Economic uncertainty continues to be a headline for businesses across the U.S. According to a recent survey by The Conference Board, salary budgets in 2026 are projected to grow by an average of 3.4%—the same pace as 2025. While that’s lower than the near-4% growth forecasted last year, it still exceeds the pre-2020 average of 3%.
This signals a labor market that isn’t regressing, but realigning. Companies are slowing broad pay increases and instead channeling compensation dollars into the roles and skills that make the greatest impact.
Strategic Investment in Critical Skills
With turnover slowing, businesses have the chance to be more selective with how they allocate pay. The trend is clear:
- Critical capabilities and high-value skills are getting prioritized.
- Performance-based compensation is taking precedence over one-time bonuses.
- Upskilling and training are growing as cost-effective ways to strengthen teams.
This approach makes sense: in a competitive but slower-growing economy, companies need to ask themselves which positions drive the most value, and which areas of their workforce require investment to sustain productivity.
Flexibility Is Key
At the same time, companies are being cautious. The study found that economic uncertainty is constraining workforce strategies at 61% of organizations. Hiring expansions have slowed, backfilling is less aggressive, and some industries are even shifting temporary layoffs into permanent cuts.
So, how can leaders balance the need to invest in top talent while managing risk?
The Case for Temporary Staffing
Temporary staffing offers a flexible strategy that complements selective salary investment. By leveraging temporary or temp-to-hire professionals, companies can:
- Contain costs: Avoid long-term salary and benefit commitments until demand stabilizes.
- Fill gaps quickly: Step in where critical skills are needed without slowing operations.
- Stay agile: Adjust workforce levels in response to market shifts, projects, or seasonal changes.
- Test before you invest: Assess a candidate’s fit in real work conditions before committing to a permanent hire.
In today’s climate, it’s not about hiring more—it’s about hiring smarter. For many organizations, that means focusing their permanent salary investments on high-impact roles while relying on temporary staffing to maintain flexibility and resilience.
Moving Forward
The Conference Board’s survey underscores the importance of realignment, not regression. Businesses that thrive in uncertain times will be those that balance strategic talent investment with workforce flexibility.
Now is the time to ask:
- Which roles in your organization move the needle the most?
- Where can temporary staffing give you breathing room while still meeting business goals?
- How can you invest in upskilling your team to meet future challenges?
Answering these questions ensures you’re not just managing costs—you’re positioning your company for sustainable growth.
