Two major measures of consumer confidence fell in May, with the University of Michigan's sentiment index dropping to a record low of 44.8. The primary driver: inflation fueled by the ongoing Iran war, which has pushed gas prices to a national average of $4.49 a gallon — up from $2.98 before the conflict began in late February.
The Conference Board's Consumer Confidence Index slipped to 93.1, its first decline after three months of gains. Confidence is now diverging sharply by income: households earning above $100,000 grew more optimistic while most others pulled back. Two-thirds of respondents said they are cutting spending, with most reducing general purchases and delaying larger acquisitions.
The wage picture adds pressure. Real average hourly earnings shrank in April compared to a year earlier — the first decline in three years. Meanwhile, consumers now expect prices to rise 3.9% annually over the next five to ten years, up from 3.5% in April.
Minneapolis Fed President Neel Kashkari said this week that bringing down inflation remains the central bank's primary focus, noting that consumer prices are "simply much too high." U.S. headline inflation stood at 3.8% in April — above the Fed's 2% target, which Kashkari noted has been missed for more than five years. The remarks come as the Fed enters a new chapter under Chair Kevin Warsh, who succeeded Jerome Powell.
Read more via Bloomberg, AP, Conference Board, CNBC
Despite widespread alarm about AI eliminating white-collar work, labor economists say the numbers tell a more nuanced — and more cautious — story.
Unemployment rates for occupations most exposed to AI are currently lower than for less-exposed jobs, and there is no large-scale evidence of workers shifting out of AI-threatened roles into manual ones, according to Bureau of Labor Statistics data analysis. Only one in five U.S. companies are using AI in any business function, per Census data.
Where impact is visible, it's concentrated among younger workers. Stanford Digital Economy Lab research found a 16% decline in entry-level jobs in AI-exposed occupations — including software development and customer service — for workers aged 22 to 25 since 2024, while headcounts for older workers in the same fields grew. Annual employment growth for coders has slowed roughly 3% since ChatGPT's launch, but overall coding employment continues to grow, according to Federal Reserve Board research.
The pattern that's emerging: jobs where AI fully automates tasks are contracting at the entry level, while jobs where AI augments rather than replaces workers are seeing faster-than-average headcount growth. As Stanford's Erika McEntarfer put it: "It could be disruptive, but the data is telling us right now that disruption is not yet here, and we have time to plan."
Also worth noting: Pope Leo XIV, in his first encyclical, urged global regulation of AI and warned that prioritizing profit over employment violates human dignity. And OpenAI CEO Sam Altman said at a recent conference that AI has not eliminated as many white-collar jobs as he anticipated when ChatGPT launched — attributing the gap partly to the irreplaceable human element in many roles.
Read more via MIT Technology Review, CNBC, Reuters
Gartner projects that by 2028, AI will begin creating more jobs than it eliminates. The catch: organizations that fail to rethink how employees build expertise won't have the talent to fill those new roles.
The disruption is already visible. Forty percent of companies have eliminated obsolete jobs, and nearly half have restructured to become more collaborative, according to a Gartner survey of 110 HR leaders. Junior employees are losing the developmental runway they once had — fewer opportunities to build foundational judgment and skills — while traditional performance metrics no longer reliably predict readiness for more senior roles.
Almost half of U.S. HR leaders said AI has raised productivity expectations for entry-level employees without changing actual staffing levels. Nearly a third said their companies are hiring fewer junior workers. As Gartner Director Analyst Kaelyn Lowmaster framed it: "AI is ultimately going to result in more job gains than losses, but in the process it's going to break down millions of careers."
The tension is sharpest for new graduates. Unemployment among college graduates aged 22 to 27 stood at 5.6% in March — one of the highest rates since 2013 outside the early pandemic. The most AI-fluent graduates in history are entering a market that is simultaneously recruiting them for their skills and cutting the entry-level roles they were counting on. The share of employers cutting back on junior hires grew to 17% from 13% in 2025, per a Strada Education Foundation survey of nearly 1,500 employers. Salesforce, IBM, and SharkNinja, however, are moving in the opposite direction — actively ramping up hiring of AI-native graduates.
Read more via HR Dive, The Wall Street Journal
The share of HR professionals naming employee training their organization's top priority nearly doubled year over year — from 5% to 9% — according to HR Dive's 2026 Identity of HR survey. The primary driver is AI transformation, though a slower hiring market is also pushing employers to develop the talent they already have rather than look outside.
The skills gap is real. Seven in ten professionals say they use AI weekly, but only 14% consider themselves advanced users, per a Go1 survey of more than 2,000 learning and development leaders and workers. Traditional labor-cost arbitrage has narrowed to below 20%, eroding the cost advantage of hiring outside talent over reskilling existing workers — a shift that makes internal development an increasingly rational economic choice.
Training investment is going toward both technical and human skills, including emotional intelligence, communication, and collaboration. The data suggests the employers moving fastest on structured upskilling will have a meaningful advantage as the talent landscape reshapes around AI fluency.
