retention and engagement, especially as its focus shifts from resignations to "quiet quitting" and disengagement, or “The Great Detachment”. Remote and hybrid work is stable but not increasing, with an emphasis on flexibility and well-being. Who will win the RTO battle?

Middle Managers are increasingly suffering from rising burnout and wellbeing concerns being sandwiched between a shrinking labor force and growing expectations from upper management. We must also address the productivity and talent shortages from the growing adoption of AI tools and move to both skills-based hiring and in-house AI training for current employees. There are also industry-specific dynamics, with some sectors (travel, hospitality) facing higher turnover rates.

Even though some notable companies have publicly distanced themselves from DEI initiatives, most continue to prioritize diversity, inclusion, and mental health initiatives to foster strong organizational cultures – this is what most employees want, and it’s proven to help companies flourish when others flounder.

Success for organizations for the rest of 2025 (and beyond) will be measured by how they address and execute retention strategies that move beyond compensation. Investing in engagement, holistic employee support, flexible work structures, and forward-looking upskilling strategies, especially AI, will give them an advantage in an ever-changing workforce landscape.