Why Are Hiring Costs Rising in a Cooling Labor Market?

Despite a cooling labor market in 2025, many talent acquisition leaders grappled with an unexpected challenge: rising recruiting costs.

According to the Recruitment Marketing Benchmark Report from Appcast, both cost-per-application (CPA) and cost-per-hire (CPH) climbed sharply, even as hiring demand softened and application volumes increased.

At first glance, the trend appears to defy basic labor market logic. “It seems counterintuitive,” said Andrew Flowers, chief economist at Appcast, based in Lebanon, N.H. “Historically, when hiring demand slows, recruitment costs fall. In 2025, we saw the labor market cool, hiring rates were low, and employment gains slowed. Yet costs rose.”

For HR leaders, understanding why is critical to planning more effective and efficient recruitment strategies in the year ahead.

Event: SHRM Talent 2026

Rising Costs in a Soft Market

The 2026 Appcast report, which analyzed more than 302 million clicks, 27 million applications, and data from nearly 1,200 employers, points to structural shifts in recruitment marketing as a key driver of rising costs.

As Flowers explained, two forces are at play: job composition and platform monetization.

“Employers hired for fewer roles overall, but the composition also shifted to the hardest-to-fill roles, mainly in health care,” he said. “In 2025, 95% of net new job gains were in health care.”

These roles, particularly in specialized fields such as physical therapy, occupational therapy, and physician positions, come with significantly higher recruiting costs.

“The demand has been roughly double pre-COVID levels,” Flowers noted, while the talent pipeline has failed to keep pace.

That imbalance has intensified competition. “The bigger factor for rising costs is the imbalance between supply and demand for hard-to-fill roles,” he said. “The same number of employers are competing for the same shrinking share of talent.”

At the same time, recruitment platforms have adjusted their pricing strategies. “The job boards started to realize that their take rate was flat, and they wanted to change their pricing,” Flowers said. Both Indeed and ZipRecruiter have signaled shifts in monetization, contributing to rising cost-per-click and CPA.

The result is that even in a soft market, employers are paying more simply to maintain visibility with candidates, Flowers said.

High Apply Rates

While costs increased, apply rates also rose. This reflects a labor market where more candidates are chasing fewer opportunities, but also one where recruitment marketing is becoming more efficient.

For employers, this dual dynamic presents both opportunity and risk. Higher apply rates can improve funnel volume, but they do not automatically translate into better hires.

Flowers pointed to two primary drivers behind the surge. “The macro factor is that unemployment has ticked up year over year, and there’s been an uptick in layoffs in the white-collar industries,” he said. “There’s a growing subset of job seekers who are unemployed and applying for more jobs.”

The second factor is the growth of agentic AI, Flowers said, referring to tools that enable candidates to rapidly search and apply for jobs at scale.

This has fundamentally changed candidate behavior, allowing job seekers to submit many more applications than before, he said. For recruiters, that means higher volumes — but not necessarily higher quality — unless targeting and screening processes evolve accordingly.

Notably, apply rates declined in several frontline-heavy industries, including health care, transportation, hospitality, and retail. One contributing factor, Flowers noted, is policy-driven. “Some workers in industries that heavily employ foreign workers have been dissuaded to apply by the Trump administration’s immigration policy,” he said.

The report underscores a growing divide between white-collar and frontline labor markets.

On one hand, office roles saw a surge in apply rates, reflecting what many economists have termed a “white-collar recession.” On the other, frontline “standing-up” roles — especially in health care — remain persistently hard to fill and expensive to recruit for.

This divergence is reshaping talent strategies. Organizations can no longer rely on a single, unified recruiting approach. Instead, they must tailor strategies to vastly different labor dynamics across job categories.

Specialty Credential: Talent Acquisition

The Waning Power of Remote Work

Another notable shift: the declining advantage of remote roles. In previous years, labeling a job as “remote” or “hybrid” significantly boosted both clickthrough and apply rates, according to Appcast. But in 2025, that edge narrowed considerably. Remote roles became far less common, and their ability to drive candidate volume diminished.

Flowers attributed this in part to broader hiring trends. “Over the last few years there has been a big shift in the number of workers working remotely,” he said. “That was followed by a corrective effect when many workers went back into the office as a result of return-to-worksite policies.”

However, he suggested the bigger factor may be the reduced hiring in traditionally remote-friendly sectors. “It may be less so that employers are taking remote work off the table, and more that employers in industries like technology, marketing, sales, and finance … have shifted toward less hiring and more layoffs.”

Salary Transparency as a Competitive Advantage

If remote work is losing its edge, salary transparency is gaining ground. The report shows that job postings with pay ranges consistently outperform those without, delivering higher apply rates and often lower CPAs. For employers, this represents a relatively simple yet powerful lever to improve recruitment efficiency.

“There’s been a normalization among job seekers to see more salary transparency in their job search,” Flowers said. “As time goes on job seeker preference for salary transparency should continue to grow.”