Need to Know Briefing | February 9: What January's Labor Data Means for Your 2026 Hiring Plan

How bad was January hiring?

The short answer: bad. Private sector employment increased by just 22,000 jobs in January, according to the ADP National Employment Report—a stark signal that the hiring slowdown shows no signs of reversing.

The sector breakdown tells a split story. Education and health services added 74,000 jobs, and financial activities contributed another 14,000. But professional and business services shed 57,000 positions, and manufacturing declined by 8,000—a sector that has now lost jobs every month since March 2024.

Regionally, the Northeast and Midwest posted modest gains (17,000 and 25,000 respectively), while the South and West both lost ground. And the broader trend is unmistakable: private employers added just 398,000 jobs in all of 2025, down from 771,000 in 2024. That's a continuous three-year slowdown in job creation, even as wage growth for job-stayers held steady at 4.5%.

Why is the January jobs report missing?

For the second time in recent months, the Bureau of Labor Statistics delayed a scheduled jobs report—this time citing the partial government shutdown. The January Employment Situation release was supposed to land on February 6. Instead, the BLS said it would be rescheduled once government funding resumes.

This isn't just an administrative inconvenience. Economists had expected the report to show an increase of roughly 55,000 jobs. Without it, HR leaders and hiring managers are flying partially blind on the state of the labor market—relying on private-sector data like ADP's report to fill the gap.

What does the JOLTS data reveal about job openings?

The latest Job Openings and Labor Turnover Summary (JOLTS) from the Bureau of Labor Statistics confirms what many in talent acquisition already feel: the labor market is showing hard-to-ignore cracks.

Job openings dropped 386,000 in December to 6.5 million, with the openings rate falling to 3.9%—well off its most recent peak of 4.6% back in September. The declines were steepest in professional and business services (-257,000), retail trade (-195,000), and finance and insurance (-120,000). Over the full year, job openings fell by 966,000.

Hiring ticked up slightly to 3.3%, but that rate is still consistent with the sluggish hiring patterns last seen in the early 2010s. Quits and layoffs both held relatively flat, with the quits rate at 2.0% and the layoffs rate at 1.1%.

Why did layoffs surge in January?

U.S. employers announced 108,435 job cuts in January—up 118% from January 2025 and up 205% from December, according to Challenger, Gray & Christmas. It's the highest January layoff total since 2009.

Transportation led the cuts, driven primarily by a major UPS announcement. Tech followed with more than 22,000 cuts, most of them at Amazon. And the healthcare sector announced over 17,000 reductions—the most for the industry since April 2020.

What's behind the surge? Employers cited contract loss, market and economic conditions, restructuring, and department closings as primary drivers. AI was responsible for just 7,600 cuts—roughly 7% of the total. The bigger story is that most of these plans were set at the end of 2025, signaling that employers entered 2026 with a less-than-optimistic outlook.

Are employers ready for a misconduct reckoning?

A new TalentLMS survey of 1,000 U.S. employees reveals deep gaps in how organizations handle workplace misconduct—and the data points to a systemic accountability problem.

The numbers are stark: 36% of respondents witnessed incivility or disrespect, 29% witnessed professional or social exclusion, and 25% witnessed retaliation against colleagues who spoke up. On the other side, 62% believe misconduct is more likely overlooked when top performers or leaders are involved, and 45% have seen people promoted even after mistreating others.

Fear is doing real damage to reporting. A quarter of employees who witnessed or experienced misconduct didn't report it, with 56% saying they believed reporting wouldn't make a difference and 36% fearing retaliation. Nearly half (47%) say managers actively discourage employees from escalating harassment or discrimination complaints, and 42% worry that speaking up will label them as "difficult."

Training isn't bridging the gap either. 45% of respondents say compliance training is disconnected from the real situations employees face, and 36% believe more realistic scenario-based training would reduce misconduct.

Why are women leaving the workforce?

It's not because they want to. A new Catalyst report found that 42% of women who voluntarily left their roles last year did so because of caregiving responsibilities, including the cost of childcare. Another 18% cited dissatisfaction with pay.

The flexibility connection is impossible to ignore: women who left were far more likely to have worked in organizations without flexible schedules (37% versus 22% of women who stayed). As Catalyst's lead researcher put it, women aren't opting out—they're being pushed out by the collision of caregiving demands and rigid work structures.

Should employers be worried about turnover in 2026?

Half of them already are. According to a new Express Employment Professionals/Harris Poll survey of more than 1,000 U.S. adults, turnover expectations jumped to 50% in 2026—up from 39% in fall 2024 and 33% in fall 2023.