Read more via HR Dive
A confluence of new research and pending legislation is drawing attention to a deepening dysfunction in hiring — on both sides of the table.
On the employer side, experts estimate more than a third of all job postings are fake. In a 2024 survey of recruiters, 80% admitted their company posts jobs that are already filled or don't exist. At least five state legislatures are actively reviewing bills to crack down on ghost job ads, citing concerns ranging from wasted applicant time to data privacy violations to distorted labor market data.
Candidates are responding in kind. Ninety-three percent of job seekers surveyed by background verification firm GCheck reported lying or embellishing during the hiring process, and 60% said they didn't believe they would have been hired had they been fully truthful. Twenty-five percent of candidates surveyed reported using an AI avatar in place of their own face during a virtual interview.
For HR leaders, the practical implication is clear: candidate verification processes that made sense two years ago may be inadequate today, and job posting strategies that treat listings as free marketing carry real legal and reputational risk as state-level scrutiny increases.
Read more via Forbes, Fast Company
Among workers most likely to struggle finding new employment if AI eliminates their roles, 86% are women — most of them administrative or clerical staff — according to a Brookings Institution study. They are not waiting to find out what happens next.
The share of administrative professionals who say they have adopted AI tripled in two years, from 26% in 2024 to 77% this year, according to the American Society of Administrative Professionals' annual report. But adoption is outpacing confidence: only 47% feel certain integrating AI into their workflows.
The risk is compounded for some groups. Women of color make up 31% of workers in the 15 most AI-vulnerable jobs, while Black women's unemployment has been climbing as government employment — historically a stable sector — continues to shed positions.
The role itself is evolving. Administrative positions that paid $70,000 to $80,000 three years ago are now commanding six figures, though employers are hiring one or two people for strategic roles where they might previously have hired four or five. The structural risk, researchers warn, is that employers are largely leaving workers to navigate the AI transition on their own — and the absence of structured transition plans significantly raises the probability of widespread displacement.
Read more via The 19th
The largest independent study of AI-powered hiring tools to date found significant racial disparities in algorithms used to screen millions of job applicants — and documented a methodology flaw that may have allowed the bias to go undetected.
Researchers from Stanford, Chapman, and Northeastern universities analyzed more than 4 million applications submitted by 3 million applicants across 156 large employers, all screened by algorithms built by talent platform Pymetrics. More than 25% of all applications submitted by Black job seekers went to positions where the algorithm produced outcomes that trigger federal discrimination scrutiny. Asian applicants were also affected, with nearly 15% of their applications going to positions with discriminatory outcomes.
The researchers argue Pymetrics had been measuring bias incorrectly — pooling all applicants and outcomes across employers and positions rather than analyzing each position separately, which is how federal anti-discrimination law is designed to be applied.
The study also documented what researchers call an "algorithmic blackball" effect: because Pymetrics scores are stored and reused for up to 330 days, applicants rejected by one company using the platform effectively receive the same score — not an independent evaluation — at the next employer. To reduce the probability of being shut out across multiple employers to below 0.1%, an applicant would need to apply to at least 25 different positions.
For HR and talent acquisition leaders currently using AI-powered screening tools, the study is a direct prompt to audit how bias is being measured — and whether the methodology aligns with how federal anti-discrimination law actually works.
Read more via Fortune, Stanford Digital Economy Lab
The Trump administration has issued a new policy directing that most immigrants seeking permanent residence must apply through a U.S. consulate in their home country rather than adjusting status from within the United States. The change affects more than one million people with pending applications and carries significant implications for employers sponsoring foreign workers.
Under the new policy, adjustment of status — the process that allows visa holders already in the U.S. to apply for a green card without leaving the country — is now characterized as "extraordinary relief" to be granted only in exceptional circumstances. H-1B and L-1 workers and their dependents have some insulation through "dual intent" provisions in immigration law, but holding those visa categories alone is not sufficient to guarantee approval.
The practical risks are serious. Workers sent abroad to complete consular processing risk being unable to return if their applications are denied, and any approved employment authorization documents tied to a pending application would likely be revoked upon denial. Immigration attorneys say the new guidance applies to all cases not yet approved, regardless of when they were filed. Legal challenges are considered likely, with attorneys citing potential due process concerns around retroactive application.
As former USCIS Senior Official Michael Valverde noted: "This is a largely unprecedented move that will limit lawful immigration to the US greatly. People who followed the rules faithfully now face tremendous uncertainty."
Read more via BBC, Fragomen, Quarles
This summer is shaping up to be the toughest for teen employment since the federal government started tracking the data in 1948. Challenger, Gray & Christmas projects teens will gain just 790,000 jobs across May, June, and July 2026 — down from 801,000 last summer and potentially the lowest total on record. Teen unemployment stands at 14.4%, more than three times the national average, and employers in entertainment and leisure plan to fill 70% fewer roles than last year.
The forces behind it are economic, structural, and demographic — and the implications extend well beyond teenagers. We break it all down in this week's Spotlight.
▶ Read the full Spotlight: Teen Summer Jobs May Hit a Record Low
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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.