The cost of that turnover is climbing too, with estimates reaching $45,236 per employee, up nearly $10,000 from $36,723 in 2025. Large employers (500+ employees) are the most concerned, with 64% expecting turnover to rise. The top drivers? Increased workplace demands (37%), a competitive job market (35%), better pay and benefits offered elsewhere (32%), and employees switching careers entirely (29%).

What's happening in Massachusetts biotech?

The state's biotech sector—once a magnet for advanced-degree talent—is in a sharp downturn. According to The Wall Street Journal, Massachusetts saw its roughly 65,000 biotech R&D jobs decline in 2024 after years of growth, with losses continuing through at least June 2025.

The ripple effects are visible everywhere. Nearly 28% of greater Boston's laboratory space sat empty by the end of September. In Cambridge's Kendall Square—historically the epicenter of biotech activity—lab vacancy hit 17%, up from just 0.4% in 2021. Venture capital funding in the first half of 2025 reached its lowest point since 2017, and the termination of federal grants has compounded the crisis.

For Ph.D. graduates, the job market has become brutal. Recent graduates report applying to hundreds of positions without offers, with some relying on government food assistance, working outside their field, or considering relocating to China, where biotech recruiters say the industry is still hiring.

Could AI screening tools violate federal law?

A new class action lawsuit against AI recruiting platform Eightfold AI is raising a legal question that every employer using AI to screen candidates should be watching closely.

Filed in California on January 20, the lawsuit alleges that Eightfold's platform violated federal and state consumer protection laws by creating what amount to hidden credit reports on job seekers—assembling detailed candidate profiles using data far beyond what applicants provided, including information from public databases. The platform allegedly ranked candidates based on predicted likelihood of success and provided those assessments to employers before any human review.

The legal theory is novel: rather than focusing on bias or discrimination (the typical AI hiring challenge), this case argues that AI-driven candidate assessments could constitute "consumer reports" under the Fair Credit Reporting Act (FCRA). If courts agree, companies using AI screening tools would need to comply with FCRA procedures—including notifying applicants in advance and informing them of any adverse action. As HR Executive noted, this lawsuit creates ongoing and heightening legal risk for AI hiring software providers and their clients.

What does the latest AI safety report say about the workforce?

The second annual International AI Safety Report flags several developments that HR leaders and workforce strategists need on their radar.

On the capability front, AI systems are advancing rapidly—improving at mathematical operations and software engineering tasks, with completion time for complex tasks doubling every seven months. The report projects AI could handle several-hour tasks by 2027 and multi-day tasks by 2030.

The workforce implications remain genuinely uncertain. Studies from Denmark and the U.S. found no relationship between AI exposure and overall employment levels, but UK research identified hiring slowdowns at AI-exposed companies, particularly for technical, creative, and junior positions. Meanwhile, deepfakes are getting harder to detect (77% of study participants incorrectly identified AI-generated text as human-written), and cybersecurity threats are escalating.

Are blue-collar jobs next for AI disruption?

A growing number of AI startups are building what Axios describes as "brains" for robots designed to perform blue-collar work. The approach involves training AI models on real-world physical data—or less expensive simulated physical world data—to create robots that understand physics and real-world conditions.

Companies like Toronto-based Waabi, California-based FieldAI, and Pittsburgh-based Skild AI are leading the charge. Separately, researchers at Washington State University are designing AI-powered robots to harvest fruit in response to worldwide labor shortages, FedEx announced a new AI-enabled robotic package unloader, and Tesla has begun mass production of its Optimus Gen 3 humanoid robot—with CEO Elon Musk targeting one million units from a single California facility.

Global snapshot

Canada: Approximately 6,000 blue-collar workers in Montreal went on strike after contract talks with city hall stalled over wages—the union's first strike in about 17 years. (Montreal Gazette)

New Zealand: Unemployment rose to 5.4% in Q4 2025, the highest level since 2015, exceeding economist expectations of 5.3%. (The Wall Street Journal)

Switzerland: Job openings increased 2.4% in Q4 2025 compared to Q4 2024, according to Adecco's Swiss Job Market Index, suggesting possible labor market stabilization despite economic headwinds. (SIA)

United Kingdom: Almost one-third (31%) of UK workers ranked pension contributions and unlimited time off as the most sought-after employee benefits, with 40% of workers over 55 prioritizing increased pension contributions. (SIA)

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The Need to Know Briefing is published weekly by Kelly, curating the most important workforce and hiring insights for HR leaders and hiring managers.